TUI reports huge loss as bookings shift to 2021

TUI Group revenue collapsed 98% to €75 million in the three months to the end of June with the travel giant reporting massive losses in the quarter of €1.1 billion.

The result again highlights the staggering cost to the travel sector of Covid-19.

The quarterly result brings TUI’s nine-month loss to €2 billion, an increase of €1.8 billion over the same period last year.

Bookings for summer 2020 are down 81% with average prices tumbling 10%.

In a bid to cut costs, the operator said it will look to make ‘permanent and group-wide’ savings of 30%. 

Only 55 hotels reopened in the quarter – approximately 15% of its total portfolio – with average occupancy of 23%, a number still described as ‘encouraging’.

TUI said it has sold just 16% of its original 2020 capacity, and 57% of its adjusted capacity.

This time last year it had sold 88% of its summer 2019 holidays.

For the 2020-21 winter season, TUI reduced capacity by 40% with overall bookings down ‘broadly in line with this capacity adjustment’.

Bookings in the UK for winter holidays are down 5%.

But the operator attempted to bring an optimistic air to its results, proclaiming a ‘successful resumption of travel activities from all markets’.

It described Summer 2021 as ‘very promising’ with bookings rising 145%. Average prices have climbed 9%.

"Bookings are currently up significantly as customers both rebook holidays from this Summer and look to secure new holidays early," it said.

Since the re-opening of some borders in mid-June the operator said it has taken 1.7 million bookings, reflecting ‘high demand’ for a 2020 holiday.

Despite the encouraging number of bookings for 2021, the picture remains a gloomy one.

TUI said a ‘comprehensive review was underway’ across the business as it looked to ‘identify benefits and savings’.

"We are targeting a permanent annual saving of more than €300m with the first benefits expected to be delivered from FY21 and full benefits to be delivered by FY23," the company said. "Negotiations have begun within respective business units.

"In two years’ time, TUI Group will emerge stronger, leaner, more digitalised and more agile, in what is likely to be a much more consolidated market."

The company said it expects FY20 restructuring costs to be around €240m in FY20, €40m in FY21 and €10m in FY22.

TUI has secured an additional €1.05 billion loan from the German government to see it through the winter.

CEO 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. With the second government credit line, we are prepared if the pandemic again has a significant impact on tourism".

By Steve Jones, Contributing Editor