Tui shares could fall as more holidays cancelled ahead of Q3 earnings

Tui could see its recent share rebound stall ahead of its third quarter (Q3) results on Thursday 13 August, after it was forced to cancel more holidays and flights to Spain amid coronavirus fears.

‘Due to the updated travel advice from the UK Foreign Office advising against all but essential travel to all areas of Spain, TUI UK has now cancelled all holidays to Spain, including the Balearic Islands and Canary Islands, up to and including Sunday 16 August 2020,’ Tui said in a statement.

‘In light of the on-going uncertainty customers with holidays to Mainland Spain before Tuesday 1 September can amend their holiday for free or cancel and receive a full cash refund,’ the company added.

In March, Tui withdrew its full-year guidance due to the uncertainty and economic fallout from the coronavirus pandemic, which has acutely impacted companies operating within the travel industry.

The company also admitted that the Covid-19 crisis will have a ‘considerable impact’ on the development of the group’s earnings, with cost-saving measures only partly able to compensate for the negative effects of the viral outbreak.

Investors will be eager to see just how large of an impact when the company unveils its Q3 earnings later this week.

Tui is trading 6% higher on Tuesday at 370p per share at the time of publication, with the stock down 62% year-to-date.

Tui: technical analysis

The recovery in Tui shares from late May has fizzled out, as the price drops back towards 300p and gives back most of the gains, thanks to concerns about renewed lockdowns and limits on air travel, along with the UK government’s decision to quarantine travellers returning from Spain, according to Chris Beauchamp, chief market analyst at IG.

‘From a high of 600p, the price dropped back to 300p. Since the beginning of August, it has managed to rebound slightly, moving back towards 350p,’ he said. ‘However, it now faces trendline resistance from the May peak.’

‘If it can break above this then a more bullish view may develop, while a reversal below 340p likely suggests that another test of 280p/300p is in the offing,’ he added.

Tui signs deal for five new Boeing 737 Max aircraft

Earlier this month, the travel and tourism group signed a sale and leaseback agreement with BOC Aviation for five new Boeing 737 Max-8 aircraft.

The deal is valued at $226 million, with the FTSE 250 company expecting the first of the five aircraft to arrive in the Q1 of the 2021 financial year. The other four aircraft are due to be delivered in the summer of next year.

‘We expect the lease agreement with BOC Aviation, on standard commercial terms, to create a total lifetime lease obligation of around €223m to commence by the end of the 2021 financial year,’ Tui said in a statement.

‘We expect further sale and leaseback financing on our future deliveries beyond 2021, in line with our newly agreed deferred re-fleeting programme with Boeing,’ the company added.

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