Omicron Stalls TUI Recovery

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Omicron Stalls TUI Recovery

By Catherine Reynolds 

Investing.com --  TUI Group (LON: TUIT ) shares were down 4.7% by mid-session in Europe as the emergence of the new Omicron variant stalled its vaccine-driven recovery from the pandemic as winter holiday bookings took a hit from the development. TUI posted end of year results showing that Winter 2021/22 bookings are 62% of winter 18/19 levels. Before the recent news coverage, they had been returning to normal levels, the travel group said.

“The increased media coverage of rising incident rates and the emergence of new Omicron variant has weakened this positive momentum, particularly for Winter," the group said in a release to the stock exchange.

The success of vaccination programmes and rebound of leisure travel had driven a recovery for TUI with fourth quarter revenues up €2.1 billion compared to Q4 2020. The fourth quarter saw the holiday group deliver its first positive quarterly EBITDA since the pandemic started, at 160 million euros.

If sentiment continues to be hit by the new Covid variant, winter season capacity is likely to be modified towards the lower end of assumptions of between 60% to 80%, TUI said. However, the group also forecast a bounce back in the summer 2022 season, where bookings have increased. The U.K., which books summer holidays earlier, is already 52% sold for May with total markets and airlines bookings for the key August holiday period up 17%. 

TUI said it expected that Summer 22 volumes would recover close to normalized Summer 19 levels, supported by the stronger starting position and a travel environment underpinned by the continued success of vaccination campaigns. The holiday giant forecast that world arrivals would show a strong increase in 2022 and return to normal in 2023 and 2024.

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