Monday, 17 August 2020

TUI group gets agreement with German government over €1.2 billion package as demand starts to increase

TUI 787 Dreamliner                                                                                                     Photo TUI
The European holiday giant TUI  released confirmation at the end of last week that it and KfW have agreed to extend the existing KfW credit line by €1.05 billion subject to certain conditions and underwritten by the Economic Stabilisation Fund (WSF).  

The €1.2 billion stabilisation package strengthens the Group's position and would provide sufficient liquidity in this volatile market environment. This will cover both the seasonal swing in tourism through winter 2020/21 and other long-term travel restrictions and disruptions related to COVID-19.

Including the funds from the additional stabilisation package, TUI AG would thus have cash and credit facilities of 2.4 billion euros.

TUI CEO Fritz Joussen: "The additional stabilisation package allows us to focus on the operations and at the same time to drive forward the realignment of the Group. Already before the pandemic, we had initiated the next transformation of TUI: the transformation into a digital platform company. This transformation will now be significantly accelerated. Our integrated business model is intact. Summer holidays are taking place again in all markets. We introduced massive cost reductions early and implemented them quickly and consistently. However, no one knows at present when a vaccine or medication will be available and what effects the pandemic will have in individual markets in the coming months."

Successful resumption of travel activities from all markets / Third quarter meets own expectations






-TUI has successfully resumed its travel activities in all European markets.
First trips since mid-June generate turnover again
Operationally current cash costs should be covered in the fourth quarter and cash break-even should be achieved
Demand returns: 1.7 million new bookings since resumption of travel activities
Bookings for summer 2021 very promising: +145 percent
Implementation of initial measures for realignment and sustainable cost reduction – target: annual savings of more than 300 million euros
Significant cost reductions limit Q3 loss: underlying EBIT -1.1 billion euros
Underlying EBIT for the first nine months: 2.0 billion euros1 including COVID-19 effects of -1.9 billion euros
Excluding the effects of COVID-19, underlying EBIT for the same period of -102 million euros improved against the previous year (-199 million euros)
Including the stabilisation package TUI would have available liquidity in the amount of around 2.4 billion euros
Fritz Joussen spoke further on the group's ongoing resumption of services and increased demand for package holidays.: "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".

TUI has successfully resumed its travel activities in all European markets. In mid-June, TUI was the first travel company to bring German guests to Majorca in a pilot project. Due to the increased hygiene and safety measures in aircraft, transfers and in TUI's hotels and clubs in the destinations, the restart from Germany was successfully implemented. After the official end of the travel warnings for most European destinations, holidays were also launched in the remaining TUI markets at the beginning of July. In addition to the Balearic Islands, Greece and the Greek Islands, in particular, are an important and major holiday destination for TUI and its guests. 

In July, more than half a million customers across Europe travelled with TUI on their summer holidays. Furthermore, demand for holidays remains very high: since the resumption of travel activities, 1.7 million new bookings have been received Group-wide. Bookings for summer 2021 are also very promising. They are currently 145 percent higher than last year's bookings for this summer. Operationally, current cash costs should be covered in the fourth quarter and cash break-even should be achieved. CEO Fritz Joussen said: "Our integrated business model with aircraft, transfers, hotels and cruise ships is intact and has proved its worth in this difficult environment. During the crisis it has enabled us to be the first travel company to fly guests on holiday. 

The summer holidays are conducted responsibly and with the highest standards of hygiene in all markets. These were developed and implemented in cooperation with the governments of the destinations, the Group’s hotels and airlines and the teams in the destinations. We were able to make integrated decisions on flight plans and hotel openings and also on the implementation of hygiene standards for all stages of the holiday. We also introduced massive cost reductions early and implemented them quickly and consistently. The additional governmental loan will secure our liquidity in the event of further long-lasting travel restrictions and disruptions through COVID-19. The securing of financial resources will allow us to focus on our operating business and at the same time drive forward the realignment of the Group. Even before the pandemic, we had already initiated the next transformation of TUI: the transformation into a digital platform company. This is now being significantly accelerated. TUI after the crisis will be stronger, faster and more efficient than TUI before the crisis".








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