TUI Group said that demand for travel was rising, with 50% of the group’s programme for May 2021 already booked.
CEO Fritz Joussen said: "TUI is ready for a speedy and successful resumption of travel activities as soon as the lockdowns are lifted and destinations reopen.”
He added: "Very rapid cost and liquidity measures, an accelerated realignment and our flexible business model have enabled us to steer the group through the crisis. The prospect of vaccinations from the beginning of the year will significantly increase demand for summer holidays in 2021. We are prepared for a new start after the crisis.
“International tourism is strengthening the southern euro zone and North Africa in a special way. We are very well positioned to resume operations on a larger scale as soon as the lockdowns are lifted and destinations are reopened.
“Our business model with our own tour operators, the travel agencies, aircraft, hotels and ships under the TUI umbrella makes a resumption possible very quickly. The prospect of successful vaccinations from the beginning of the year makes us confident. All indicators point to a successful restart of the travel business as soon as the pandemic is over. We are prepared for this new start. We are consistently continuing the change we have initiated in order to be better and more efficient after the crisis.”
The comments were made as the company reported underlying EBIT on a constant currency basis of -€3.0bn (previous year €893.5m). Revenue amounted to €7.9bn and was 58% down on the previous year.
The first five months of the 2020 financial year (October 2019 to February 2020) saw a record booking rate of +14% in January. In mid-March the group had to completely discontinue all travel activities due to the worldwide travel warnings. The tourism group was only able to generate revenue again when it was able to fly its first holiday guests to Majorca in mid-June in a pilot project and a limited resumption of operations from July onwards. It described Greece as “particularly strong” as a holiday destination in 2020.
Total bookings across all markets for winter 2020/21 were currently 82% lower than in the previous year, roughly in line with the reduced capacities. Average prices were 4%. Bookings for summer 2021 were 3% higher than for the regular summer 2019. Average prices for the summer 2021 programme were currently 14% higher than for 2020.
Earlier this month saw the company secure €1.8bn in additional funding which Joussen said would allow the group to secure “liquidity for a continuing pandemic in 2021”.
TUI reached the agreement with the Economic Support Fund, KfW, its banks and the largest single shareholder Unifirm - the Mordashov family. The package consisted of silent participations of the WSF, a further credit line of the KfW, guarantees and a capital increase with subscription rights, which was to be resolved at an extraordinary general meeting of TUI in January 2021.
The group said it was taking further precautions in view of the rising number of infections since autumn, strict travel restrictions in many countries and the resulting shorter booking times of customers.
The financial package was intended to ensure that the company could bridge the gap if the pandemic persisted in 2021.
The proceeds of the capital increase will be used to repay €300m in senior notes due in October 2021 and so will provide a significant contribution to the extension of TUI’s maturity profile.
The financing measure shall also include a guarantee credit facility in the amount of €400m. The guarantee credit facility will be supported by a state guarantee, potentially including the federal states.
Including the additionally agreed financial package, TUI had financial resources and credit facilities of €2.5bn as at 30 November.
In September TUI Group said that it would “evaluate options” to achieve the optimal balance sheet structure to support the business over the long term.
Insight: Demand is rising? We can all feel it, as we dare to stare at summer holiday options, while the number of duvets rises and the urge to start heating alcohol before we drink it grows. Show me a cold winter and I’ll show you demand for a summer holiday. Show me a pandemic and I’ll show you demand for all the holidays all the time.
It seems an, if not safe, then reasonably secure bet that the summer will see a resumption of travel, at least for those with vaccine certificates. It’s getting there which will be the issue for many in the travel sector.
TUI has secured its role in the recovery, but what will be interesting to note is the role of its supply. Will the power of the travel agents return as hotels need to fill beds, post pandemic?