TUI is ready to resume its travel activities in Germany and Europe soon. Just under two months, after almost all business areas had to be shut down due to the global travel ban, the tourism group is prepared to resume operations.
The first TUI hotels on Sylt and in Mecklenburg-Western Pomerania will open their doors to guests in the coming days. TUI hotels and clubs are also ready to receive holidaymakers in European destinations. A 10-point catalogue for increased hygiene and protective measures is currently being implemented worldwide in the Group’s hotels, which offers guests the greatest possible security.
Fritz Joussen, CEO of TUI Group, said:
“The safety and well-being of our guests and employees around the world remain a top priority. Summer holidays in Europe can now be gradually made possible again – responsibly and with clear rules.
Organized travel offers great advantages right now: with the TUI trust mark, we offer security, on-site support and guarantee the return journey home in special situations. Together with the destinations and our partners, we have developed extensive measures to protect our guests. The demand for vacations is still very high. People want to travel. Our integrated business model allows us to start our travel activities as soon as possible. The season starts later, but it could take longer”.
Strong development before the pandemic broke out
The Group had to suspend its operational travel activities due to COVID-19 and the associated worldwide travel bans in mid-March, before the end of the first six months of the 2020 financial year.
Up to this point, the world’s leading tourism group had been on track: In the first five months of the financial year, sales increased by six percent to 6.0 billion euros. Operating adjusted EBIT was EUR 240 million, which was an improvement of 21 percent compared to the same period in the previous year.
Fritz Joussen added: “We were economically very successful before the crisis and will continue to be after the crisis. We have a functioning and successful business model and over 21 million loyal customers who trust our strong brand”.
Bridging loan ensures liquidity
Immediately after TUI was forced to largely discontinue business as a result of global travel restrictions, the group decided to apply for a KfW bridging loan of EUR 1.8 billion. This is intended to cushion the unprecedented effects of the pandemic until normal business operations can be resumed. The German government approved the loan on March 27.
On April 8, the banks, which made TUI’s existing credit line of EUR 1.75 billion (“Revolving Credit Facility”) available, also approved the contractual integration of the new loan. The quick action of the TUI Executive Board thus made it possible to secure additional liquidity at short notice.
From 10 May the Group has a credit line of approximately 2.1 billion EUR.
Global realignment accelerates transformation
The received loans have to be repaid in a short period of time and the high level of debt has to be reduced quickly. The Group is now implementing a global program with extensive cost-cutting measures so that the strong operational development can continue even in a market that is weakened globally after the pandemic. This will further accelerate the transformation to a digital platform company that has already been initiated.
Fritz Joussen said: “TUI should emerge stronger from the crisis. But it will be a different TUI and a different market environment than before the pandemic. This requires cuts: in investments, in costs, in our size and in our presence all over the world. We have to be leaner than before, more efficient, faster and more digital. We will implement our “Asset right” strategy, which was launched in 2019, in an even more targeted and faster manner.
We are becoming more digital at all levels – in particular, the expansion of digital platforms in the new markets and for our activities in the holiday regions is being accelerated. We want to permanently reduce our overhead costs by 30 percent across the entire Group. Worldwide, this will affect around 8,000 jobs that we do not fill or cut. So that we can find our way back to the successful development of the past few years even after the crisis, we must now implement the realignment quickly”.
Outlook: forecast for full year not yet possible
On March 15, the Executive Board withdrew the forecast made for full year 2020. Due to the ongoing pandemic and the continuing worldwide travel restrictions, the Management Board also refrains from making a new forecast for the 2020 financial year under the current circumstances. The summer program 2020 is currently still 35 percent booked.
In a list the CEO of the worldwide known tour operator saidQ
- CEO Fritz Joussen: “People want to travel. Europe must now gradually open up. Summer vacation is responsible and possible with clear rules. We will reinvent vacation 2020. ”
- TUI Hotels ready in Germany and Europe. Increased hygiene and protective measures for all of the Group’s tourism activities.
- Strong start to the 2020 financial year before the pandemic: Sales grew by 6 percent to 6.0 billion euros in the first five months. Operatively adjusted EBIT after five months +21 percent to EUR -240 million
- First bookings for summer 2021 + 114 percent
- Utilization of TUI Cruises 2021 at normal level
- Overhead costs are to be reduced across the group by a total of 30 percent
- Available cash and cash equivalents (as of May 10, 2020): 2.1 billion euros