Europe’s biggest travel group Tui reports “strong” demand for next summer and foresees “normalised demand” from 2022
Tui chief executive Fritz Joussen reported bookings for summer 2021 up 145% year on year this week and average selling prices up 9%.
He said: “Even if you exclude voucher re-bookings, bookings for next year are up. We had 430,000 new bookings [for summer 2021] since June, 1.5 million in total.
Tui reported a loss of €2.3 million for the nine months to June, but forecast a “return to a normalised level of demand in 2022 and beyond”.
Asked to justify the forecast of a return to “normal” demand, Joussen said: “We have 145% more bookings for next summer. That is extremely strong. That booking level is more than double this year for next year. How much evidence do we need?”
He said: “Yes, we need a vaccine. The general assumption is we will see a vaccine potentially next year. Then demand will be returning.”
However, Tui has reduced capacity for this winter by 40% and for summer 2021 by 20%.
The combination of strong advance bookings and reduced capacity has pushed up average selling prices by 9% to date.
Joussen said: “This year definitely you can find a bargain, also for the winter. Next year, with the [number of] bookings in, it is more expensive.”
However, Joussen insisted: “There is still volatility, so we are happy we agreed new financial headroom with the German federal government.”
Tui announced an agreement with the German government for an additional €1.2 billion in credit ahead of the results.
It followed an earlier deal in April with Germany’s state-owned development bank KfW to provide €1.8 billion in credit.
Joussen explained: “We always made clear at the first [credit] application that the money would last to the end of May. We thought we were in a much worse position. It still might be enough.
“But the volatility and uncertainty are big. The risk of a second wave [of Covid-19] is exactly why we need the secondary cash.”
Asked if the group could be forced to sell parts of its business he insisted:“There will be no forced divestments. When we do something we do it for strategic reasons.”
Tui reported a monthly cash-burn rate of €550 million-€650 million in the third quarter to June, including customer refunds.
Joussen said €350 million was paid out to customers in June, adding: “More than 95% is paid back now. At the end of July, largely everything was paid back.”
But he said: “Sometimes it’s not so easy [to pay a refund]. If you [a customer] paid via a travel agent, we need to know how you paid.”
Joussen forecast the group could operate through the three months to September in a cash-neutral state, without drawing on its cash reserves or credit.
But he said the group “will be a little cash burning again, about €100 million a month” in the final three months of the year – or the first quarter of Tui’s 2020-21 financial year.
He reported: “Our cash facilities in place now total €2.4 billion.”
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