Tourism: Tui before repayment of first state aid

tourism
Tui before repayment of first state aid

Despite the Omicron variant, the world’s largest travel group, Tui, is expecting a full comeback in the holiday business in the summer and wants to return a first part of the state aid before that.

Around 700 million euros are to flow out again by April 1, as CEO Fritz Joussen announced on Tuesday. After the existential setback in the early days of the Corona crisis, the manager sees a clear stabilization. “The demand for travel is high across all markets,” said Joussen when presenting the figures for the first winter quarter. “The way out of the pandemic is becoming increasingly clear.”

The company expects business for the summer to be at about the level of the pre-crisis year 2019. The signs for this have recently been good: in the first quarter of the business year (October to December) Tui achieved sales of 2.4 billion euros – around five times as much as in the first Corona -Winter a year

Seasonal loss halved

The bottom line is that the group was able to roughly halve its typical seasonal loss from 780 million to 384 million euros. However, the minus was higher than many industry experts had expected. In November and December, fears about the consequences of Omikron weighed heavily on the mood in tourism. The Tui share price did not initially find a clear direction on Tuesday morning.

The management draws courage from the bookings of the past few weeks. Many customers still made decisions at very short notice. “But confidence in progress in ending the pandemic is increasing,” the group reported. By January 30, a good 3.5 million customers had booked a Tui trip for the summer. That was 28 percent less than at the same time in 2019 – but more new bookings were received last week than in the corresponding period of 2019. Many consumers have some catching up to do.

Something similar was recently heard from sales. The online offer Tui.com reportedly reported the highest sales ever in one day on January 30th. In the stationary travel agencies and with service requests, operations are also expected to increase significantly.

Customers spend more money

According to Tui, customers are also digging deeper into their pockets than before the crisis. The average prices for booked summer trips have so far been 22 percent higher than in summer 2019. This is not so much because trips have become more expensive. Rather, people are booking higher quality hotels and rooms and more package deals, Joussen explained. In the current winter season, customers are already spending an average of 15 percent more on their trips than in the pre-crisis winter of 2018/19.

In view of the latest inputs, Joussen “can’t imagine at the moment” that the development will turn negative. “But forecasts are difficult, especially when they concern the future.” After all, Tui only started the year 2020 with strong growth in bookings, before the corona virus practically brought the travel business to a standstill a little later.

Without the subsidy it would have been tight

Without the support of politicians and taxpayers, it would have been extremely tight for Tui. After the German state had saved the Hanoverians from going under with more than 4 billion euros, the board now sees a much better situation. At the beginning of February, Tui had liquidity of 3.3 billion euros – including unused credit lines. Tui hardly claimed a loan from the state bank KfW for 3 billion euros, said Joussen.

This is not least due to the most recent capital increase, which brought in 1.1 billion euros for the group in the fall. The Tui board continues to work towards returning the aid completely. Joussen did not dare to promise when this would be possible. However, he would be “very disappointed” if it took three years. In addition, the state could exchange part of the money for Tui shares and then sell them. “Then we don’t have to pay it back.”

In the afternoon, Tui gathers its shareholders for an online general meeting. The shareholders are expected to clear the way for a further capital increase of 1.7 billion euros. They should give the group “the necessary legroom” to tackle the repayment of further state aid.

Joussen wants to complete 90 percent of the savings program initiated during the crisis by the end of September. By 2023, the annual costs are expected to have fallen by 400 million euros. “We believe that Tui will be significantly more profitable in the future than before the crisis,” said Joussen. Again and again there is criticism of the austerity course – most recently from the pilots’ union Vereinigung Cockpit, which accuses the group airline Tuifly of having too many routes served by other providers.

dpa