TUI loses €1.1bn as Covid-19 lockdowns batter holiday bookings

By Frank Prenesti

Date: Thursday 13 Aug 2020

(Sharecast News) - Holiday operator TUI plunged to a €1.1bn third quarter loss as its business shut down under coronavirus lockdowns and bookings fell through the floor.
The company on Thursday said the loss was driven by Covid-19 impairments, and net costs arising from ineffective hedging contracts. TUI on Thursday secured a further €1.2bn in funding from the German government and added that liquidity was now at €2.4bn.

Revenues from its normally lucrative summer period were wiped out, falling 98% to €75m million as bookings tumbled by 81%.

TUI said fixed costs were cut to around €237m per month, in line with half year guidance as it moved to cut expenditure by more than 70% as the business moved into crisis mode.

TUI's underlying loss before interest and tax of €1.1bn for the three months to June 30 compared to a €102.3m profit a year ago.

The company reopened 55 hotels in the quarter, around 15% of its total portfolio, as lockdown restrictions eased worldwide from mid-May.

"Hotel volumes remain significantly lower than usual summer levels however there were encouraging signs of customer demand with average occupancy of 23% achieved, reflecting the initial restart of operations in Europe, Mexico, the Caribbean and Egypt and the necessary social distancing protocols in place," TUI said.

"All three cruise operations remained suspended throughout the quarter, adhering to both German and UK government advice on cruising."

Capacity plans for winter 2020/21 was reduced by 40% and overall bookings were down broadly in line with this adjustment.

Summer 2021 capacity was adjusted by 20%, "with flexibility to adjust as we gain more visibility", TUI said.

"Bookings are currently up significantly as customers both rebook holidays from this summer and look to secure new holidays early. Bookings for summer 2021 are consequently up by around 145%," the company said.


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