TUI Ready for Travel but Needs to Cut Costs

TUI Group announced this week that it was ready to resume travel activities and due to the coronavirus (Covid-19) crisis has decided to move ahead with a global realignment of its plan and to cut costs.

The company said its hotels in Europe were “ready to go” with a 10-point catalogue of increased hygiene and safety measures in place for all of the group’s tourism activities.

“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,” said CEO Fritz Joussen.

According to Joussen, TUI had recorded a strong start to the 2020 financial year before the pandemic hit with a 6 percent rise in turnover to 6.0 billion euros in the first five months.

In terms of first bookings for summer 2021, he said there was a rise of 114 percent with 2021 occupancy rates for TUI Cruises at a “normal level”.

Joussen added that demand for holidays was still very high, adding however that though the season may be starting later, “it could last longer”.

TUI to move ahead with cuts

However, TUI’s CEO stressed that the company will have to move ahead with cuts in order to “emerge stronger”. Joussen referred to reductions “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”.

The reductions may affect potentially 8,000 positions worldwide that will either not be recruited or reduced.

TUI CEO Fritz Joussen

TUI is also targeting to permanently reduce its overhead cost base by 30 percent across the entire group.

“In order to return to the successful development of the past years after the crisis, we must now implement the realignment quickly,” Joussen said.

The Group has also signed for a 1.8-billion-euro bridging loan to be used to cushion the unprecedented effects of the pandemic until normal business operations can be resumed.