by Travel giant Tui is considering plans to delist from the London Stock Exchange, dealing a fresh blow to the City as ministers battle to revive its reputation as a financial hub.
Europe’s biggest travel operator said it was investigating the move after shareholders raised questions about whether its dual-listing structure across London and the Frankfurt Stock Exchange was “optimal and advantageous”.
Due to increased scrutiny from investors, Tui proposed a vote at its annual general meeting in February, which will decide whether the business should switch to a sole listing in Germany.
Tui has been listed on both stock exchanges since 2014 when UK-based Tui Travel, known for its travel agencies Thomson and First Choice, merged with its largest shareholder, Germany-based Tui AG.
This connection created one of the largest tourism businesses in the world, which included more than 400 hotels, 16 cruise ships, 1,200 travel agencies and five airlines.
The company’s potential exit from the Square Mile will prompt new concerns about its ability to retain and attract companies, particularly after a series of high-profile exits.
That includes building materials company CRH and plumbing equipment supplier Ferguson, which moved its listings to New York.
Ministers want to cut red tape to make London a more attractive place to list.
However, Tui bosses said there has been a significant shift in share ownership from the UK to Germany over the past four years.
Tui’s chief financial officer, Mathias Kiep, said around 75pc of Tui’s shares “are now held in Germany or in the German register”, adding: “There were comments during our roadshow when people asked me, why do you still have this listing structure? Why is the liquidity not pooled in one exchange? That would be better for us as investors and we would also encourage you to consider whether there is a better index.”
Tui dropped out of the FTSE 100 in early 2020 after the pandemic hit its shares. It is still trading around 80pc lower than it was in late 2019 despite rebounding travel demand.
On Wednesday, the company said it had reversed a profit in the latest financial year to the end of September after reporting higher revenue.
The group reported pre-tax earnings of €551.2m (£471.9m) for the year to September 30 against a loss of €145.9m in 2022.
Underlying earnings are expected to rise by at least 25% a year in the new financial year, with sales also expected to rise by another 10pc.
Mr Kiep said being solely based in Europe had advantages as it made operations easier after Brexit.
However, chief executive Sebastian Ebel emphasized that any departure from London is not a political decision: “It’s just that it could make the structure easier.”
He said British tourists were still “our most important market”.
The Tui brand has been a mainstay on many British high streets for many years, particularly through Thomson travel agents – which had a history dating back 50 years before the brand was phased out in 2015 as part of a push to rebrand unite under the shadow of Tui.
Tui’s complex dual-listed structure comes from the 2014 merger of Germany’s Tui AG and London-listed Tui Travel.
At the time, Tui AG held a majority stake in Tui Travel, having helped create the business through the merger of its travel arm and Britain’s First Choice.
Tui management is expected to consider the potential listing change in the coming weeks before a final decision is made in February.
If approved, the listing change could allow Tui to upgrade to a standard main listing on Frankfurt’s MDax index.
Ivor Jones, an analyst at Peel Hunt, said the change could be beneficial: “It will probably be more relevant to more investors if it becomes a member of the MDax index.”
However, he said it came at a time when there were growing concerns about the health of Britain’s stock market, where the number of listed companies was declining.
In a research note on Wednesday, Peel Hunt highlighted a series of issues that have hampered the City.
Charles Hall, head of research at the broker, said Britain did not have enough investment reserves to help listed companies grow.
He said this was because UK pension and insurance funds have been steadily withdrawing from British shares.
In 1992, UK pension funds held 32.4pc of British shares, according to the Office for National Statistics. In 2022, this percentage reached an all-time low of just 1.6pc.
Mr Hall said: “The investment drain in recent years means there is a dearth of funds available to support IPOs (there is only one notable one so far this year) and to support growth companies that are already listed.”
The result is lower company valuations, he said, meaning British companies are more likely to be bought out: “This has made the UK a happy hunting ground for both corporate and financial buyers.”
