LONDON (Reuters) - TUI said on Tuesday its underlying loss had widened in its first quarter, days after the tour operator slashed its full-year forecasts due to an unusually long and hot summer in northern Europe.
TUI’s underlying loss was 83.6 million euros (£73.3 million) in the three months to Dec. 31, widening from 36.7 million euros in the comparable period the previous year, and in line with the company’s expectations.
Chief Executive Fritz Joussen said that the group was taking a hit on margins in order to protect its market share in a tough operating environment for travel firms.
“Customers are buying, but they are buying at lower prices. That’s the reason why you see the margin degradation. It is all markets,” Joussen told reporters. “The market is challenging.”
On Wednesday, the travel group cut its profit forecast and warned that underlying earnings before interest, taxes and amortisation (EBITA) for the fiscal year ending Sept. 30 would be broadly flat from the 1.177 billion euros ($1.34 billion) it made in the 2018 fiscal year.
The company added it could no longer uphold its previous guidance for at least 10 percent annual growth in underlying EBITA at constant currencies during the three years to fiscal year 2020.
TUI’s shares have fallen almost 20 percent in the three trading sessions since the profit warning.
An unusually hot summer in Northern Europe in 2018 deterred many would-be holidaymakers from travelling, with rival Thomas Cook also feeling the effects and being forced into two profit warnings in two months late last year.
Joussen said that TUI was an “active observer” after Thomas Cook said it would listen to offers for its airline business last week, but said the two companies had not been in contact about a possible deal.
TUI also said that weakness in the British pound after the 2016 vote to leave the European Union was also having an impact on its performance.
Reporting by Alistair Smout; Editing by Shreejay Sinha and Louise Heavens