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TUI Warns On Weak Capacity; Cost Cutting To Likely Impact 8,000 Jobs; Stock Up

tui sept22 lt

Tour operator TUI AG (TUIFF.PK) Tuesday said Summer 2020 and Winter 2020/21 capacity reduced as a result of recent volatile changes in travel restrictions amid Covid-19 pandemic.

The company further announced that the Global Realignment Programme, aiming to permanently reduce overhead cost base by 30%, is underway. The program potentially impacts 8,000 roles.

With this program, the company is targeting permanent annual saving of more than 300 million euros, with the first benefits expected to be delivered from FY20 and full benefits to be delivered by FY23.

The company also said it is on track to complete the additional stabilisation package provided by the German Federal government.

In its pre-close trading update for the twelve months ending September 30, the company noted that since restarting operations from mid-June, it has taken 1.4 million customers on their holidays, achieving an average load factor of 84 percent based on adjusted capacity.

Following the restarting, leisure travel is expected to recover faster than business travel.

The company noted that bookings for Summer 20 are currently 83 percent down versus prior year and ASP down 19 percent.

Winter 20/21 programme has been further reduced by around 20 percent since third quarter update, to around 40 percent adjusted capacity reflecting the current uncertainty relating to travel restrictions.

For Summer 21, TUI expects to operate 80 percent adjusted capacity in line with view shared at third-quarter results.

The company noted that prior to the pandemic, January 2020 saw the best booking month in the company's history. TUI was on track to deliver a strong result for financial year 2020.

Since the worldwide travel suspension in March, significant self-help actions have been taken to address the impact of the C-19 pandemic across the business.

TUI added that over the last month, it has been impacted by continuous changes in travel advice by various governments across markets.

Chief Executive Friedrich Joussen said, "Destination availability at present 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.... TUI will emerge a stronger, leaner, more digitalised business and is well positioned to benefit from the expected recovery."

In Germany, TUI shares were trading at 3 euros, up 1.62 percent.

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