New TUI CEO To Act On Under-performing Businesses
German travel and tourism group TUI's new CEO, stuck with a 22 percent stake in loss-making shipping group Hapag-Lloyd, said he would have little patience with under-performing businesses.
"I have always followed the strategy to work on the strengths of the company and not waste too much time trying to improve weaknesses," Friedrich Joussen said at TUI's annual shareholder meeting, at which he took over as chief executive.
"My patience ends where a division is not performing. Where there is weakness we need to act," he said.
TUI has long wanted to exit Hapag-Lloyd to focus on tourism, and has the option to either sell its stake to a third party or call for a flotation. Joussen said a sale would depend on market conditions.
Joussen, who joined TUI last year, will need to satisfy shareholder demands to lift the company's 5.6 percent operating margin. Cutting costs will likely be in his sights.
TUI owns 56.4 percent of its main earnings driver, British group TUI Travel - Europe's largest tour operator, giving it two headquarters, in Hanover and in London. Joussen said that arrangement was costly and a solution was badly needed.
TUI decided against making a bid for TUI Travel earlier this year, saying it was too costly.
That decision may be revisited after outgoing TUI CEO Michael Frenzel said he would step down as head of TUI Travel on March 25, six months earlier than initially planned.
Last week, TUI Travel reported first-quarter results, saying more Europeans were booking all-inclusive holidays to make the best use of dwindling incomes.