TUI AG: Pre-Close Trading Update

TUI AG (TUI) 
TUI AG: Pre-Close Trading Update 
 
24-Sep-2019 / 08:00 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
            24 September 2019 
 
      TUI GROUP 
 
      Pre-Close Trading Update 
 
Prior to entering its close period ahead of reporting its full year results 
for the twelve months ending 30 September 2019 on 12 December 2019, TUI 
Group announces the following update on current trading. 
 
            Chief Executive of TUI Group, Friedrich Joussen, commented: 
 
"On Monday 23 September 2019, our competitor Thomas Cook UK Plc and 
associated UK entities entered into compulsory liquidation. TUI is preparing 
measures to support. Where TUI customers are booked on Thomas Cook Airlines 
flights and these are no longer operated, replacement flights will be 
offered. We are currently assessing the short term impact of Thomas Cook's 
insolvency under the current circumstances, on the final week of our FY19 
financial result. 
 
   "Our vertically integrated business model proves to be resilient, even in 
       this challenging market environment. Our Holiday Experiences business 
      continues to deliver strong results. Meanwhile, our Markets & Airlines 
business faces a number of ongoing external challenges such as the grounding 
        of the 737 MAX aircraft, airline overcapacities and continued Brexit 
     uncertainty. The Summer 2019 season is however closing out in line with 
      expectations and we therefore reiterate FY19 underlying EBITA guidance 
stated in our ad hoc announcement of March 2019 of approximately up to minus 
           26% compared with underlying EBITA rebased in FY18 of EUR1,177m.1 
 
 "These external challenges will continue in FY20 - therefore, we will focus 
     on becoming more cost competitive in our Markets & Airlines business to 
  protect and extend our market share where possible. Going forward, our two 
key digital strategic initiatives will deliver greater customer reach in new 
     markets complementary to our existing markets, through our new GDN-OTA2 
platform as well in our Destination Experiences markets through our Musement 
 platform, driving further demand to our own Holiday Experiences businesses. 
     TUI is well-positioned to become an integrated digital tourism platform 
            business." 
 
1 Based on constant currency: FY19 comparative rebased in December 2018 to 
EUR1,187m to take into account EUR40m impact for revaluation of Euro loan 
balance within Turkish Lira entities in FY18, and adjusted further to 
EUR1,177m for retrospective application of IFRS 15 
 
2 Global distribution network (GDN) as TUI's new Online Travel Agent (OTA) 
platform, serving run rate of 250k customers to date 
 
            Current Trading 
 
 In Hotels & Resorts, our diversified portfolio of destinations continues to 
       deliver balanced results with demand shifting from Western to Eastern 
   Mediterranean. As anticipated, we are seeing demand for Spain normalising 
    with both rates and occupancies coming off record highs in recent years, 
offset by better results in our Turkish hotels. By the end of this financial 
    year, we will have successfully opened 70 new hotels since merger, well 
 ahead of our 60 target set at the time of the merger. Going forward we will 
 continue to further diversify our asset portfolio and selectively invest in 
 our key hotels brands such as Riu, Robinson and Blue Diamond. We will build 
 up our TUI Blue brand from 10 to 100 hotels by the end of 2020 through the 
 repositioning of existing hotels within the portfolio. TUI Blue will become 
            our flagship hotel brand, allowing for asset-light growth. 
 
     In Cruises, we successfully launched the new TUI Cruises Mein Schiff 2, 
  Marella Explorer 2 and Hanseatic nature for Hapag-Lloyd Cruises, with high 
occupancy levels and robust daily rates continuing to be delivered despite a 
  significant increase in market capacity, particularly in the German cruise 
         market. In FY20, we will launch one additional expedition ship, the 
    Hanseatic inspiration for Hapag-Lloyd Cruises, with further launches for 
         both TUI Cruises and Hapag-Lloyd Cruises scheduled in future years. 
 
  In Destination Experiences, we expect to see strong customer growth in the 
     final quarter, driven by both underlying growth and the acquisitions of 
      Destination Management and Musement. This year has seen the successful 
    integration of both companies and together with the planned expansion of 
    both the product portfolio and 3rd party distribution, we have created a 
    solid base for future growth in this attractive and fast growing market. 
 
 In Markets & Airlines, as expected, the most recent trading weeks since our 
      Q3 update on 13 August have been stronger in both bookings and average 
    selling price, resulting in Summer 20193 customer bookings flat on prior 
 year and ASP up 1%, with customer volumes to Turkey and North Africa seeing 
            a clear return to growth. 
 
   Winter 2019/20 programme3 (which is low season for most markets) is at an 
   early stage, with around one third of the programme sold, broadly in line 
      with prior year. The weaker demand environment as previously discussed 
   remains evident and we are seeing bookings down in line with our capacity 
            reduction of 2%, with average selling price up 4% on prior year. 
 
  Resumption of the 737 MAX remains subject to the clearance decision of the 
  civil aviation authorities. To ensure we are sufficiently covered for peak 
  periods during our Winter 2019/20 programme, we anticipate a smaller level 
      of aircraft replacement costs to be incurred, compared to Summer 2019. 
 
3 These statistics are up to 15 September 2019, shown on a constant currency 
            basis and relate to all customers whether risk or non-risk 
 
            Foreign Exchange & Fuel 
 
           Our strategy of hedging the majority of our currency and jet fuel 
  requirements for future seasons remains unchanged. This gives us certainty 
  of costs when planning capacity and pricing. The following table shows the 
  percentage of our forecast requirement that is currently hedged for Euros, 
  US Dollars and jet fuel for Markets & Airlines, which account for over 90% 
            of our Group currency and fuel exposure. 
 
                        Summer 2019 Winter 2019/20 Summer 2020 
Euro                        97%          86%           52% 
US Dollars                  96%          88%           65% 
Jet Fuel                    95%          93%           78% 
As at 19 September 2019 
 
     At our Q3 update we indicated approximately EUR15m positive translation 
impact on underlying EBITA compared with rates prevailing in the prior year. 
       We now expect a positive impact of approximately EUR11m in total from 
foreign exchange translation on the FY19 underlying EBITA result, subject to 
            further movements in exchange rates to 30 September 2019. 
 
            Expected development and guidance 
 
FY19 is closing out in line with our expectations and we therefore reiterate 
   FY19 underlying EBITA guidance stated in our ad hoc announcement of March 
2019 of approximately up to minus 26% compared with underlying EBITA rebased 
            in FY18 of EUR1,177m.1 
 
    As articulated, the ongoing external challenges we have seen in FY19 are 
 likely to persist into FY20. This coming year will see us focus on becoming 
more cost competitive, selectively grow our Holiday Experiences business and 
  scale up our digital platforms in new markets and Destination Experiences. 
          Delivering on our four strategic initiatives will ensure we remain 
well-positioned to benefit in this changing environment and enable sustained 
            growth going forward. 
 
Annual Report 2019 
 
TUI Group will issue its Annual Report on Thursday 12 December 2019 and hold 
a presentation for analysts and investors on the same day. Further details 
will follow. 
 
Analyst & Investor Enquiries 
 
     Peter Krueger, Member of the Group 
 Executive Committee, Group Director of 
   Strategy, M&A and Investor Relations 
 
                                        Tel: [phone] 
 
 Contacts for Analysts and Investors in UK, Ireland and Americas 
Hazel Chung, Senior Investor Relations  Tel: [phone] 
Manager 
Corvin Martens, Senior Investor         Tel: [phone] 
Relations Manager 
 
Contacts for Analysts and Investors in Continental Europe, 
Middle East and Asia 
Nicola Gehrt, Head of Investor          Tel: [phone] 
Relations 
Ina Klose, Senior Investor Relations    Tel: [phone] 
Manager 
Jessica Blinne, Junior Investor         Tel: [phone] 
Relations Manager 
 
ISIN:           DE000TUAG000 
Category Code:  TST 
TIDM:           TUI 
LEI Code:       529900SL2WSPV293B552 
OAM Categories: 3.1. Additional regulated information required to be 
                disclosed under the laws of a Member State 
Sequence No.:   21018 
EQS News ID:    878443 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

September 24, 2019 02:00 ET (06:00 GMT)