Tui, Europe’s largest tour operator, is weighing up a rights issue or sales of parts of its business after reporting a net loss of more than €2bn so far this year as a result of the pandemic.
Fritz Joussen, Tui’s chief executive, said on Thursday that there would be no fire sale of assets and that plans for a rights issue were in “early days” but that the company was “evaluat[ing] all options”. He suggested that a sale of Tui’s Marella cruise line was a possibility.
Tui posted a net loss of €2.3bn in the nine months ending in June this year, with €1.5bn of that in the group’s third quarter alone.
Revenues in the three months ending in June were €75m, down 98 per cent compared with the same period last year — a greater drop than analysts had forecast.
Bookings for next summer’s package holidays are up 145 per cent on the same point last year but, Tui admitted, this was in part due to customers rebooking trips cancelled this summer. It has cut capacity for next summer by 20 per cent and also slashed its 2020 winter holiday programme by 40 per cent in expectation of lower demand.
Tui has struggled to recover from the shutdown in international travel. Since it was forced to halt all operations in March, the Hanover-based group has only made a slow recovery due to the faltering resumption of European travel as localised outbreaks prompt governments to advise against holidays in certain areas.
In July, the UK government said that all travellers returning from Spain, one of Tui’s biggest markets, would have to quarantine for 14 days following a rise in cases there.
Although Tui has increased the number of flights running from 61 in June to 4,200 in August, the company said that occupancy at the hotels that it had reopened was only around a fifth.
James Ainley, an analyst at Citi, said in a note that the results were “weaker than expected” and that Tui had cut capacity more than anticipated.
To see it through the quieter winter months, Tui announced on Wednesday that it had secured an extra €1.05bn loan from the German government, on top of a €1.8bn facility agreed in April, leaving the group with total cash and liquidity of €2.4bn.
It has launched €300m of cost-cutting measures designed to reduce outgoings across the business by 30 per cent by 2023. It previously announced that it planned to reduce its staff numbers by 8,000.
The company, which employs about 70,000 people and runs 400 hotels and 150 aircraft, said it expected “normalised levels of business” from 2022 but that it hoped to break even in the fourth quarter of this year as more travel resumed.
Mr Joussen said the forecast was based on the assumption that long-haul travel would not fully return until 2021 but that there would be a vaccine available “early next year”.
He added that customers taking holidays this year were “making a bargain” but that prices had returned to normal levels for 2021.
Shares in Tui were down 5.45 per cent to £3.47.
This story has been amended since first publication to state that bookings for next summer’s package holidays are up 145 per cent on the same point last year, not 45 per cent