TCG - TUI with weak H119

All,

As expected, the TUI reporting this morning reveals a weak H1 (October - March). Rad-through for Thomas Cook:

1) Knock-on from Summer 2018 heatwave. Consumers had had enough sun for the year and decided to skip the late October/November sun holidays. This should play a role for TCG too.

2) Overcapacity in Spain as consumers shift to Turkey and Eastern Med. This effect could be stronger for Tui, as TCG have less destination capacity. 

3) Brexit uncertainty… Applies to TCG.

4) The Nordics have had a particularly strong H118 last year. Applies to TCG.

5) Boeing 737 MAX grounding. Does not apply to TCG, but cannot be a major factor in sales.

TUI summer bookings are down 3% points from 62% last year to 59%  (capacity is flat YoY) with a 1% (constant currency) price rise not compensating for cost inflation due to competitive environment. All margins are lower YoY in all markets on weaker demand and in particular Spain oversupply.

We regard the news as confirmation of our thesis and Tomas will decide if any of it warrants a change to our assumptions.

Call is at 9am.

Wolfgang