TUI share price outperforms despite bigger half-year loss

Shares in TUI Group (LON:TUI) have jumped in London this Wednesday, even as the blue-chip tour operator posted a bigger loss for the first half of its financial year. The company had previously warned of a hit to profits as a result of the grounding of Boeing’s 737 MAX planes.

As of 08:38 BST, TUI’s share price had added 0.79 percent to 811.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.11 percent lower at 7,233.66 points. The group’s shares have lost more than 53 percent of their value over the past year, as compared with about a six-percent fall in the Footsie.

TUI’s half-year losses widen

TUI announced in a statement this morning that its underlying EBITDA loss had widened to €300 million in the first half of its financial year, from €169.7 million in the prior-year period. The group’s revenue meanwhile rose 1.7 percent to €6.57 billion during the reported period.

The tour operator explained that its Markets & Airlines unit had been impacted by last year’s heatwave, overcapacities in Spain, Brexit uncertainty, as well as the impact of the 737 MAX grounding, which commenced in mid-March, and the later timing of Easter this year.

TUI meanwhile reiterated its outlook for profits, noting that it expects a one-off impact on underlying EBITA of €200 million assuming 737 MAX flight resumption latest by mid-July. The company, however, also flagged a further negative one-off effect if it does not become sufficiently certain in the course of May that flying the 737 MAX will resume by mid-July.

Analysts on tour operator

Barclays initiated coverage of the blue-chip group with  an ‘equal weight’ rating this week, trimming its target on the TUI share price from 1,200p to 900p. According to MarketBeat, the London-listed tour operator currently has a consensus ‘hold’ rating and an average valuation of  1,180.83p.