TUI Group said that it would “evaluate options” to achieve the optimal balance sheet structure to support the business over the long term.
The comments came as the company announced that it had cut winter capacity by 40%.
The group’s liquidity stood at €2bn on 20 September, down from €2.4bn in mid August, with the reduction due to higher customer refund obligations.
TUI said that it had launched a programme to try and cut costs by 30% across the whole group, with the goal of a permanent annual saving of more than €300m, with the first benefits expected to be delivered from full-year 2021 and full benefits to be delivered by full year 2023.
CEO Fritz Joussen said: “Leisure holidays remain important to customers and have been one of the most missed activities during the pandemic, with leisure travel expected to recover faster than business travel. Our integrated model, underpinned by our trusted and leading brand, offering differentiated products and attractive value propositions, combined with proven flexibility in a volatile environment, means we are strategically well placed to benefit as leisure travel volume recovers over the coming seasons.
“Destination availability is highly influenced by government policy and development of the pandemic, meaning the environment remains volatile, and is likely to remain so for the next few quarters.”
In its Hotels & Resorts division, the group reopened 157 hotels, around 44% of total group owned portfolio by the end of August across its worldwide destinations.
All three cruise operations remained suspended, adhering to both German and UK government advice on cruising.
The operator said that Summer 2021 capacity had been “cautiously adjusted by 20%”, with flexibility to adjust as it gained more visibility. TUI said: “Bookings were currently up significantly as customers both rebook holidays from this Summer and look to secure new holidays early”.
Bookings for Summer 2020 were down 83%.
The group has completed the sale of Hapag-Lloyd Cruises to TUI Cruises’ joint venture against, it said, a difficult market environment on the terms and conditions agreed in February 2020. The first stage of disposal proceeds has been received in the third quarter with remaining proceeds and full de-consolidation to be competed in the final quarter of the current financial year.
TUI said: “In two years’ time, TUI Group will emerge stronger, leaner, more digitalised and more agile, in what is likely to be a much more consolidated market.”
Last month the group agreed an additional €1.2bn “stabilisation package” with the German government, having previously been approved for €1.8bn loan from KfW, the state development bank, in April.
Insight: Bookings being down by 83% may not look too much like you have options, but thanks to the support of the German government, options are what TUI does indeed have.
So while it enjoys the breathing space, what are its options while it waits for a vaccine? Thomas Cook, which has now been stripped down to a virtual entity, has seen its efforts to get into real estate sold to its joint venture partner and there may be some similar joy to be had if TUI sold its 49% stake in RUI.
The company is also likely to be not only a seller a buyer of technical solutions. Its goal of being “more digitised” in a world where Booking and Expedia are also running after limited guests will require expertise. It’s all good news for the consumer, jury’s out on how the hotels will fare.