TUI says challenges to continue in 2020; gauging Thomas Cook impact
Travel operator TUI reiterated its forecast of a fall in full year profits and warned Brexit worries, Boeing 737 Max groundings and airline overcapacity would continue to pose challenges in the new fiscal year.
It added that it was offering replacement flights to its customers booked on Thomas Cook holidays after the rival firm collapsed on Monday, stranding hundreds of thousands of holidaymakers.
"We are currently assessing the short term impact of Thomas Cook's insolvency under the current circumstances, on the final week of our full year financial result," the company said in a trading update on Tuesday.
TUI said the summer season was closing out in line with expectations as the company reiterated a fall of up to 26% in 2019 underlying earnings before interest, tax and amortisation from 2018's €1.177bn (£1.03bn).
The company issued two profit warnings in seven weeks this year, one due to a €300m from the grounding of Boeing 737 Max jets over safety concerns.
"These external challenges will continue in full year 2020 - therefore, we will focus on becoming more cost competitive in our markets & airlines business to protect and extend our market share where possible," the company said.
Interactive Investor head of markets Richard Hunter said the demise of Thomas Cook "may well present TUI with unexpected opportunities, although it may be some time until such benefits wash through".
"TUI is a rather different animal from Thomas Cook, with its diversified business model and digital aspirations providing rather more of a defence than the one broken at its former rival," he said.
"If TUI capitalises on its aim to become an “integrated digital tourism platform business”, the clouds overhanging the business may begin to clear. In all, the jury remains out not just for TUI’s progress but perhaps for the industry as a whole."