Tourism giant wants to make $20 bln in revenue

BERLIN-Reuters

AFP Photo

TUI Group plans to restructure its airline brands and cruise businesses and drive more online bookings now its merger to create a tourism group with annual sales of over $20 billion has completed.

“We are very clear on what we want to achieve, and we will be refining those thoughts over the next few months,” Co-Chief Executive Peter Long told analysts after TUI published first quarter results Feb. 10.

The company, formed in December from the merger of London-listed TUI Travel and German majority owner TUI AG , will provide more details of strategic measures when it publishes half-year results on May 13.

Management said it was working to organize its five charter airline brands better, which have 140 planes and together would be Europe’s seventh largest airline. The company also wants to modernize the British Thomson Cruises business and create new ways to boost online bookings.

In the first quarter, improving profits at its hotels and cruise divisions helped TUI narrow its underlying loss before interest, tax, and amortization (EBITA) to 107.9 million euros ($122 million) from 141.1 million a year earlier.

Shareholders have welcomed the merger as it means the combined company can cut down on overlapping functions and a costly dual-holding structure.

“Growth chances have improved thanks to the merger,” said Ingo Speich, a portfolio manager at TUI shareholder Union Investment, according to comments prepared for the TUI AG annual shareholders’ meeting taking place on Tuesday.

In Germany, there are fears that a combined TUI airlines business could be based in Britain, with jobs lost at the Hanover-based brand TUIFly.

“We are analyzing it and then we will decide,” Co-CEO Fritz Joussen told reporters. “But if you bring companies together, it is likely it will lead to job cuts.”

TUI said it was on track for underlying earnings of about 1 billion euros in the current financial year.
TUI’s Travel Sector division, which includes tour operators and airlines, was hit by the impact of currency fluctuations and slight declines in Germany and the Nordic region in the first quarter and posted a slightly wider loss of 149.1 million euros.

Long also said TUI was not getting any immediate financial benefit from low oil prices as they were being offset by negative trends in the dollar-euro exchange rate.

“Our assumption is that an advantage that the whole industry has is competed away, but it does have a benefit in making our customers feel good and generating more demand for holidays,” he said.