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Travel operator TUI says it's 'resilient' in wake of Thomas Cook collapse

Edmund Heaphy
Finance and news reporter
A TUI plane takes off from the airport in Palma de Mallorca, Spain. Photo: Reuters/Paul Hanna

Travel operator TUI (TUI.L) said on Tuesday that its business model was “resilient” even after its rival Thomas Cook collapsed.

Though the company noted that there was a “challenging market environment,” TUI said in a trading update that it expected its full-year results, which will be reported in December, to be in line with previous forecasts.

Shares in the FTSE 100 travel operator, which surged on Monday by as much as 9.2%, rose slightly on Tuesday.

The company, which expects its full-year underlying earnings to fall by 26% to around €1.2bn (£1bn), said that the challenges would continue.

Shares in TUI surged on Monday after the collapse of Thomas Cook. Chart: Yahoo Finance UK

But it said that it believed its “vertically integrated business model proves to be resilient,” and noted that its holiday experiences business continued to deliver strong results.

“This coming year will see us focus on becoming more cost competitive, selectively grow our holiday experiences business and scale up our digital platforms in new markets and destination experiences,” the company said.

“Delivering on our four strategic initiatives will ensure we remain well-positioned to benefit in this changing environment and enable sustained growth going forward.”

TUI’s major rival Thomas Cook (TCG.Lcollapsed on Monday after it failed to secure the funding it needed to continue trading, leaving more than 150,000 holidaymakers stranded abroad.

READ MORE: Only 13 days to go to bring back 135,000 stranded Thomas Cook passengers

Hundreds of its flights have been cancelled, disrupting the travel plans of tens of thousands of people and triggering the largest-ever peacetime repatriation in UK history.

TUI said in its trading update that it was reviewing the impact of the collapse on its own business, and said it was planning to offer replacement flights for TUI customers who were booked on Thomas Cook flights.

TUI also said that its markets and airlines business faced a number of external challenges, pointing to the grounding of the Boeing 737 MAX aircraft, overcapacity in the market, and “continued Brexit uncertainty.”

It nevertheless said that the summer 2019 season was closing out “in line with expectations,” and reiterated forecasts it had issued in a trading announcement in March.