German travel giant deals blow to LSE as board recommends delisting from London 

The board of travel group Tui has delivered a setback to the London Stock Exchange by suggesting the cancellation of its UK listing, as per a report by the Financial Times on Thursday. 

Tui, currently listed in both London and Frankfurt, expressed concerns last month, saying shareholders had questioned whether the group’s dual-listing structure was “optimal and advantageous”.  

In a Thursday statement, the tour operator noted a shift in share liquidity from London to Frankfurt over recent years: 

“Around 77 per cent of share transactions are conducted directly through the German share register and less than a quarter of trading in Tui shares is carried out in the form of UK depositary interests”. 

The proposed cancellation of the UK listing is set to be voted on by shareholders at the upcoming annual meeting next month. Approval from 75% of shareholders would be required for such a move. The company has previously highlighted potential advantages of transitioning to a single listing, including a more prominent position on a Frankfurt index and cost savings. 

At the time of writing, the Tui share price on the LSE was down close to 0.6%, trading at 604.00p. The company’s stock has fallen by over 20% over the past year, although it has shown close to 40% of growth in the past three months. 

Tui Group delisting: February AGM vote to decide fate of tour operator’s LSE shares 

The board’s recommendation builds on earlier news of Tui’s potential delisting from the London Stock Exchange, initially reported by the Financial Times’ Oliver Barnes and Olaf Storbeck on December 6 last year.  

The company has a dual listing since Tui Group was formed in 2014 following a merger between UK tour operator Tui Travel and its German parent company Tui AG. 

The London listing market continues to face challenges, with companies opting for New York listings or shifting to Wall Street in pursuit of higher valuations and increased capital.  

Building materials group CRH, one of the biggest companies on the FTSE 100 at the time, revealed its decision to shift its primary listing to the NYSE in the U.S. in March last year. The move followed in the footsteps of Ferguson, a UK-based plumbing equipment supplier that made a similar transition in 2022. 

Cambridge-based chip designer Arm Holdings, one of the UK's noteworthy global tech success stories, also opted to bypass London and chose to go public on the Nasdaq in New York in September 2023. The IPO marked one of the most significant listings in recent years. 

Tui has noted that a potential listing change could bring "benefits to European Union airline ownership and control requirements," as airlines need to be owned and controlled by EU entities in order to benefit from being part of single market for aviation. 
 
Sebastian Ebel, Tui Group’s chief executive, told the FT last December that there was “no political background” to the review, adding:

“It’s just that it could make the structure easier. [The UK’s outbound tourism market] is the most important market for us and therefore there is the full focus of the potential improvements in the business here”. 

Multiple analysts stressed the move made sense from a financial perspective. Hansjörg Pack, a portfolio manager at German asset management company DWS, which has a 3% stake in Tui, pointed to the expense of two listings and the splintering of liquidity in the company’s shares:

“With a market capitalisation of around €3.5bn, a dual listing just does not make any sense”. 

Bernstein analyst Richard Clarke said the dual listing was a “quirk of history”, adding: 

“If you were creating Tui from scratch, there’s no way you would list it on two exchanges”. 

Tui growth projections: Tui Group sees 10% revenue growth in 2024 

News of the LSE delisting have coincided with Tui's optimistic projections of substantial growth in revenues and profits for 2024, signaling the ongoing resilience of the travel industry post-pandemic, despite sticky inflation and high interest rates. 

The tour operator anticipates a minimum 10% increase in group revenues in 2024 from €20.7 billion in the 12 months ending September 2023. It also forecasted a minimum 25% growth in underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 — up from €977 million in 2023.