Tui plans to reopen holidays to key peak summer destinations

Tui expects to reopen holidays to the Greek islands, Balearics, Canaries and Portugal for the summer peak.

Europe’s largest travel group plans to run 75% of capacity compared to pre-pandemic levels in summer 2019.

But summer 2021 bookings, including amendments and voucher re-bookings, are down 69% as people postpone travel to future seasons.

This reflects “customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on lifting of travel restrictions”.

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The group said while reporting winter half-year losses of €1.3 billion: “We will be focussed on a reopening portfolio of destinations with expected well vaccination and low incidence rates.”

More than 60% of planned capacity for this summer is to such destinations.

The company has a pipeline of 2.6 million bookings for this summer’s season – a small reduction compared to its previous trading update.

Average prices are 22% higher than for summer 2019 due to the high proportion of all-inclusive packages in current bookings.

Sales in the winter six month period fell from €6.6 billion to just €716 million.

There is now a continued customer appetite and intention to travel for future seasons, according to the group.

UK bookings for winter 2021-22 are up by 17% and 293% for summer 2022 compared to respective levels for 2019 programmes.

Tui pointed to research showing that its customers “value a strong brand, flexibility, comprehensive health and safety protocols with a good customer experience during these unprecedented times.

“Tui, with its integrated model, strong brand, and in-destination service and online 24/7 support, is the model of choice for many holidaymakers.”

But Tui said: “It remains difficult to forecast the further course of the pandemic and its impact on customer behaviour.

“In view of these considerable uncertainties, the management board continues to believe that it is not in a position to issue a specific forecast for the financial year 2021.

“Due to the travel restrictions in the first half of the year and the current expectations for the summer season 2021, we now expect Tui Group revenue in financial year 2021 to be down year-on-year at constant currency rates.”

Tui revealed that 6,000 out of 8,000 planned job cuts have been agreed as part of plans to trim costs by €400 million a year by 2023.

“Projects are well underway across core functions, Markets & Airlines and TUI Musement – formerly Destination Experiences – and we are on track to achieve almost 50% of our targeted savings by end of the current financial year.”

The group completed additional financing via a €400 million bond in April after a rights issue at the start of the year and previous German government bailouts .

Group chief executive Fritz Joussen said: “The successful placement of the bond was an important first step in addressing our capital structure.

“A good summer season will help with refinancing measures. The government support for the group helps us, but these are interest-bearing loans, not gifts.

“We take a clear signal from the capital market – tourism remains a growth market internationally and investors trust our business model and support Tui’s strategy.

“The realignment of the group, with strict cost discipline and an efficiency programme, is underway, and we have accelerated the transformation and digitalisation. Tourism will recover and Tui will be more digital, leaner and more efficient after the pandemic.”

Joussen added: “The prospects for early summer 2021 make me optimistic for tourism and for Tui. They are significantly better than in the first pandemic year, 2020.

“Scientists and doctors know the virus, there are vaccines from several manufacturers, the vaccination campaigns are working everywhere in Europe and rapid tests are now available everywhere.

“Much has been achieved in the last 14 months through government programmes and the discipline of us all.

“The entire Tui ecosystem from consultation and booking, to flight, transport and hotel is now even more focused on quality, comfort and safety. Incidence levels in key destinations are falling steadily.

“The Balearic and Canary Islands are well below 50 new cases a day. The opening of Mallorca over the Easter holidays with thousands of Tui guests [from Germany] has shown that safe and relaxing holidays are possible in times of the pandemic.

“TUI welcomes the statements by the German chancellor and the German government that holidays in Europe will be possible for both vaccinated and unvaccinated people. This now gives families security and reliability when booking and supports local tourism and also the countries of Southern Europe.

“We are now at the beginning of the expected restart. The  anticipation is palpable, these are opportunities for tourism and for Tui.”

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