Tui bets on Greek and Spanish summer holidays as it crashes to €1.5bn loss

·3 min read
Tui's group revenue was €716m, down 89%. Photo: Getty Images
Tui's group revenue was €716m, down 89%. Photo: Getty Images

Tourism company Tui’s revenue for the first half of its 2021 financial year took a severe beating as it continued to reel from the impact of the pandemic. Shares in the company slumped 2% on Wednesday morning.

For the period ended 31 March, Tui posted a net loss of €1.47bn (£1.26, $1.78bn), which widened from a loss of €861.4m a year prior.

Group revenue was €716m, down 89% “as a result of extended travel restrictions imposed across our key European markets for the majority of the first half,” the company said.

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Bookings were 69% lower when compared with 2019.

"The development of Tui Group's revenue and earnings in first half of 2021 was still materially impacted by the suspension of the vast majority of our tour operation, aviation, hotel and cruise operations as a result of the global travel restrictions in order to contain the spread of COVID-19," the travel operator said.

Tui's stock ticked lower on Wednesday morning. Chart: Yahoo Finance
Tui's stock ticked lower on Wednesday morning. Chart: Yahoo Finance

"Tui Group's results generally also reflect the significant seasonal swing in tourism between the winter and summer travel months, however this period the impact is less evident due to the COVID-19 pandemic."

However, it said its Markets & Airlines unit served 684,000 customers, “demonstrating the continued desire to travel when restrictions allow.”

Going forward, it has a pipeline of 2.6 million customers who have booked holidays with Tui for the summer, as lockdown restrictions ease. This was 69% less than pre-pandemic levels in the summer of 2019.

It said customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on lifting of travel restrictions.

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The London-listed German firm is focusing on destinations including Greece, Balearics and Canaries where it is anticipating strong vaccinations rates and low infection rates.

“The continued vaccination progress across our key customer markets and destinations, combined with more testing, and comprehensive hygiene measures throughout our ecosystem, should enable the safe return to holidays this summer,” Tui said.

It added that a survey it conducted shows customers "value a strong brand, flexibility, comprehensive health and safety protocols with a good customer experience during these unprecedented times."

Looking ahead, it said it is difficult to forecast what course the pandemic and what impact this will have customer behaviour. For this reason, it is not issuing a specific forecast for the financial year 2021.

"Although it’s not time to recline on the sun lounger just yet, the reopening of economies and control of COVID rates in key markets does bring hope that the worst of the crisis may be behind the company," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"However, a lot is still riding on governments giving tourists approval for travel, including the setting up of vaccine and testing passports," she said.

"The possibility of fresh strains emerging as the virus continues to rip through India, or current variants taking hold more aggressively are still risks ahead which could also affect the confidence of the travelling public."

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