As profit warnings excuses go, TUI Travel seems to have sought safety in numbers on Tuesday. Consider the RNS released by the travel group (emphasis ours):
Whilst our bookings to date are up 2% in the UK, the market has been particularly affected by the disruption caused by airspace closures, good weather and the uncertainty around the emergency budget, resulting in a later booking pattern which has adversely affected profitability…
Britain’s Chancellor George Osborne isn’t going to like that.
Europe’s largest travel firm blaming it on George — really? That would be compared to a weeks-long Icelandic volcanic eruption which affected 400,000 passengers and cost TUI Travel £105m. The IATA also warned about an economic mess at the time.
But since TUI has seen fit to blame even the mere uncertainty in advance of the UK’s emergency budget, this has set us wondering about what the budget actually went on to achieve — swingeing austerity cuts — is doing to the FTSE 100.
After all, TUI Travel isn’t a company that directly relies on public-sector spending or contracts, unlike such previous profit-warners as Cable & Wireless or Connaught — it’s simply a bog-standard, mid-cap cyclical firm.
That might lend some weight to Execution Noble’s argument that UK small and mid caps will bear austerity’s brunt.
Alternatively, given the Eyjafjallajökull factor in TUI’s statement, it may simply be that freak events are cropping up more on UK companies’ RNS. De La Rue’s oddly misprinted banknotes were a recent FT Alphaville favourite, while the UK baker Gregg’s was the latest victim of exploding wheat prices on Tuesday, with shares falling by 3.4 per cent.
Plus Connaught’s problems with public sector contracts actually concealed some truly mysterious accounting.
Ah well. At least TUI Travel was helping plenty of people get away for a break on Tuesday. Investors from its stock, that is:
Related links:
Britain reels as austerity cuts begin – NYT
Austerity Britain and equities – FT Alphaville