Tui Group ready to resume travel activities ,Targeting 30 per cent cost reduction across the Group

News / Tui Group ready to resume travel activities ,Targeting 30 per cent cost reduction across the Group

"Europe must now gradually open up"

TUI is ready for an early resumption of travel activities in Germany and Europe. Barely two months after almost all business units had to be shut down due to the worldwide travel bans, the tourism group is prepared for a resumption of its operational activities.

TUI’s first hotels on Sylt and in Mecklenburg-Western Pomerania will open their doors for guests in the coming days. TUI’s hotels and clubs in European destinations are also ready to welcome holidaymakers.

A 10-point catalogue for increased hygiene and protection measures is currently being implemented in the Group’s hotels worldwide, offering guests the greatest possible safety.

Strong development before the pandemic

In mid-March, before the end of the first six months of the 2020 financial year, the Group had to suspend operational travel activities due to COVID-19 and the resulting worldwide travel bans. Up to this point, the world's leading tourism group was on track: in the first five months of the fiscal year, turnover increased by six percent to 6.0 billion euros. Excluding one-off effects operating underlying EBIT amounted to -240 million euros – an improvement of 21 percent over the same period last year.

Bridging loan ensures liquidity

Immediately after TUI was forced to largely discontinue its business due to the worldwide travel restrictions, the Group decided to apply for a KfW bridging loan of 1.8 billion euros. 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 27 March.

On 8 April, the banks providing TUI’s existing credit line of 1.75 billion euros (“Revolving Credit Facility”) also gave their approval for the contractual integration of the new credit. The swift action of TUI’s Executive Board thus enabled additional liquidity to be secured at short notice. As at 10 May 2020, the Group had financial resources and available credit facilities of around 2.1 billion euros.

Global realignment accelerates transformation

The loans received are to be repaid within a short period of time and the high level of debt is to be rapidly reduced again. To ensure that the strong operational performance can continue in a globally weakened market following the pandemic, the Group is now implementing a global program with extensive cost-cutting measures. This will further accelerate the transformation to a digital platform company that has already been initiated.

Outlook: Full-year guidance not yet possible

On 15 March, the Executive Board withdrew the guidance given for 2020 as a whole. Due to the ongoing pandemic and the continuing worldwide travel restrictions, the Executive Board refrains from providing a new guidance for fiscal year 2020 also under the current circumstances. Currently, 35 percent of the 2020 summer programme is still booked.