Holiday group Tui has revealed a £63 million hit from the recent travel chaos that crippled airports and led to flight cancellations and lengthy delays. The firm said its customers were affected by about 200 cancelled flights in May and June, mainly relating to departures from Manchester Airport amid staff shortages.
"Excluding these additional costs, underlying group earnings before tax and interest would be €48 million euros, the first profitable quarter since the start of the pandemic," said Tui. The firm remained loss-making in the three months to the end of June due to the costs of the airport disruption, reporting underlying pre-tax losses of 27 million euros (£23 million) in its third quarter.
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It comes after airports such as Heathrow and Gatwick told airlines to cut their flight schedules following scenes of chaos as staff shortages left them struggling to cope with the sudden ramping up of demand for overseas holidays. Holidaymakers have suffered flight delays and cancellations along with lengthy queues as airports have struggled with baggage handling, air traffic control and security.
Tui's chief financial officer and incoming boss, Sebastian Ebel, said he will hold 'intensive' talks with airports and airlines, as well as resorts, as he looks to improve the customer experience. Mr Ebel, who takes over as chief executive at the end of next month when Fritz Joussen steps down, said the 'entire European airline sector continues to face challenges'.
He added: "We are consistently tackling the operational challenges of the restart. We want to offer our guests the usual high Tui standards of quality and service.
"The topics of quality and customer experience are therefore at the top of my agenda. To this end, I will engage in intensive dialogues with the destinations, retail, but also with system partners such as airports and airlines."
While costs of the airport troubles kept the group in the red over its third quarter, the result still marked a big improvement on the 669.8 million euro (£566 million) underlying loss suffered a year earlier thanks to the recent rebound in travel demand. Tui said that, with the airport disruption impact stripped out, it would have reported underlying earnings of 48 million euros (£41 million) in the three months to June 30 – its first quarterly profit since the pandemic struck.
It expects to bounce back close to pre-pandemic levels of demand overall this summer, operating 82% of its holiday programme in its third quarter, with customers at 84% of 2019 levels. The group also expects to see significant underlying earnings for the full year.
But it warned that surging inflation due to the Ukraine war is affecting its costs due to rising fuel prices, while it said soaring energy bills could knock demand for holidays as consumers cut back.
A Manchester Airport spokesperson said: “We work closely with all our airlines to support them in operating their planned schedules and delivering their check-in and baggage handling services to an acceptable standard. Manchester Airport has not enforced flight cancellations on any carrier, but has supported individual airlines when they have taken the decision to reduce their schedules due to challenges they have faced in recovering from the pandemic.
"This was the case in May when TUI opted to cut six flights per day from its June schedule, due to resource challenges experienced by the airline and its appointed ground handler, Swissport. We understand the disruption that flight cancellations cause to passengers, which is why we have worked hard to avoid the need to reduce capacity at Manchester Airport, and have sought regular assurances from all of our partners regarding their operational capacity.”
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