The First Choice holidays and TUIfly airline owner is being lifted by a 0.3% rise in first half sales at EasyJet and an increase in the dividend from 40% to 50% of annual earnings.
The market’s confidence in TUI has also been boosted by a positive note from Deutsche Bank, which reckons the group will enjoy a strong summer.
TUI quickly changed its capacity mix after the terrorist attacks in Turkey, so is well-placed to benefit from visitors returning to ‘safer’ European destinations like Spain.
Deutsche Bank says TUI’s model is becoming simpler and the market will soon realise it’s really three businesses – a hotelier, a cruise liner and a tour operator – rather than just a tour operator.
Hoteliers and cruise liners tend to trade at premium multiples to tour operators, so unlocking the two businesses could enhance shareholder value.
TUI recently sold its Hotelbeds business for €1.2 billion in a deal that is expected to complete by the end of September. The funds will be used to invest in further growth, but analysts reckon a cash return is also on the cards.