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Maldives retreat (photo: Tui Group)

Booking turbulence hits TUI

The tour operator is warning that summer 2019 margins are being affected by similar problems it encountered in 2018.

The European tour operator giant TUI is warning that margins for this coming summer are being hit by a continuation of the problems it saw in 2018.

Although earnings for 2019 will be “broadly stable”, TUI says, it is “not reiterating” its earlier guidance of earnings rising 10% per year up to 2020.

The news sent TUI’s shares plunging, while its rival Thomas Cook has made similar warnings saying it is considering a sale of its airline business to boost resources in the run-up to broader restructuring.

TUI shares plunged by 19% after it warned that last year’s hot summer weather coupled with factors such as Brexit and the weak pound are hitting its margins.

Summer 2019 bookings are “broadly in line” with last year, it insists, but “margins are not”, based on the “early visibility” of its Markets & Airlines sales.

Sector headwinds
Margins for summer 2019 are being affected by a “continuation of the sector headwinds” such as the negative impact from last year’s hot summer, which persuaded many in northern Europe to ignore holidays in the south.

Another negative factor has been the shift in demand from the western to eastern Mediterranean leading to overcapacity in the Canaries.

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