Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TUI AG (TUIFF, Financial) reported its 10th consecutive quarter of underlying EBIT growth, supported by strong performance in hotel, cruise, and TUI Musement segments.
- Revenues increased by 13%, driven by holiday experiences and market and airlines, with a positive outlook for the upcoming summer season.
- The company achieved a BB rating from Fitch, reflecting improved financial discipline and structure, returning to pre-pandemic levels.
- TUI AG (TUIFF) is benefiting from a global customer base, with increased demand from regions such as the Caribbean and Spain, contributing to higher occupancy and rates.
- The company is making significant strides in sustainability, with new ships ready for green methanol and LNG, aligning with its long-term sustainability goals.
Negative Points
- Market and airlines segment reported a decline of EUR30 million, primarily due to investments in the Nordic and Northern European markets.
- There is a concern about volume slowdown in Germany and negative bookings in the UK, which could impact future growth.
- Despite a strong start, the company faces challenges in maintaining cruise occupancy rates, which are down compared to pre-pandemic levels.
- The company is cautious about adding fixed capacity, relying on dynamic packaging for growth, which may not yield immediate profitability.
- TUI AG (TUIFF) faces competitive pressure in the UK market, with competitors increasing their capacity significantly, which could affect market share.
Q & A Highlights
Q: Are you concerned about the volume slowdown in Germany compared to the figures you gave in December? And why are the hotel ADR figures accelerating in Q2 and the second half of the year compared to Q1?
A: We are benefiting from our global portfolio and increased global travel, especially in regions like the Caribbean and Spain, where demand is strong from outside Europe. Regarding Germany, we are focusing on margin protection and managing volume strategically. We do not expect the market to weaken significantly.
Q: How should we think about any benefit to the EUR400 million P&L interest expense over the next year or two, particularly in the context of the RCF refinancing?
A: The RCF is linked to our rating category and is up for renewal before summer. The biggest cost is the commitment fee, as it is not heavily drawn. We expect more savings from the rating improvement, particularly in the lease and asset financing portfolio.
Q: Can you help quantify the FDI benefits you've seen so far and how you're thinking about that in your guidance for the year?
A: We have seen some impact from FDI last year, and there might be a small positive impact this year. However, it's difficult to quantify precisely as the market risk was known last year. We expect a modest growth in holiday experiences for the rest of the year.
Q: With Ryanair included, are you taking other capacity out to match that? And do you make any profit on a Ryanair trip?
A: The risk capacity remains flat, and growth is expected from dynamic content like Ryanair. We don't disclose profit numbers on partners, but any incremental business is positive for profitability. The strong distribution network helps secure occupancies and load factors.
Q: Are you concerned about negative bookings in the UK, and what gives you confidence in improving this?
A: We feel comfortable with the current booking status. Bookings seem to be slightly later, but the market is in good condition, and what we see for summer supports our guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
