By Sarah Young
LONDON (Reuters) – Holiday company TUI Group said on Thursday a recovery from the pandemic was well underway, helped by a surge in bookings from Germany and continental Europe and a recent easing of travel restrictions in Britain.
The Germany-based company said summer bookings had jumped by 1.5 million since May and it was confident in demand for the rest of the key holiday season, helping to ease pressure on finances which have been hammered by the COVID-19 crisis.
TUI has taken on loans of over 4 billion euros ($4.7 billion) and been bailed out multiple times by the German government after the pandemic forced it to stop running holidays last year.
Its London-listed shares, which have lost 19% of their value over the last three months due to worries about how summer would pan out, rose 3% to 343 pence in early deals.
For this summer, TUI said it currently had 4.2 million bookings and was seeing strong demand and booking momentum in recent weeks, as travel from Britain, which alongside Germany is its biggest market, is allowed to restart at scale.
But the Hanover-based group also cut its summer capacity to 60% of its 2019 programme, down from the 75% it had planned in May, illustrating the impact of travel restrictions in Britain lasting longer than expected.
“Germany and continental European markets show high demand. In England this will only be reflected in the fourth quarter (July-Sept). Business is coming back,” said Chief Executive Fritz Joussen.
Profitability will be “reasonably good in summer” he told reporters on a call. “We are adding bookings everyday”.
Joussen reiterated the company would consider raising capital to help pay down debt at some point. In July, its banks agreed to extend its credit lines by two years to 2024, giving it more time.
Bookings from Germany and the rest of continental Europe helped TUI turn cash flow positive in its March-June quarter for the first time since the pandemic started, and it recorded a cash inflow of 320 million euros.
“New bookings are materially helping liquidity,” said Jefferies analysts in a note.
For the period, its third quarter, TUI posted an adjusted loss before interest and tax of 670 million euros on revenues of 650 million euros.
($1 = 0.8524 euros)
(Reporting by Sarah Young and Ilona Wissenbach; Editing by Kate Holton and Mark Potter)
