TUI Share: Enthusiasm is limited!

At the tour operator TUI, the Corona pandemic is increasingly fading, despite constant warnings from experts not to take the problem lightly. On the other hand, this is noticeable in the company’s cruise ships. At the end of the current month, masks will be mandatory there and life will return to normal, which people are now familiar with from everyday life.

This move is not expected to have any significant impact on travel behaviour. However, the whole thing shouldn’t stand in the way of increased booking numbers, and so there are hopes that the group can finally experience a profitable major season again. In the past few weeks and months, the same officials have spoken repeatedly of rapid demand and a rebound again in the summer at a level that some investors might remember before the pandemic.

TUI reduces government debt

Elsewhere, too, TUI is working frantically to leave the Corona issue behind. Just this week, the company announced that it will reduce its national debt. The so-called “silent sharing 2” will be serviced by 671 million euros, and the credit limit at the KfW will be reduced again. This means that the country still owes billions of dollars less than the average. At least it’s going in the right direction.

Unfortunately, TUI has used a debt repayment tool that is likely unpopular with shareholders. With the capital increase, the group topped the existing cash and thus recently sent its shares in a sharp downward movement from which the bulls have not yet been able to recover.

TUI shares fell south by about 12 percent on Wednesday, and the bears followed again on Thursday with losses of 2.65 percent. This ultimately led to the paper dropping below the €2.50 level and putting away dreams of a breakout of the €3 level. Everything now depends more on the important summer business.

there is a lot to do

In the context of the pandemic, sales at TUI have slipped into a cliff and it is not yet possible to predict with certainty whether more normalcy can return this year. The number of bookings is only expected to be higher than in the past two years. However, there is plenty of room for improvement and with high inflation and other negative factors there are also arguments against really big jumps in sales.

year Revenue (in Euro)
2021 4.73 billion
2020 7.94 billion
2019 18.93 billion
2018 18.47 billion
2017 18.54 billion

To make matters worse, TUI has been in a consolidation phase in recent years, even independently of Corona, which has not simply disappeared due to the various crises today. However, the tour company has not yet announced specific numbers for the current year. In interviews, CEO Fritz Jossen only talked about making profits again with “remarkably positive adjusted earnings.”

There is no reason for euphoria

So far, it appears that very few investors share the confidence of the TUI chief, and with good reason. As mentioned earlier, the group was already in decline before Corona and over the 5 years, prices have fallen by about 65 percent so far. Until last year, which gave the term “bullish market” a whole new meaning, the stock was not able to recoup losses since the Corona crash in 2020. This speaks of a fundamentally negative attitude of stockbrokers to the title.

TUI was definitely in a special position as a travel group in 2021. Unlike many other sectors, there wasn’t much going on here and shareholders could only dream of a real comeback. But that alone cannot be used as an excuse for very manageable performance. After all, stock exchanges are still investing in the future and the corona was ultimately expected to have less or no significance at all.

Thus there is currently no reason to consider TUI stock a safe bet. On the contrary, the charting technique and the still-high debt burden speak an entirely different language. In addition, a sharp increase in the price of fuel and other energy sources is not likely to have a particularly positive effect on margins, which are already narrow in some cases.

loose money

TUI says vacationers will spend more money on their trips this year and that average booking time will outpace epidemic-free times. It remains to be seen if that will be enough to iron out the many negative factors. From an investor’s point of view, it is not recommended to blindly rely on them.

In addition, shareholders should always consider the possibility of raising capital. Whether it’s to pay off other debts or just to prevent bankruptcy, Corona should celebrate a sad return in the fall or even sooner. Against this background, the TUI stake can still be recommended only to speculative types of investors.

This speaks against the share of TUI

  • High debt burden
  • Return to profitability uncertain
  • Rising energy prices could affect margins
  • Destinations lost due to the Ukraine war, especially in the cruise sector
  • Due to the ban on Russian flights, expensive transfers must be accepted on long flights
  • The chart style is still clearly talking about a downtrend

Should TUI Investors Sell Immediately? Or is it worth starting?

How will TUI evolve now? Is the entry worthwhile, or should investors sell instead? Find out the answers to these questions and why you need to act now on your current TUI analysis.

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