Tui lost £1bn during coronavirus shutdown but remains optimistic

Simon Calder
·3-min read
Tui remains optimistic despite loss: Getty
Tui remains optimistic despite loss: Getty

Europe’s biggest holiday company lost €1.1bn (£1bn) during April, May and June as the coronavirus pandemic took hold worldwide and put an end to almost all tourism.

But Tui says it has “successfully resumed its travel activities” in all markets – including the UK.

Reporting its third-quarter results, the Anglo-German travel group said its financial performance had met its own expectations.

Between July and September it hopes to achieve “cash break-even”, with 57 per cent of its summer capacity sold. The group has sold 1.7 million new bookings since it resumed travel activities in mid-June, with a pilot programme from Germany to the Spanish island of Mallorca.

Tui calls its advance bookings for summer 2021 “very promising”. They are currently 145 per cent ahead of the same point a year ago – but much of the demand comprises travellers who have postponed 2020 trips and are taking advantage of incentives to re-book.

The group says it has significantly reduced costs and is implementing “global realignment” – reducing the scale of its operations.

The chief executive, Fritz Joussen, said: “Our integrated business model is proving its worth, even in the crisis.

“The implementation of our hygiene and safety concepts and the relaunch of the business could be implemented in the flight, hotel, ship and destination segments from a single source.

“This has given our guests a high level of security.

“We also introduced massive cost reductions early and implemented them quickly and consistently.”

Mr Joussen said the firm is prepared in case a second wave of infections hits Europe.

“We are prepared if the pandemic again has a significant impact on tourism,” he said.

Tui has said it will close 166 of its UK high street travel agencies, representing 30 per cent of the total. Many staff will be redeployed as homeworkers.

The group will also benefit from a lifeline from the US plane manufacturer Boeing over Tui’s order for 737 Max aircraft. The plane is currently grounded worldwide following two fatal accidents.

The company says: “The agreement will compensate a large part of the damage incurred over the next two years and postpone the delivery of new aircraft until the coming years.

“This will relieve the balance sheet on the one hand and at the same time allow TUI to plan its fleet more flexibly in times of the pandemic.”

Separately, the global coach operator National Express says it had made an excellent start to 2020 before an “unprecedented and immediate drop in passenger demand of 80 per cent”.

But Dean Finch, the group’s chief executive, said: “We remain fundamentally positive about the future.

“When we do emerge out of the pandemic the world will be confronted with the need to power an economic recovery with high-quality, cleaner and greener public transport at its heart. The alternative is inefficient, congested towns and cities with dirty air.”

The firm said 12 of its staff had died as a result of Covid-19.

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