TUI Travel share price: Company supports Russian JV

on Oct 16, 2014
Updated: Oct 21, 2019
Listen, Thursday, October 16: TUI Travel (LON:TT) has agreed to provide new investment for its Russian joint venture to help ease the impact of challenging trading conditions.

The British tour operator said in a statement yesterday that it had entered into arrangements to invest up to £15.3 million and provide a new guarantee of £3 million for its TUI Russia & CIS joint venture with S-Group. Existing guarantees and shareholder loans would be renewed, the firm added.
“Given the ongoing challenging trading environment for tour operators located in the Russian and Ukrainian source markets the above arrangements are prudent as we enter into the off-peak Winter period,” TUI Travel stated.

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Earlier this month, the firm said it was cutting the number of holidays it offers to Russian customers by 30 percent after the devaluation of the rouble prevented it from raising prices. It also said it had made a provision of £27 million in the fourth quarter against loans made by its Russian venture.
“The Russian business is currently loss making. The £27 million was from the devaluation of the Russian ruble and our inability to raise prices against that backdrop, which has put pressure on the margins. We are taking a cautious view for winter, where we are reducing capacity. We will then assess our programme for next summer,” TUI CEO Peter Long said.

TUI Travel, which owns Thomson and First Choice, holds 49 percent of the Russia & CIS joint venture, with S-Group holding 51 percent. The venture was launched in 2009.

S-Group is wholly-owned and controlled by Russian businessman, Alexey Mordashov, who owns approximately 25 percent of TUI AG, TUI Travel’s German parent, with which TUI Travel is in the process of merging to create the world’s biggest leisure and tourism group ( ).

**Analysts on TUI Travel share price**
TUI Travel’s stock rose 0.76 percent yesterday, closing at 333.02p.
Of the eight analysts projecting 12 month price targets for TUI Travel for the Financial Times, the median target is 459.50p, with a high estimate of 510.00p and a low of 395.00p.
According to the FT, as of 13 October 2014 the consensus forecast amongst 27 polled investment analysts covering the FTSE 100-listed tour operator has it that the company will outperform the market.
**As of Wednesday, October 15, buy TUI Travel shares at 330.10p.**
**As of Wednesday, October 15, sell TUI Travel shares at 329.80p.**


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