Tui, Europe’s largest tour operator, has recently announced plans to delist from the London Stock Exchange (LSE) and move its stock exchange listing to Frankfurt. This decision comes after a series of discussions with shareholders questioning whether the current dual listing in London and Frankfurt is optimal and advantageous for the company.
The move is seen as a strategic one, aimed at centralising liquidity and providing a clearer investment profile under a single listing.
Tui’s decision to consider a “Prime Standard” listing in Frankfurt, with inclusion on the MDAX index, could potentially enhance the company’s equity profile and create efficiencies, as well as reduce costs.
The shift to Germany could also yield potential benefits to EU airline ownership and control requirements. This is a significant factor for Tui, as airlines owned and controlled by EU entities benefit from being part of the single market for aviation.
Impact for the London Stock Exchange
Tui’s decision to delist from the LSE is not without its critics, however.
Some view it as a reflection of the LSE’s inability to provide an effective capital raising and trading market, especially for smaller and growing companies.
While Tui’s departure from the London Stock Exchange may be seen as a setback for the UK market, it is important to note that the LSE still boasts a significant number of listed firms. The loss of Tui’s £3.2 billion market value is unfortunate but not terminal for a market with a valuation well above £2 trillion.
Tui’s management has defended the move, stating that it aligns with the company’s ownership and current liquidity, and delivers benefits to all shareholders.
A growing trend
There has been a notable liquidity migration from the UK to German stock markets over the past four years.
This shift has been particularly evident since the merger of the British and German Tui businesses in 2014.
Tui similarly aims to simplify its stock market listing structure, taking advantage of the potential benefits that an inclusion in the MDAX index on the Frankfurt Stock Exchange could bring.
The move to Frankfurt is also seen as an opportunity to centralise liquidity, which would provide a clearer investment profile for Tui. The company believes that this strategic move could potentially enhance its equity profile, creating efficiencies, and reducing costs.
Financial performance and future outlook
The company’s exit from the UK market comes at a time when it has reported a substantial return to profit in its most recent financial year. This positive performance was supported by continued growth in the fourth quarter across Tui’s Holiday Experiences segments and operational improvements in its Markets & Airlines division.
Tui’s reported earnings before interest and tax more than tripled, and earnings per share went from a negative 0.45 to 0.74 in a year. The company also expects to see a strong year ahead with solid winter and summer bookings, forecasting that revenues would grow by 10% year-on-year and underlying profits to rise by a quarter.
Tui acknowledges the current macroeconomic and geopolitical uncertainties, particularly in the Middle East, but remains optimistic about overall customer demand and the resilience of its business.
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