TUI AG chief executive officer Michael Frenzel said he expects shipping revenue to recover and declined to give a profit forecast until regulators approve the company's takeover of First Choice Holidays plc.
TUI, Europe's biggest travel company and owner of the Hapag-Lloyd shipping line, will keep reducing debt and expects to save 150 million euros (S$309 million) over three years by combining with First Choice, according to the text of a speech Mr Frenzel delivered at the company's annual shareholder meeting.
Hanover-based TUI last week reported a wider first-quarter loss as a glut of new ships drove freight rates down and expenses to promote a new airline rose. The company is combining its tourism assets with First Choice to fend off Web travel agents and discount airlines.
'The first quarter was the low for freight rates,' Mr Frenzel said. 'We expect to see recovery signs in the second quarter. The result in tourism will strongly depend on when the First Choice merger is approved.' Mr Frenzel said TUI will cut 250 million euros' worth of costs by 2008. He added that he does not expect any 'danger' of hedge funds trying to take over the company.
The shares have still jumped almost 40 per cent this year, lifted by speculation that the billionaire Oetker or Herz families may bid for TUI to bolster their own shipping assets.
Speculation Mr Frenzel will quit has also boosted the shares. The CEO denied the company will sell its shipping business, according to a report on Tuesday in Handelsblatt.
'I don't think they will be interested in selling shipping now because of the bad performance last year,' Martina Noss, an analyst at Norddeutsche Landesbank in Hanover, said before today's meeting. 'They will wait, turn around the business and get a better price.' She rates TUI shares 'hold', citing prospects for improving shipping rates and the ongoing takeover speculation.
TUI, Europe's biggest travel company and owner of the Hapag-Lloyd shipping line, will keep reducing debt and expects to save 150 million euros (S$309 million) over three years by combining with First Choice, according to the text of a speech Mr Frenzel delivered at the company's annual shareholder meeting.
Hanover-based TUI last week reported a wider first-quarter loss as a glut of new ships drove freight rates down and expenses to promote a new airline rose. The company is combining its tourism assets with First Choice to fend off Web travel agents and discount airlines.
'The first quarter was the low for freight rates,' Mr Frenzel said. 'We expect to see recovery signs in the second quarter. The result in tourism will strongly depend on when the First Choice merger is approved.' Mr Frenzel said TUI will cut 250 million euros' worth of costs by 2008. He added that he does not expect any 'danger' of hedge funds trying to take over the company.
The shares have still jumped almost 40 per cent this year, lifted by speculation that the billionaire Oetker or Herz families may bid for TUI to bolster their own shipping assets.
Speculation Mr Frenzel will quit has also boosted the shares. The CEO denied the company will sell its shipping business, according to a report on Tuesday in Handelsblatt.
'I don't think they will be interested in selling shipping now because of the bad performance last year,' Martina Noss, an analyst at Norddeutsche Landesbank in Hanover, said before today's meeting. 'They will wait, turn around the business and get a better price.' She rates TUI shares 'hold', citing prospects for improving shipping rates and the ongoing takeover speculation.