TUI shares drop 4% on FY21 loss: Should you go for a bargain buy?

Germany based travel and tourism major TUI Group’s (LON: TUI) shares dropped nearly 4 per cent after the group posted over EUR 2 billion in annual losses in its full-year results today.

TUI group’s full-year results

The group’s FY 2021 revenue dropped by 40 per cent to EUR 4.732 billion, from EUR 7.944 billion in the year before (on an adjusted basis).

However, TUI’s Q4 2021 revenue jumped to EUR 3.366 billion, up sharply from EUR 1.233 billion in Q4 2020 (adjusted basis). This jump was attributed to the success of vaccination programmes and due to the leisure travel sector rebound, especially in the summer season in continental Europe.

TUI’s FY 2021 loss before tax stood at EUR 2.462 billion, narrowing from a loss of EUR 3.203 billion in FY 2020 (adjusted basis).

The group’s Q4 2021 earnings before interest and tax (EBIT) was almost break-even, standing at a loss of EUR 97 million, which included EUR 60 million one-offs, delivered on lower volumes.

TUI AG’s (LON: TUI) share price performance

TUI’s shares were down by 3.72 per cent to GBX 209.40 on 8 December at 08:56 AM BST, while the FTSE 250 index was at 23,358.95, up by 0.52 per cent.

TUI is a part of the FTSE 250 index and was the second-biggest faller at the time of writing on the index.

Image source: Refinitiv

The company’s market cap stands at £3,529.84 million as of Wednesday.

Current trading

The group’s winter 2021/22 bookings were currently at 62 per cent of its bookings compared to pre-pandemic levels in winter 2018/19.

The group stated that before the recent news coverage of the Omicron variant, winter bookings had returned to their normalised levels, last seen in winter 2018/19.

The group’s Q1 2022 capacity is expected to move towards the lower end of its winter capacity plans to a range of about 60 to 80 per cent.

TUI has a pipeline of 2.2 million bookings for summer 2022, an increase of about 535 thousand bookings since its previous 3 October update.

This increase is due to a combination of re-bookings and new bookings, which further affirms that customers intend to travel and highlights the continuing appetite for a summer holiday.

The company expects that summer 2022 volumes will rebound near to normalised summer 2019 levels. TUI expects that the rebound will be aided by a mix of factors such as a better starting position and a travel environment helped by the ongoing success of vaccinations.