TUI AG (LSE:TUI) said it expects to climb back into the black this year as the travel market continues to recover from the COVID-19 pandemic.
The Anglo-German travel company reported strong growth in bookings and capacity for the second quarter to end-March 2022, reflecting improved consumer confidence, pent-up demand for holidays and the easing of travel restrictions.
“After two years of turbulence and against the backdrop of current bookings and the business performance to date, we expect to return to significantly positive underlying EBIT for financial year 2022,” the company predicted in its interim results statement.
Revenue came in at €2.1bn in the second quarter, an improvement of €1.9bn on the same period last year. Underlying losses (underlying EBIT) almost halved to €329.9mln from a €633mln loss in the second quarter last year, after the lifting of omicron restrictions led to a strong recovery in the second half of the three-month period.
First-half revenue rose to €4.5bn from €0.7bn, with operating losses (adjusted EBIT) shrinking to €603.5mln from €1.3bn.
The company said it operated at 71% of pre-pandemic 2019 capacity in Q2, just ahead of its expectations, and exited March with an operated capacity of 75%.
Passenger departures totalled 1.9mln in the second quarter, 1.7mln more customers than last year, with the highest number seen in March.
The load factor was 84%, compared with 85% in the second quarter of 2019, before the pandemic struck.
Summer 2022 bookings are currently at 85% of summer 2019 levels, with bookings in the last six weeks “firmly surpassing” summer 2019 levels, TUI said.
The UK market is the most advanced booked, with bookings up 11% versus Summer 2019.
It reiterated that it expects Summer 2022 bookings to be close to Summer 2019 levels.
The war in Ukraine has not affected bookings across the company’s key markets of UK, Germany and Benelux, although the Nordics and Poland have been subdued.
TUI said it expects to deliver a further 20% of its €400m cost savings target in the current financial year and is on track to complete the programme in 2023.
The company reported a strong liquidity position of €3.8bn as of 6 May 2022, following the hand-back of €0.7bn state support.