The term "last minute" is one of those anglicisms that are firmly anchored in German usage. It is used primarily in tourism. Here, the buzzword describes the possibility of booking a cheap trip at short notice. Looking ahead to the coming vacation months, the head of a major industry representative is likely to have just disillusioned many bargain hunters. "There will be no 'last-minute summer' in 2023, as there used to be," said TUI CEO Sebastian Ebel in an interview with "Bild am Sonntag." Rather, he expects the opposite: "Prices will be higher rather than cheaper shortly before departure, because hoteliers and airlines also know that a lot is still booked at short notice. Spontaneous bargains will be the absolute exception." At TUI, demand is exceptionally high in the first summer after the pandemic, he said. "Greece is the best booked," the group executive explained.
His statements fit into the general mood of optimism in the global tourism sector. Be it the monthly traffic figures from Zurich Airport and other airports, the latest quarterly reports from hotel groups and booking portals, or simply the Easter traffic jams at the Gotthard: the collective desire to travel is showing up in various places. Nevertheless, TUI - unlike many of its competitors - is having a hard time on the stock market. After a strong start to the year, the share turned south and continued its long-term downward trend. The relative weakness - the STOXX Europe 600 Travel & Leisure Index has gained almost a quarter so far this year - is likely to be directly related to TUI's extensive financing measures. In mid-April, the Hanover-based group completed another capital increase. In the process, it collected EUR 1.8 billion from investors.
Ten days later, TUI was able to say goodbye to a prominent backer. The travel group repaid the remaining state aid to the Federal Republic of Germany. When the Corona pandemic caused tourism to collapse in spring 2020, Berlin had saved the group from collapse with a total of EUR 4.3 billion. Four capital increases enabled TUI to repay the debt quickly. Naturally, these measures caused a veritable flood of shares and a corresponding dilution of existing shareholders. The CEO nevertheless stood up after the recent transfer to the Economic Stabilization Fund (WSF) and spoke of a very important day for the company. "TUI is strengthened and on course, now the focus is on the future, the focus is on profitable growth," Ebel made clear. Indeed, the Group's broad positioning makes it predestined to seize opportunities in the sector. With 16 cruise ships, around 400 hotels, a fleet of 130 vacation airlines and around 1200 travel agencies, TUI is a true vacation giant.
The start to the 2023 financial year (as of September 30, 2022) was successful: 3.3 million vacationers traveled with TUI from October to December 2022 - 1 million more than in the first quarter of the previous period. The number of customers thus reached 93% of the level of 2019, the year before the pandemic. With revenue growth of almost 60% to EUR 3.75 billion, TUI almost halved its operating loss (adjusted Ebit level) to EUR 153 million. Thanks to a strong summer business, TUI had posted a remarkable turnaround here last year (see chart). For the current period, management forecasts a significant improvement in adjusted EBIT. The markets will find out today, Wednesday, whether this outlook will continue to apply or whether the CEO will adjust it. TUI published its interim report for the second quarter of 2023 after this issue went to press.
Just in time for the earnings date, Leonteq launches new Softcallable Barrier Reverse Convertibles (BRCs) on Mid Cap. The yield enhancement product is available in CHF and EUR. In Swiss Franks, the guaranteed coupon amounts to 16% p.a.. The counterpart denominated in the single currency yields 200 basis points more per annum. The barrier is 49% of the initial level in each case. As long as the TUI share does not fall to or below this level, the respective maximum return is fixed. If the cushion is not sufficient, the partial protection expires. The investment would then be directly linked to the progress of the volatile underlying. Please also note the softcallable function. Leonteq can terminate the BRCs prematurely. If the issuer makes use of this option, investors would receive the full nominal and the pro-rata coupon.
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