(Alliance News) - Anglo-German tour operator TUI AG is to assess the financial impact of smaller rival Thomas Cook Group PLC's collapse, it said Tuesday, as its own airline continues to face challenges.
Thomas Cook went into insolvency in the early hours of Monday, after talks with lenders and shareholders on Sunday failed to come up with crucial funding.
FTSE 100-listed TUI is preparing measures to support its customers booked on Thomas Cook flights, it said on Tuesday, offering replacement flights. TUI is currently assessing the financial impact this will have on its year ending September 30.
TUI's own airline is facing "a number of ongoing external challenges". These include the grounding of Boeing Co's 737 MAX airline following two fatal accidents, airline overcapacity, and Brexit uncertainty.
However, trading in the Markets & Airlines division has been stronger since mid-August, in terms of both bookings and selling prices, meaning summer 2019 bookings are flat year-on-year. Positive growth in bookings was recorded in Turkey and North Africa.
TUI acknowledged there has been continued weaker demand for the winter, with around one-third of its holiday programme sold, the same as a year before.
Elsewhere, the Hotels & Resorts unit is delivering "balanced results". Demand is shifting to the eastern Mediterranean from the west, with demand for Spanish holidays "normalising" after recent record annual performances, the company said.
TUI has achieved high occupancy levels for new cruise chips launched, while there was "strong" customer growth in the Destination Experiences arm during the last quarter of its financial year ending September 30.
TUI has reiterated previous guidance of a 26% fall in annual underlying earnings before interest, tax, and amortisation.
"As articulated, the ongoing external challenges we have seen in financial 2019 are likely to persist into financial 2020. This coming year will see us focus on becoming more cost competitive, selectively grow our Holiday Experiences business and scale up our digital platforms in new markets and Destination Experiences," said TUI.
"Delivering on our four strategic initiatives will ensure we remain well-positioned to benefit in this changing environment and enable sustained growth going forward."
TUI will release annual results on December 12.
By George Collard; georgecollard@alliancenews.com
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TUI AG (TUI)