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TUI Magic Life (photo: TUI)

TUI chief: “We are more competitive” than Thomas Cook

Fritz Joussen puts additional distance between the two rival operators as they post their half-year results.

TUI has posted its first-half results, marked by deepening winter losses the tour operator blamed on a late Easter and overcapacity in Spain.

The group revealed that its net loss for the low-season H1 grew 36% to €287.2 million, TTG reports.

It comes after two profit warnings this year, the first in February blaming the summer 2018 heatwave, the second in late March following the grounding of the Boeing 737 MAX.

The grounding could dent full-year earnings by more than a quarter – €300 million – if the aircraft, of which it has 15, remains out of service during the summer season, TUI has said.

Rival operator Thomas Cook will post its first half results on May 16, following a challenging period in which it has placed its airline business up for sale, announced more store closures and, this week, revealed plans to cut 100 head-office roles.

“More competitive”
TUI Group chief executive Fritz Joussen stressed this week that the two companies have completely different structures.

“Only 30% of our profits look like Thomas Cook’s. The rest is from our cruise, hotels and destination experiences, and we are much more competitive. Vertical integration and scale are the reason for our profitability,” he said.

He added that he was not interested in buying his rival’s airline and said that future investment would instead be targeted at “destination experiences and digital platforms, not necessarily in-country consolidation”.

TUI will concentrate on growing its hotel, cruise and destination experiences divisions while increasing digitisation, he said. It bought the Milan-based activities platform Musement in September and has since doubled the number of activities and excursions sold through it to 2.4 million.

Spain vs. Turkey
Joussen also talked down Spain and talked up Turkey. “Competitive pressure” is to blame for the increased interim losses, he said.

“The main issue is over-capacity into Spain. People have better prices because of over-capacity and we have lower margins. It will be a trend continuing into the second half of the year, but we have a counter-effect in Turkey. Turkey will be back big time, although it is not as important in winter and the benefits will only come in the second half.”

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