German travel operator TUI AG (LSE:TUI) is bracing for a €25 million (£21.5 million) financial blow following last month's devastating wildfires in Rhodes, Greece.
In today’s third-quarter earnings call, the company announced that the total cost, which will be reflected in its full-year results, encompasses expenses related to holiday cancellations, customer compensation, welfare expenses and repatriation flights.
TUI was forced to cancel numerous holiday packages, provide compensation to affected customers and arrange flights to bring them back home when wildfires swept across the popular tourist destination.
Some 19,000 British tourists had to evacuate the island.
Despite the setback from the wildfires, TUI swung to a profit in the third quarter, reporting an underlying EBIT of €169 million, marking a significant turnaround from a loss of €27 million in the third quarter of 2022.
Brokerage firm Peel Hunt weighed in on TUI's performance, noting the company's significant pre-pandemic business changes.
TUI had set a target of deriving 70% of its EBITA from Holiday Experiences, including hotels and cruises, anticipating high and stable returns.
Peel Hunt highlighted that if TUI can showcase its successful transition and the efficiency and resilience of its ‘markets and airlines’ segment, there's potential for further share price growth.
For now, the broker maintained its 'hold' rating for TUI, with a target price set at 560p, slightly below today’s bid of 562.50p.