TUI banking on a summer recovery after pandemic losses By Reuters

By Sarah Young and Ilona Wissenbach

LONDON (Reuters) – TUI (LON:TUIT) Group the world’s biggest holiday company, is banking on a summer recovery to help ease its strained finances after it sunk to a 699 million euro quarterly loss during another period when coronavirus curbs stopped trips.

Germany-based TUI, which before the pandemic took 23 million people on holiday annually, has secured multiple bailouts from the German government to survive. It said it currently had 2.1 billion euros ($2.5 billion) of financial resources.

“That should be enough until summer, until the business takes off in summer,” Chief Executive Fritz Joussen told reporters on a call.

But there is still great uncertainty over the European travel market for the peak holiday months this year.

In Britain, TUI’s biggest market alongside Germany, the government has repeatedly warned people not to book trips abroad for the summer. It is currently in the process of tightening border controls.

TUI said it was ready to relaunch its business in the coming weeks and that it had 2.8 million bookings for this summer, adding that customers were likely to book much closer to their departure date this year.

Progress with Britain’s vaccination programme should help bookings said TUI.

Shares in TUI opened down 1% to 326 pence. The stock has lost 40% over the last 12 months.

Analysts at Jefferies noted that TUI’s net debt now stood at 7.2 billion euros and warned that summer cancellations could be painful.

“We note that the working capital outflow from any cancellations would severely limit liquidity endurance,” they said.

For the three months to the end of December, TUI said it cut its monthly cash outflow to 300 million euros, from an expected level of 400 to 450 million euros.

That meant its adjusted core earnings (EBIT) for the quarter came in at 699 million euros, compared to the loss of 147 million euros for the same period in 2019, in what is a seasonal business focused on summer tourism.