TUI AG fell as much as 8 percent after Europe’s biggest holiday company detailed how a glut of flights and hotel rooms is hurting earnings, giving investors more reasons for concern following a profit warning last week.
The loss for the quarter through December more than doubled, with no prospect of a turnaround because prices are depressed by unfilled capacity, TUI said in a statement Tuesday. Uncertainty around Brexit is also roiling UK sales and 2018’s hot summer has put people off booking ahead in case there’s a repeat. The stock traded 4.2 percent lower as of 9:56 am in London, where TUI has its primary listing. It fell 19 percent on February 7 following the profit warning.
TUI’s problems look mild by comparison with those afflicting rival Thomas Cook Group Plc, which slumped 75 percent last year after splurging on rooms it couldn’t fill, and is mulling a sale of its airline arm to raise cash and avoid a rights offer. TUI Chief Executive Officer Fritz Joussen said he’ll be an “active observer” of that process but isn’t in talks with Cook. Hanover, Germany-based TUI said February 6 that operating profit will be flat in the 12 months through September after five consecutive years of double-digit gains. Joussen said on Tuesday the company’s cruise-ship business should help offset declines at the tour-operator arm. It also owns a far larger proportion of its hotels than Cook, paring costs and giving it greater flexibility over pricing. TUI stock is down 18 percent this year compared with a 14 percent decline at London-based Thomas Cook.