Category Archives: TUI Group

TUI terminates agreement: TUI brand name may no longer be used by TUI Russia

TUI AG has terminated the brand use agreement with TUI Russia.

TUI Russia is not a company of the TUI Group. The last shares in TUI Russia were sold by the Hanover Group in 2021.

The existing brand license agreement allows TUI Russia to use the TUI brand in various countries, including Russia, Ukraine, Belarus, Kazakhstan and Uzbekistan. This agreement has now been terminated by TUI AG.

Fritz Joussen, CEO of TUI Group: “TUI condemns Russia’s attack and war against Ukraine. Our position is clear. The TUI brand must no longer be used by TUI Russia for its business and its brand presence.”

Update from TUI Group CEO Fritz Joussen: Comments on the Russian invasion of Ukraine and his Russian Oligarch investor

Dear colleagues,

The attack on Ukraine and the fighting that has been going on for days now leave me, like everyone I have spoken to over the past few days, stunned. When I think of the people in Ukraine, the men and women who are defending their country, and the families who are now fleeing their homeland, I can hardly imagine the suffering.

A war of aggression in the middle of Europe, an attack on a sovereign country, on innocent Europeans – all this was hardly imaginable after the end of the Cold War and in the era of dialogue and cooperation. As Europeans, we have perhaps taken the right to live in peace and self-determination too much for granted. Although it gives us hope that the free world is showing unity, worries about further developments now predominate.

The question of how the war will affect our business is certainly not the first priority, but of course the question is legitimate and important for us. We are monitoring the developments intensively in order to assess possible consequences and to be able to put plans into place if necessary. Let me share some thoughts with you on this.

We ourselves are no longer represented with companies in Russia and Ukraine. As you know, we sold our shareholdings in the tour operators in Russia and Ukraine some time ago. However, in order to ensure the safety of our customers, we will make or have already made adjustments in some areas, such as flight routes and cruise destinations. We are in contact with the employees of service providers in Ukraine who work for us and are supporting them as best we can to keep themselves and their families safe. TUI Cruises is also intensively looking after crew members from Ukraine who are employed on board our fleet of ships.

Some of you have also asked me about our largest single shareholder Alexey Mordashov and our position with him. Mr Mordashov has been a TUI shareholder for around 15 years and has held about a third of our company since he propped it up during the Corona crisis. Two thirds of our shareholders are from Germany, the EU, the UK, the US or are funds. Mr Mordashov is also one of 20 representatives on the Supervisory Board elected by shareholders at the Annual General Meeting. However, our company is run by the Executive Board, like any German public limited company, and not by the shareholders or the Supervisory Board. We therefore assume that any restrictions or sanctions against Mr Mordashov will not have any lasting negative consequences for us as a company.

Photo: Wikipedia. Russian Oligarch Alexi Mordashov.

The coming days and weeks will show how relations between Russia and the EU will continue to develop – and how economic cooperation between Russia and the West will develop in the future. A solution is not in our hands. This is the time of the governments and the community of states.

One thing is clear: we will be true to our values and show our position. Like hardly any other sector, tourism stands for international understanding and peaceful exchange across borders and cultures – we feel particularly committed to this.

Thank you that so many of you show your attitude in your private and professional lives and support the people in Ukraine and those fleeing the country with aid and donations!

Let’s all hope that humanity and reason will prevail and peace will return to Europe.

Fritz Joussen

TUI Group full year report: Successful restart in summer and almost fully booked first winter quarter 2022

TUI Group issued this financial report:

  • High-earning Group unit TUI Hotels & Resorts and TUI tour operators in the Central (Germany, Austria, Switzerland, Poland) and Western (Belgium, Netherlands, France) regions report positive quarterly earnings for the first time since the start of the pandemic
  • Underlying Group EBIT close to break-even in Q4 on the basis of reduced capacities
  • Significantly stronger cash inflow: cash flow before financing activities positive for the second consecutive quarter at 1.4 billion euros from July to September
  • Q1 2022 program with 93 per cent almost fully sold – currently 69 per cent of capacity of pre-crisis level achieved (Q1 2019)
  • Successful transformation: global efficiency program takes effect – around 60 per cent of the annual cost savings of 400 million euros announced from 2023 already achieved in 2021
  • CEO Joussen: “We had a successful summer season after the relaunch. The overarching trends are intact. TUI’s operating business is back and has recovered significantly in the last financial quarter of 2021. The first financial quarter of 2022 is already almost fully booked at 93 per cent. This means that we are currently at 69 per cent of the pre-crisis level capacities in the current quarter. We expect summer 2022 and the peak travel season to return to booking levels similar to pre-Corona 2019.”

TUI has taken another step out of the crisis with an almost balanced fourth financial quarter of 2021. Due to the successful resumption of the tourism business, TUI is close to reaching break-even in terms of underlying EBIT at -97 million euros in Q4 2021. TUI Hotels & Resorts, an important and high earning division for the Group, as well as TUI tour operators in the Central and Western Regions, reported positive underlying quarterly results for the first time since the beginning of the pandemic. Cash flow before financing activities was also positive for the second quarter in a row. Fritz Joussen, CEO of TUI Group: “The operating business is back. We are generating significant cash inflows and achieving positive results again in many markets and with our hotels and TUI hotel brands. The program of the first financial quarter of 2022 is already almost fully sold. This means that we are currently achieving 69 per cent of the pre-crisis level. We expect Summer 2022 to reach a largely normalized booking level. Structurally, we have also done our homework. The Group’s transformation and the global efficiency program are progressing very well. In 2021 we have already achieved around 60 per cent of the annual cost savings of 400 million euros announced for 2023. In addition, we have reduced our debt with successful refinancing measures, strengthened the balance sheet and have very solid liquidity. I would like to thank our guests for their trust, all colleagues for their commitment and our partners in the markets and destinations for their dedicated support with the successful relaunch of tourism in 2021.”

Q4 2021: Underlying EBIT close to break-even – High-earning TUI Hotels & Resorts Division and tour operators in Central and West regions with positive earnings – 1.4 billion euros positive cash flow
In the fourth quarter of financial year 2021, TUI generated clear positive cash inflows and almost tripled revenue year-on-year to 3.5 billion euros (Q4 2020: 1.2 billion euros). Earnings almost reached break-even: underlying EBIT improved by 570 million euros to -97 million euros compared to the previous quarter on the basis of reduced capacities – including one-off effects of -60 million euros (Q4 2020: -1.03 billion euros). Positive underlying EBIT was achieved for the first time since the start of the pandemic by TUI Hotels & Resorts (116 million euros), traditionally an important segment for Group earnings, and by Central Region with the German, Austrian, Swiss and Polish markets (49 million euros) and Western Region with the Dutch, Belgian and French markets (71 million euros). Due to the successful recovery of the operating business in the fourth financial quarter, TUI recorded significant cash inflows so that cash flow before financing activities was positive for the second quarter in succession at 1.4 billion euros. As of 6th December, TUI had 3.5 billion euros in financial resources at its disposal.

Bookings for 2022 at a high level – average prices +15 per cent (winter) and +23 per cent (summer)
More than 1.4 million additional bookings have been made since the last booking update at the beginning of October 2021. TUI is currently recording 4.1 million bookings for winter 2021/22 and summer 2022. The Group is currently planning for capacity in winter 2021/22 with a corridor of 60 to 80 per cent of the pre-Corona year 2019. 69 per cent has currently already been achieved in the first financial quarter 2022, with 93 per cent of the first quarter 2022 program already sold. There will be flexibility in deciding whether to offer winter program capacity at the lower end of the range depending on the so-called fourth Corona wave and possible policy decisions with regard to the Omicron variant. Capacity plans are regularly reviewed and adjusted. For winter and the coming year, it is clear that holiday makers are choosing higher-value offers, more package tours and are also prepared to plan a larger budget for their holidays. Average prices are approximately 15 per cent higher than in the pre-crisis year. For the comparatively well-booked summer of 2022, average prices are even 23 percent higher.

Long-term trend is intact: People want to travel
In the entire 2021 financial year, 5.4 million guests travelled with TUI. Booking level for the 2022 financial year are already encouraging at 4.1 million bookings. Tourism remains a strong growth market in the long term. It benefits from overarching social trends that will continue to intensify in the coming years: People are living longer, they are healthier and more consciously aware. Many have the financial means to make a conscious decision to travel. Experiences and encounters are becoming more important to many people than property and possessions. Whenever restrictions are lifted, demand picks up immediately. Currently, however, customers are booking later and at short notice. Joussen: “The advantages of our integrated and diversified business model are particularly evident now that we can react quickly to changing market conditions. A lot of flexibility was required when we restarted. TUI can do this like no one else in our industry, as we have all stages of the value chain of a tour operator in-house. This allows us to make quick and coordinated decisions: when we reopen our hotels in a region, we set up the flight schedule, have the aircraft to fly to the destination and the teams on the ground to look after our guests. Everything fits together at TUI. This is important for our guests’ holiday experience – and economically efficient for the Group.”

TUI Group to put its airlines under a single management team

TUI Group is planning to put its five airlines in Belgium, Germany, Netherlands, Scandinavia and the United Kingdom under a single management team according to Handelsblatt.

TUI says the goal is to “take the complexity out of the system”, creating an airline and travel group that can “hold its own in competition”.

However each AOC and brand will be retained in their respective countries.

In other news, the TUI Group has successfully completed the sale of its minority stake in a property portfolio to the Riu family. The portfolio which was previously held jointly between TUI and RIU consists of 21 properties, comprising 19 existing buildings and two in development. The divestment only includes the ownership of these properties. The operation and marketing of these hotels will continue to be carried out by the 50:50 joint venture between TUI and RIU. As a result, TUI ties up less capital in property ownership and concentrates on its core business, the operation and marketing of hotels.

TUI had agreed and announced the sale in May 2021. The total portfolio was valued at 1.5 billion euros. For its 49 percent minority stake, TUI has received an initial purchase price payment of 541 million euros today and can receive an additional earn-out of around 130 million euros until 2023.

The transaction has been closed in a continued difficult market environment and generated a significant book gain of around 200 million euros. As announced previously, the proceeds will be used to reduce the Group’s Corona debt.

BOC Aviation delivers seven Boeing 737-8 MAX 8 aircraft to TUI

BOC Aviation Limited has announced that it has delivered the seventh of seven new Boeing 737 MAX 8 aircraft for lease to TUI Travel Aviation Finance Limited. All aircraft are powered by CFM LEAP-1B engines.

TUI is the world’s leading tourism group. The broad portfolio gathered under the Group umbrella consists of strong tour operators, 1,600 travel agencies and leading online portals, five airlines with around 150 aircraft, over 400 hotels, 15 cruise liners and many incoming agencies in all major holiday destinations around the globe.

TUI Group reports a €3.0 billion annual loss, but is upbeat for 2021

TUI Group has issued this financial report for the fiscal year (October 1, 2019 through September 30, 2020):

  • Global reorientation measures accelerated and cost target raised: annual savings of 400 million euros announced
  • Demand for travel is rising: 50 percent of the program for May 2021 already booked
  • Summer 2021: average prices +14 percent – bookings 3 percent higher than for summer 2019
  • Revenue in Corona year reaches 7.9 billion euros1 (previous year: 18.9 billion euros)
  • Significant cost reductions limit loss for the full year:underlying EBIT -3.0 billion euros1 (previous year: 893.5 million euros)
  • TUI has liquid funds amounting to 2.5 billion euros2
  • CEO Fritz Joussen: “Very rapid cost and liquidity measures, an accelerated realignment and our flexible business model have enabled us to steer the Group through the crisis. TUI is ready for a speedy and successful resumption of travel activities as soon as the lockdowns are lifted and destinations reopen. The prospect of vaccinations from the beginning of the year will significantly increase demand for summer holidays in 2021. We are prepared for a new start after the crisis”.

TUI is preparing intensively for a new start in 2021 after the corona crisis year 2020. The pandemic is not over, but there is light at the end of the tunnel and the prospects for tourism and for TUI are good. The demand for holiday travel is there – consumers in all age groups say that traveling is one of the most missed activities for them in the Corona year. 2021 will be a transition year for tourism, and 2022 is expected to see a return to pre-Corona levels. In particular, the holiday sector will recover faster than the sector as a whole. TUI had made an excellent start to the financial year before the outbreak of the pandemic, but the worldwide travel warnings since March 2020 then forced the Group to largely discontinue business. Among other things, there was no Easter business, no travel at Whitsun and only very limited summer business in the Corona crisis year 2020. The Group introduced cost-cutting and financing measures at an early stage and accelerated the global realignment. In addition to securing additional liquidity, extensive cost-cutting projects were launched. The long-term goal of reducing annual costs has been raised from the previous 300 million euros to the current 400 million euros.

Fritz Joussen, CEO of the TUI Group: “The rapid measures to cut costs and secure liquidity are important for the Group. They are a stable foundation for the future. TUI was in perfect health before the crisis and we want to return to our former strength as quickly as possible. The market is intact, our business model is future-proof and customer demand is there. Holiday travel remains very relevant for people. At the same time, international tourism is strengthening the southern euro zone and North Africa in a special way. We are very well positioned to resume operations on a larger scale as soon as the lockdowns are lifted and destinations are reopened. Our business model with our own tour operators, the travel agencies, aircraft, hotels and ships under the TUI umbrella makes a resumption possible very quickly. The prospect of successful vaccinations from the beginning of the year makes us confident. All indicators point to a successful restart of the travel business as soon as the pandemic is over. We are prepared for this new start. We are consistently continuing the change we have initiated in order to be better and more efficient after the crisis”.

Group transformation accelerated – TUI becomes more digital, leaner, more efficient
The transformation and expansion of the Group’s digital platforms, which was initiated before the crisis, is being implemented consistently and has received a further boost in the pandemic. In all areas of the Group, the pandemic has further accelerated the digitalization of the business. Wherever it is in the interest of the customer, services will be digitalized even more in the future. The maxim is more and better service for the benefit of the customer. At the same time, digitalization offers considerable potential for efficiency and cost reduction. A comprehensive cost-reduction program was launched in the spring.

Cost reductions implemented in the short term limit loss for the year as a whole – revenue at around 8 billion euros
The first five months of the 2020 financial year (October 2019 to February 2020) were very successful for TUI, with a record booking rate of +14 per cent in January. In mid-March, the Group had to completely discontinue all travel activities due to the worldwide travel warnings. The tourism group was only able to generate revenue again when it was able to fly its first holiday guests to Majorca in mid-June in a pilot project and a limited resumption of operations from July onwards. Greece was particularly strong as a holiday destination in 2020. Since the new start in the summer, TUI has safely made holidays possible for more than two million guests. Underlying EBIT on a constant currency basis totaled -3.0 billion euros(previous year 893.5 million euros). Revenue amounted to 7.9 billion euros and was 58 per cent down on the previous year (18.9 billion euros). The sale of Hapag-Lloyd Cruises to the joint venture TUI Cruises, jointly operated with the Royal Caribbean Group, was initiated before the crisis. The transaction was successfully completed in the summer despite the difficult crisis environment. The proceeds additionally improved the Group’s liquidity. In addition, TUI had reached an agreement with Boeing to compensate for the consequences of the 737 MAX flight ban.

Financing and liquidity secured for ongoing pandemic
In view of the persistently volatile market environment and the continuing travel restrictions, TUI AG has agreed an additional financing package totaling 1.8 billion euros with private investors, banks and the German government. The package agreed last week includes a capital increase with subscription rights of around 500 million euros, the Group’s anchor shareholder has already confirmed his participation. It also includes a convertible silent participation of the Economic Stabilization Fund in the amount of 420 million euros. The financing package strengthens TUI’s position against the backdrop of increasing travel restrictions due to a renewed rise in the number of infections and the associated shorter-term booking behavior of some customers. The Group is securing liquidity during the ongoing pandemic.

Forecast for resumption of extensive travel activities in 2021 not reliably possible 
Due to the continuing high incidence of infection and the resulting lockdowns in the markets and only a few available travel corridors, it is not possible at this stage to make a reliable forecast of the extent and period of travel activity in 2021. At present, trips from the most important core markets can be made in particular to the Canary Islands as a popular winter destination. Cruises around the Canary Islands without shore leave (Blue Voyages) also take place.

Total bookings across all markets for winter 2020/21 are currently 82 per cent lower than in the previous year, roughly in line with the reduced capacities. Average prices are four per cent higher. Bookings for summer 2021 are three per cent higher than for the regular summer 2019. Average prices for the summer 2021 program are currently 14 per cent higher than for 2020.

Positive outlook for the tourism sector and TUI after the pandemic
The unbroken high level of consumer interest in holidays promises a rapid recovery for the holiday sector if the Corona situation eases. Tourism will remain a growth industry in the long term. As a safe and reliable form of travel, package tours in particular will play an important role in the resumption of travel. The cruise segment is also expected to see a complete resumption of business as soon as vaccines become widely available. The restart of cruises in summer 2020 has demonstrated the great interest of customers. With strong holiday brands, differentiated products and broad-based distribution in the key European markets, TUI is well positioned to get back on track successfully after the pandemic.

All photos by the group.


1) Pro forma calculation according to IAS 17

2) As of 30 November 2020, including 3rd financing package and redemption of the senior bond in the amount of 300 million euros

TUI AG and German government agree on additional stabilisation package of 1.2 billion euros

TUI AG made this announcement:

  • Increase of the existing KfW tranche by EUR 1.05 billion and Convertible Bond for EUR 150 million
  • Stabilisation package strengthens TUI’s position in a volatile market environment over the 2020/21 winter season and in the case of any further long-term travel restrictions and disruptions due to COVID-19 
  • TUI would thus currently have cash and available facilities of 2.4 billion euros

TUI and KfW have agreed to extend the existing KfW credit line by 1.05 billion euros. The drawing of this amount is subject to TUI issuing a Convertible Bond in the amount of 150 million euros to the Economic Stabilisation Fund (WSF) and a waiver by the bondholders of the Senior Notes due in October 2021. Both conditions as well as other formal requirements need to be fulfilled by 30 September 2020.

The €1.2 billion stabilisation package strengthens the Group’s position and would provide sufficient liquidity in this volatile market environment. This will cover both the seasonal swing in tourism through winter 2020/21 and other long-term travel restrictions and disruptions related to COVID-19.

Including the funds from the additional stabilisation package, TUI AG would thus have cash and credit facilities of 2.4 billion euros.

TUI CEO Fritz Joussen: “The additional stabilisation package allows us to focus on the operations and at the same time to drive forward the realignment of the Group. Already before the pandemic, we had initiated the next transformation of TUI: the transformation into a digital platform company. This transformation will now be significantly accelerated. Our integrated business model is intact. Summer holidays are taking place again in all markets. We introduced massive cost reductions early and implemented them quickly and consistently. However, no one knows at present when a vaccine or medication will be available and what effects the pandemic will have in individual markets in the coming months. Therefore, it is right and important to take further precautions together with the German Federal government. Since the lifting of travel restrictions for most European destinations, TUI has benefited from a partial restart of the programme for summer 2020. As customers start their holidays and increasingly book future trips, the Group is generating revenue again. Hotels of the TUI hotel brands also reopened and the first cruises from Germany were launched.

Like the first KfW loan of 1.8 billion euros, which was granted in April, the second KfW loan is topping up the existing bank credit facility (“Revolving Credit Facility”, RCF). The necessary changes have already almost been implemented with the RCF bank consortium.

The potential Convertible Bond with an initial term of six years would be acquired by the WSF after the conclusion of a takeover agreement. The bond would bear interest at a rate of 9.5 per cent. TUI has a right of redemption as soon as the loan of 1.05 billion euros has been repaid. TUI would issue the Convertible Bond under exclusion of subscription rights and use an existing capital reserve resolution for this purpose. If fully converted, this would currently represent a share in TUI of up to nine per cent.

The conversion price per share would be fixed at 60 percent of the average stock price prior to the issuance, but would not be below 2.56 euros.

The first KfW loan is subject to conditions, including that TUI may not pay any dividends during the term of the loan and that restrictions apply to share buybacks. The stabilisation measure provides for further restrictions, for example on investments in other companies and on the remuneration of the members of the Executive Board, as long as the WSF remains invested.

The additional KfW loan is also subject to the provison that the holders of the bond maturing in October 2021 waive any future limitation of TUI’s indebtedness.oday leading travel companies TUI and Booking.com announced a strategic global experiences, activities and excursions partnership, providing millions of Booking.com customers worldwide with direct access to the rapidly growing activities segment of TUI and its digital subsidiary Musement. The contracts have been signed and the cooperation will start in summer 2020.

All 5 TUI airlines to be merged, based in Hanover, as fleets are reduced

TUI fly Germany has made this announcement:

  • Supervisory Board supports restructuring plans and mandates management to negotiate with works councils and trade unions
  • Existing employment guarantee until the end of 2021 for all German TUI companies also applies to the restructuring of TUI fly
  • Commitment to company headquarters and the airline base Hanover: Hanover and Düsseldorf remain the largest bases of the TUI fly fleet

TUI fly Germany Managing Director Oliver Lackmann explains after the meeting of the Supervisory Board of TUI fly GmbH in Hanover:

“At the June 18 meeting, the management again presented the plans for the restructuring of the German holiday airline to the TUI fly Supervisory Board and explained in detail the need for changes. There is no doubt that these are major changes and cutbacks for our employees and for the company. Nobody takes the decision lightly, neither I myself as managing director and flight captain nor the supervisory board. But the TUI fly fleet is too large for the customer base of our German TUI tour operator. We must reduce this fleet and work more closely together within the five airlines of the Group. Otherwise, as a premium provider of holiday flights, we will further increase our competitive disadvantage over other airlines.

Even before the Coronavirus pandemic, the German airline market was characterised by considerable overcapacity and a fierce price competition. The coronavirus pandemic has led to severe disruptions in the airline sector, especially for holiday flyers. The regular business of TUI fly has come to a complete standstill since mid-March. According to forecasts, air traffic in the coming year will still be significantly lower than the volume in 2019. Even in the peak season, the TUI fly fleet was not able to achieve a cost-covering occupancy rate before Coronavirus. In the past, between 14 and seven aircraft with crews were permanently leased to Air Berlin and later to Eurowings. These were thus aircraft and seats which we as a tour operator were unable to fill with our own customers. The situation has now become even more difficult due to the pandemic. In the long-term interests of all employees of our airline – and in the interests of TUI as a whole – we must make TUI fly fit for the future.

We want to come to an agreement with the representatives of the workforce as quickly as possible. The Supervisory Board of TUI fly has mandated the management to enter into negotiations with the works councils and the trade unions. The negotiations are also based on the employment protection scheme in place until the end of 2021, agreed with the Group Employee Council for all TUI Group companies in Germany. It excludes dismissals for operational reasons with effect before the end of 2021. We see this agreement, which has been in place since 2019, as an opportunity to make the restructuring as socially responsible as possible. The Supervisory Board also underlined this goal today. We are very aware that the reduction of each individual position is about colleagues who are highly loyal to their airline. Our aim is to secure as many jobs as possible in TUI fly in the long term. However, this will only succeed if we adjust the size of the airline to a healthy and future-proof level. We will take into account the interests of the employees, the Hanover airport location and TUI as a whole in our decisions. We are now at the beginning, not at the end, of the negotiations on the design of the restructuring. The core of the plans is the announced adjustment of the fleet to about half of the current 39 aircraft.

In addition, central functions are to be more closely integrated across all five Group airlines. In a first step, TUI’s European airlines will be merged under one company. This central flight division for TUI Group airlines will be based in Hanover.

TUI fly plans to cut jobs in technical, administrative and crew functions since fewer aircraft will be used. In future, TUI fly intends to concentrate on the departure airports of Hanover and Düsseldorf as the largest fleet locations, as well as Frankfurt, Munich and Stuttgart”.

Currently there are five airlines in the TUI Group operating around 150 medium- and long-haul aircraft, including the largest fleet of the Boeing 787 Dreamliners. The airlines are TUI Airways, TUI fly, TUI fly Belgium, TUI fly Netherlands and TUI fly Nordic, serving more than 180 destinations around the world.

TUI fly Germany aircraft photo gallery:

TUI and Boeing reach a comprehensive agreement to resolve 737 MAX grounding impacts

TUI Group has made this announcement:

  • Large part of the financial impact incurred will be compensated over the next two years
  • New agreement on the delivery schedule allows more flexible fleet planning in times of the pandemic
  • New deliveries are postponed by an average of two years
  • Reduced investments in aircraft and reduced financing requirements for TUI for the coming years
  • Agreement strengthens liquidity of TUI Group

TUI and Boeing have agreed on a comprehensive package of measures to offset the consequences of the grounding of the 737 MAX. While the details of the agreement are confidential, it provides compensation which covers a significant portion of the financial impact, as well as credits for future aircraft orders. The compensation will be realised over the next two years. In addition, both parties have agreed to a revised delivery schedule for the 61 737 MAX aircraft on order, meaning that TUI will get fewer 737 MAX deliveries from Boeing than previously planned in the next several years. The associated payment schedules have been adapted accordingly. As a result of this less than half of the originally planned 737 MAX aircraft will be delivered to TUI in the next two years. On average, compared with the original scheduling, the 737 MAX deliveries will be delayed by approximately two years. This will significantly reduce TUI’s capital and financing requirements for aircraft in the coming years and supports TUI’s plan to reduce the size of fleet of its five European airlines in the wake of the Corona crisis. It was agreed not to disclose the financial details of the agreement.

Fritz Joussen, CEO of TUI Group, commented on the agreement with Boeing: “We have reached a fair agreement that strengthens our long-standing relationship with Boeing. The agreement provides TUI with compensation for a large part of costs that were incurred due to the grounding of the 737 MAX. The new delivery schedule gives us considerable flexibility because we will have fewer new aircraft delivered in the next years. This enables TUI to rapidly adapt its fleet growth to the currently challenging market environment. And it supports our plan to downsize the aircraft fleet and reduce the capital requirements for aircraft investments in the Group.”

In March 2019, a worldwide flight ban was imposed on the 737 MAX, which also had an impact on the operations and fleet renewal plans of TUI Airlines. At the time of decommissioning, TUI´s airlines had 15 737 MAX aircraft in their fleets, with eight more scheduled for delivery in 2019. With its five airlines in Germany, the UK, Belgium, the Netherlands and Sweden TUI is one of Boeing’s largest European customers for the 737 family.

TUI Group is ready to resume travel activities but will cut 8,000 jobs

TUI Group has made this announcement:

  • CEO Fritz Joussen: “People want to travel. Europe must now gradually open up. Summer holidays are possible responsibly and with clear rules. We will reinvent the holiday in 2020.”
  • TUI hotels in Germany and Europe ready to go. Increased hygiene and safety measures for all tourism activities of the Group.
  • Strong start to the 2020 financial year before the pandemic: turnover grows by +6 per cent to 6.0 billion euros in the first five months. Operating underlying EBIT after five months +21 per cent to -240 million euros1 2
  • First bookings for summer 2021: +114 per cent
  • Occupancy rate TUI Cruises 2021 at normal level 
  • Targeting 30 per cent overhead cost reduction across the Group
  • Available liquidity (as of 10 May 2020): 2.1 billion euros

TUI is ready for an early resumption of travel activities in Germany and Europe. Barely two months after almost all business units had to be shut down due to the worldwide travel bans, the tourism group is prepared for a resumption of its operational activities. TUI’s first hotels on Sylt and in Mecklenburg-Western Pomerania will open their doors for guests in the coming days. TUI’s hotels and clubs in European destinations are also ready to welcome holidaymakers. A 10-point catalogue for increased hygiene and protection measures is currently being implemented in the Group’s hotels worldwide, offering guests the greatest possible safety. Fritz Joussen, CEO TUI Group: “The safety and well-being of our guests and employees around the world continue to be our top priority. Summer holidays in Europe can now gradually be made possible again – responsibly and with clear rules. Organised travel offers great advantages especially now: With the trusted TUI brand, we offer safety, local support and, in special situations, guarantee the return journey home. Together with the destinations and our partners we have developed extensive measures to protect our guests. The demand for holidays is still very high. People want to travel. Our integrated business model allows us to start travel activities as soon as this is possible again. The season starts later, but could last longer. For 2020 we will also reinvent the holiday: New destinations, changed travel seasons, new local offerings, more digitalisation.”

Strong development before the pandemic
In mid-March, before the end of the first six months of the 2020 financial year, the Group had to suspend operational travel activities due to COVID-19 and the resulting worldwide travel bans. Up to this point, the world’s leading tourism group was on track: in the first five months of the fiscal year, turnover increased by six percent to 6.0 billion euros. Excluding one-off effects operating underlying EBIT amounted to -240 million euros – an improvement of 21 percent over the same period last year. Joussen: “We were very successful economically before the crisis and will be again after the end of the crisis. We have a functioning and successful business model and over 21 million loyal customers who trust our strong brand.”

Bridging loan ensures liquidity
Immediately after TUI was forced to largely discontinue its business due to the worldwide travel restrictions, the Group decided to apply for a KfW bridging loan of 1.8 billion euros. This is intended to cushion the unprecedented effects of the pandemic until normal business operations can be resumed. The German government approved the loan on March 27. On April 8, the banks providing TUI’s existing credit line of 1.75 billion euros (“Revolving Credit Facility”) also gave their approval for the contractual integration of the new credit. The swift action of TUI’s Executive Board thus enabled additional liquidity to be secured at short notice. As at May 10, 2020, the Group had financial resources and available credit facilities of around 2.1 billion euros.

Global realignment accelerates transformation
The loans received are to be repaid within a short period of time and the high level of debt is to be rapidly reduced again. To ensure that the strong operational performance can continue in a globally weakened market following the pandemic, the Group is now implementing a global program with extensive cost-cutting measures. This will further accelerate the transformation to a digital platform company that has already been initiated. Joussen: “TUI should emerge from the crisis stronger. But it will be a different TUI and it will find a different market environment than before the pandemic. This will require cuts: in investments, in costs, in our size and our presence around the world. We must be leaner than before, more efficient, faster and more digital. We will implement our “asset right” strategy, which we launched in 2019, even more purposefully and quickly. We will become more digital at all levels – in particular, we will accelerate the expansion of digital platforms in new markets and for our activities in the destinations. We are targeting to permanently reduce our overhead cost base by 30 percent across the entire Group. This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced. In order to return to the successful development of the past years after the crisis, we must now implement the realignment quickly.”

Outlook: Full-year guidance not yet possible 
On 15 March, the Executive Board withdrew the guidance given for 2020 as a whole. Due to the ongoing pandemic and the continuing worldwide travel restrictions, the Executive Board refrains from providing a new guidance for fiscal year 2020 also under the current circumstances. Currently, 35 percent of the 2020 summer program is still booked.

1At constant currency

2 Excluding impact from opex in digital platforms, impact of grounding of 737 MAX and one-off hedging gain in previous year