TUI relying on vaccinated Brits for much-needed summer recovery
LONDON (UK) – TUI Group, the world’s biggest holiday company, needs a summer recovery to relieve pressure on its strained finances and is banking on vaccinated Britons going abroad in the peak months despite tightening travel restrictions.
Germany-based TUI, which before the pandemic took 23 million people on holiday annually, has secured multiple bailouts from the German government to survive. It said it currently had 2.1 billion euros ($2.5 billion) of financial resources.
“That should be enough until summer, until the business takes off in summer,” Chief Executive Fritz Joussen told reporters on a call.
But there is still great uncertainty over travel for the peak holiday months this year. TUI said progress with Britain’s advanced vaccination programme would help demand.
Asked how long its cash could last and whether more state aid would be needed, Joussen said: “I would say we are in a very good position.”
Jefferies analysts said TUI had liquidity to last about seven months if no holidays were cancelled and it did not have make refunds.
In Britain, TUI’s biggest market with Germany, the government has told people not to book trips abroad for the summer, as the country tightens controls with quarantine hotels and more testing.
Britain’s latest measures are designed to fight new variants of the virus, against which vaccines may not work.
Joussen shrugged off the risk from new variants. “This time (summer) we have vaccination and good testing on top so I’m very confident,” he said.
TUI is planning to operate 80% of 2019’s capacity this summer, saying it already had 2.8 million bookings. In the COVID-19 hit summer of 2020, it operated about 25% of capacity.
The company has cut costs during the pandemic. It said that, for the three months to the end of December, its monthly cash outflow was 300 million euros, down from an expected 400 million to 450 million euros.
That resulted in an adjusted earnings before interest and tax (EBIT) loss for the quarter of 699 million euros.
TUI’s net debt has ballooned to 7.2 billion euros during the pandemic and needs to start repayments in 2022. Joussen said selling assets or raising new equity would help, echoing his comments in December.
“It’s very clear that the math says we need, let’s say 1.5 maybe 2 billion (euros),” he said, adding that this could be achieved through divestments and more equity.