Tui bids auf wiedersehen to London

Shareholders of Tui voted by a large majority to leave the London Stock Exchange and opt for a single listing on the German Stock Exchange.

The travel company Tui Group’s shareholders at its annual meeting in Hanover voted with 98.35 percent, which is far more than the required 75%, to delist from London and retain the Frankfurt quote. This move represents a new blow for London.

The announcement came the same day that Europe’s largest travel company announced record-breaking first-quarter revenue and earnings.

It was no surprise that the outcome of the vote was as expected, since the Tui board had strongly backed the move. Pirc and ISS were two important shareholder advisory groups who also supported the decision. ISS noted that 77 percent of Tui shares are listed in Germany, and only 10 percent in London.

Tui has joined a growing number of companies who have decided to downgrade or drop their London listings and instead list on rival exchanges. Some have attributed the London market’s lack of liquidity to this, while others have cited higher valuations in New York. Travel company cited the desire for a simpler ownership structure, as it targets trading on the premier standard segment of Frankfurt exchange and inclusion in the MDAX 50.

Tui, Europe’s largest travel operator, has more than 400 hotels and 130 aircraft, as well as 16 cruise ships. The company employs about 65,000 people, and its value is approximately €3.3 billion. The London-listed company was founded in 2014, following a series of mergers, including those of Thomson Travel , First Choice and Thomson Travel .

Tui Group, in a first-quarter update that surpassed forecasts, said people continue to “prioritise holidays”. Revenues for the first three-month period were up 15% to €4.3 billion. The underlying operating result was positive for the first time. The underlying profit was “significantly” improved by €159m year-on year. This is the first time that it has been positive, with €6m, as opposed to a loss €153m at this time last.

The first quarter of this year saw a 3 percent increase in bookings by Tui for the UK’s summer season.

Tui reported that despite a “persistently challenging market” it was able to benefit from the “sustained travel demand with higher rates and prices”.

In the first quarter, the company reported that it had transported 3.5 million tourists, a 6 percent increase from the 3.3 million carried in the same period of last year. The company cited a positive booking trend, citing both an increase of 8 percent in winter and summer bookings. Total bookings combined for winter and summer have risen to 9.4 million from 8.7 millions last year. The average selling price for winter and summer was up by 4 percent.

Bookings for the UK’s summer programme this year are up 3 percent in the first quarter. 41% of the program has been sold.

Mathias Kiep is Tui’s Chief Financial Officer. He said that the company expects to reach 20 million customers this year. This will be a rise from 19 million in last year.

Sebastian Ebel, CEO, stated: “We’re on track. We are gaining clients and growing. We are accelerating our transformation quarter-by-quarter. “We have set goals which we consistently implement.”

He added that Tui was aiming for revenue growth of 10 percent and an operating profit increase of 25 percent.

In the three-month period ending December, the group’s Hotels and Resorts division increased its underlying profit to €90.7 millions on the backs of an occupancy increase of three percentage points at 78 percent and a room rate increase of 4.9 percent to €90. Both cruises and experiences grew as well.

Tour operating’s losses for the season were cut in half to €95.7m, thanks to higher average prices and improved operational performance.

Canary Islands and Egypt are popular winter destinations. All medium- and short-haul destinations are in higher demand than last year. Spain, Greece, and Turkey remain the top summer destinations.

Ebel, 60 years old, stated that although deliveries of Boeing Max 737-10s are expected to be delayed Max 737-8 aircraft on order should come on time. He added that some leasing agreements had been extended to guarantee capacity.

The stock fell by 1p or 0.2 percent to 578 1/2p after an initial boost for Tui shares quoted in London.

The boss of a City stockbroker cried “this just shows what a backwater the stock market has become” when Tui, Europe’s largest tour operator announced last year that they were considering delisting.

The Anglo-German Company’s shareholders approved by a large majority the decision to drop its UK listing and replace it with a single Frankfurt listing.

Tui’s biggest customers are still British, but less than one-quarter of the company’s shares were traded in London. The Hanover-based firm has been dual listed in London since 2014.

The FTSE 250’s decision comes amid a period of concern over a number of companies that prefer other international exchanges to London.

Arm is the designer of chips. Its shares have risen since it chose to list on the Nasdaq for $52 billion.

Last month Flutter (the owner of Paddy Power) announced that it would move its primary listing from London to New York. This decision is subject to shareholder approval in May.

The LSE bosses on Paternoster Square, as well as the Westminster ministers who are trying to restore London’s image, have not lost hope.

Tui has decided to “follow the suggestions of our investors”, but other multinationals, with different motivations, have chosen to unify their operations in London in recent years.

Unilever, anglo-dutch consumer goods group, unified its structure in the UK by 2020, two year after it abandoned plans to consolidate their headquarters in Rotterdam due to a shareholder revolt.

In 2018, Relx, formerly known as Reed Elsevier and a group that specializes in information and analytics, simplified its two-tiered structure in London.

Shell, another Anglo-Dutch firm, will vote in 2021 to eliminate its dual share structure, and to move its headquarters from The Hague to London.