Covid-19 is the greatest crisis the tourism industry has ever faced, Tui Group warned today as it reported deep winter half-year losses.
Thousands of jobs are at risk as the travel giant targets a 30% group-wide cut in costs.
“This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced,” Tui disclosed.
More: Tui chief dismisses quarantine concerns
Manuel Cortes, general secretary of the Transport Salaried Staffs’ Association, demanded an urgent meeting with Tui to stress there is no need to consider redundancies in the UK and Ireland when government job protection measures are in place.
He said: “In Britain, the government’s job protection scheme means that no jobs should be lost here. There is also a similar scheme in the Republic of Ireland. Therefore, there is simply no excuse for job cuts in Britain and Ireland.”
Europe’s largest travel group recorded a loss of €845.8 million against less than €290 million in the same period 12 months earlier.
The company blamed Covid-19 shutdown costs as well as the impact of the continued grounding of the Boeing 737 Max aircraft.
Tui secured German state aid of €1.8 billion in March in the form of a bridging loan due to the pandemic.
Full financial year profit guidance was withdrawn in the same month “based on the current unpredictable situation” and the travel giant is to accelerate its global transformation.
Tui said: “The tourism industry has weathered a number of macroeconomic shocks throughout the most recent decades, however the Covid-19 pandemic is unquestionably the greatest crisis the industry and Tui has ever faced.”
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The company added: “We are reviewing our activities, every business unit and group companies worldwide to identify synergies and where we can be leaner, faster and more efficient.
“What is crucial now more than ever is to adapt our structures, and review our investments and presence in both markets and destinations.”
Bookings for this summer are 36% down with just 35% of the programme sold, down from 59% at the same point last year, reflecting the cancellation of all holidays from mid-March until at least mid-June.
Referring to refunds, Tui said: “Under the European Travel Directive, cash refunds should be provided for holidays cancelled.
“Many of our source market governments are, however, considering voucher refund mechanisms or state-backed fund solutions as alternatives to cash refunds and subsequently we expect a low to mid-single digit hundred millions per month cash outflow to cover customer refunds relating to cancelled holidays.
“We see typically, a higher proportion of customers requesting refunds for immediate departures and customers with outer dates, choosing a voucher refund credit or rebooking to a later departure date.
“Customers who do not wish to take advantage of our vouchers/refund credits with a discount for future booking, remain entitled to a cash refund should their holiday be cancelled.
Future outlook
Holidays remain a “high priority” with customers committing early for future seasons.
UK bookings for winter 2020-21 are up 8% while summer 2021 bookings are “looking positive” on small volumes.
The group added: “We expect travel will be different for the remainder of this year, however we strongly believe our customers will still want to holiday.
“Online enquiries to our website indicate to us that customers are still actively researching holidays and destinations; customers want to travel as soon as tourism can take off responsibly and safely.
Post-crisis
“We consider ourselves very well positioned to benefit from a recovery post the Covid-19 crisis. Our vertically integrated model enables a fully co-ordinated re-start of the value chain.
“Tui’s trusted brand, direct customer engagement across the full holiday journey and differentiated products are clear USPs for customer post crisis.
“Tui’s market leading position combined with long-standing relationships with suppliers, retail agents and tour operators, means TUI plays an important and critical role in the restart of the industry.
“The foreign tourism ministries from destinations such as Greece, Cyprus, Portugal, the Balearic Islands, Austria, and Bulgaria are preparing intensively for the return of tourists.
“The health and wellbeing of both customers and colleagues remain paramount and we are assessing how we can responsibly adapt to measures so that leisure travel can resume.
“We are preparing new procedures for the airport process, on board our aircraft, in hotels and on our ships, so that any social distancing recommendations or guidelines can be implemented, without compromising customer enjoyment and travel experience.
“Tui, alongside our many destination partners, stands ready for a responsible restart and resumption of our travel programme.”
Looking further forward, Tui said: “It is clear as a result of the Covid-19 crisis, the travel industry will evolve even faster and perhaps more profoundly than many had expected. The world will be different and Tui will be different also.
“We are reviewing our activities, every business unit and group companies worldwide to identify synergies and where we can be leaner, faster and more efficient.
“What is crucial now more than ever is to adapt our structures, and review our investments and presence in both markets and destinations.
“To address costs, we will leverage synergies in areas such as hotel purchasing and exploit further potential within our global IT structures
“We will be less capital intensive, and we will continue our asset-right strategy in our hotels and cruise business which we launched in 2019.
“We will right-size our airlines and order book, alongside restructuring. We will divest and address non-profitable activities within our business.
“We will expand accommodation-only and seat-only products as well as increase dynamic packaging options.”
The group added: “Tui is well positioned to adapt to these opportunities. In order to return to the successful development of the past years after the crisis, we will now implement the realignment quickly.
“Future Tui will be leaner, less capital intensive and more digital, creating an even stronger and more agile business.”
