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TUI posts €287m loss as Brexit uncertainty bites

Written by: Danielle Levy
Ongoing Brexit uncertainty, the heatwave last summer and the grounding of Boeing 737 Max aircrafts have taken their toll on travel agent TUI.

TUI saw losses widen from €23m to €287.2m (£249m) over the six months to the end of March 2019, which reflects the continued uncertainty created by Brexit and the knock-on effects of more Brits opting for ‘staycations’ following the summer 2018 heatwave.

The travel agent said the results also reflected the initial impact of the grounding of Boeing 737 Max aircrafts following two fatal crashes – the full effects are likely to be felt in the company’s full-year results later this year.

In light of these factors, sales rose by a meagre 1.7% to €6.7bn over the six-month period.

Meanwhile, bookings for this summer in TUI’s package holiday and airlines business are down 3% year-on-year, while the average selling price has increased by 1%. The company notes that this price increase is not enough to cover its rising costs.

Shares initially dropped 6.2% to £7.85 in early trading, but recovered to £8.05 by lunchtime.

Although the travel sector has come under pressure, Helal Miah, an investment research analyst at The Share Centre, suggests there could be selective opportunities for investors who are willing to take on risk.

“Given the share price declines, there are some attractive valuations in the sector with very good yields, including TUI at just over 7%, but this is maybe for the brave investors who are willing to wade through the many challenges that TUI and it peers will face.

“We continue to recommend the share as a ‘hold’ for investors willing to accept a medium level of risk,” he explained.

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