Shares in Tui closed yesterday's trading nearly 15% higher as Europe's biggest package holiday operator reported its first full year of profits since 2019.
The company - which along with others in the sector has endured the turbulence of travel restrictions, state bailouts and recapitalisations - more than doubled its operating profits this past year as the sector has enjoyed soaring demand in a post-pandemic rebound. Its shares surged by 14.8% to finish yesterday's session in London 76p higher at 588p.
However, Tui also raised the prospect that its time as a constituent of the FTSE 250 could be limited as it is considering ditching its London Stock Exchange listing in favour of Frankfurt.
READ MORE: Tough times for UK equity markets as Tui mulls taking flight
The Hanover-headquartered group said there has been a "notable liquidity migration" since the merger of its German and UK businesses in 2014 which has gained additional momentum during the past four years. In light of this, a single German listing on Frankfurt's MDax - the index directly below the flagship Dax - would better reflect its ownership and trading patterns.
Tui's dual London and Frankfurt listing resulted from the combination of Germany's Tui with Britain's First Choice Holidays in 2007. Chief financial officer Mathias Kiep said more than three-quarters of the company's shares are held by German investors and the same proportion of trading in its stock is in Frankfurt.
Tui said it could put a proposal to leave London to shareholders at its annual meeting in February. This would required 75% approval from shareholders to go ahead.
“The executive board’s focus is to provide an attractive, long-term listing for Tui AG which aligns with its ownership and current liquidity and delivers benefits to all shareholders,” the company said.
READ MORE: Rhodes wildfires cost Tui €25m as 8,000 customers evacuated
“Potential advantages of simplification of the listing structures and an inclusion in the MDax are the centralisation of liquidity, providing a clearer investment profile under a single listing, potential benefits to European Union airline ownership and control requirements, potentially enhancing Tui AG’s equity profile with an expected prominent position in the MDax50 and creating efficiencies as well as reducing costs.”
Operating profit in the coming year is expected to jump by 25% after it more than doubled during the 12 months to the end of September on strong demand for holidays, cruises and hotel stays.
Passenger numbers in the fourth quarter rose by 200,000 to 7.8 million with an average load factor of 92%, up by one percentage point on the fourth quarter of the previous year. The company said it expects a strong performance in the coming year with solid winter and summer bookings likely, though it has also noted a "temporary slight slowing" in demand for trips to Egypt due to the Israel-Hamas conflict.
War in the Middle East and the threat of recession prompted some analysts to warn that profits may have peaked, but chief executive Sebastian Ebel said he expected bookings to Egypt to return to growth after Christmas as confidence returns and customers seek what is a value winter sun destination.
READ MORE: Tui dividend payments remain well off in the horizon
Despite the economic and geopolitical uncertainties, Tui is predicting that operating profit will grow by at least 25% in the coming financial year on revenue at least 10% higher.
Underlying profits hit €977 million (£836m) during the year to 30 September, more than double 2022’s €409m. Full-year revenues also surged to €20.6 billion versus €16.5bn previously.
While the company did not have to contend with Covid-related disruptions, it did face challenges during the past year.
In July it was forced to evacuate 8,000 of its customers from Rhodes as wildfires ravaged parts of the Greek island, wiping €25m (£21.6m) off Tui's bottom line.
Costs included the price of cancelling holidays, compensating customers, and flying them home. It came after the group returned to profitability in the key April to June period for the first time since before the Covid pandemic.
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