Europe’s largest travel operator TUI reported a jump in its first-quarter profit on Tuesday, driven by strong performance in its packaged holiday business.
While European airlines faced struggles last year, travel companies such as TUI benefited from the resurgence of packaged holidays. TUI said its bookings for the summer were up 2 per cent, with one third of packages already booked.
Holidaymakers are increasingly turning to package holidays as soaring hotel and flight prices revive demand for all-inclusive deals.
Shares of TUI have climbed 45 per cent since last September following a trading update.
“People prioritise their holidays even in times of change, and even in a challenging economic environment in Europe for almost all sectors,” TUI Group chief executive Sebastian Ebel said on Tuesday.
TUI confirmed its annual outlook and also posted first-quarter underlying earnings before interest and taxes (EBIT) of €51 million, up from €6 million in the year-ago period.
At the end of last year, the company forecast 2025 EBIT growth to ease to between 7 per cent and 10 per cent due to one-off costs.
While travel demand has remained robust, TUI, like other European airline businesses, has been affected by Boeing delivery delays and high costs.
Ebel said on a media call that he hopes the Boeing 737 MAX delivery delays will be resolved by 2027.
The first quarter is usually the weakest for airlines, as travellers are less likely to fly between January and March. For TUI, the first quarter runs from October to December.
TUI reported a decline in performance in the Markets and Airlines segment, which saw a 31 per cent drop in underlying EBIT year-on-year due to seasonal investments ahead of the summer travel period.
Ebel also said bookings growth had slowed slightly because the firm had become less aggressive on growing capacity and pricing.
However, its Holiday Experiences segment saw an improvement, rising to €150.3 million in the reported quarter from €90.7 million last year.
Its outlook will also be impacted by the later date for Easter this year, with a €30 million drop set for the second quarter, as the booking spike tied to the holiday spills into the third quarter instead. - Reuters
