The travel company Tui Group has cut back its summer schedule amid the continued impact of British coronavirus restrictions, despite receiving 1.5m bookings for summer holidays since early May.
The world’s largest tourism business said on Thursday that it had returned to generating positive cashflow for the first time in the pandemic thanks to an influx of customer deposits, in a statement to the stock market. It brought in €320m (£270m) in cash between April and June.
However, Tui will run flights at only 60% of its 2019 level during the July-to-September quarter, a reduction from the 75% it had planned in May.
Fritz Joussen, the chief executive, said the cuts to planned flight numbers were mainly down to customer uncertainty in the UK, where the government had made “sometimes too rapid” changes to which countries are open for travel.
“We are missing the bookings from the UK,” Joussen said. “We had a big booking base and then when you change the programme so often then people cancel and amend. The predictability of decisions was not very high.”
Tui has been one of the most vulnerable companies to changes in travel restrictions across Europe during the pandemic. England, one of its largest markets, has kept travel restrictions in place on many of the most popular destinations for longer than expected because of the spread of the infectious Delta variant of coronavirus.
Joussen added that UK demand was lowered further by the costs of mandatory PCR (polymerase chain reaction) tests for all passengers, including for those who are fully vaccinated. Tui has offered cheap testing to customers in an attempt to encourage them to book.
The Anglo-German company made a steep quarterly loss of €940m between April and June. Over the first nine months of its financial year from October to June, Tui lost €2.4bn, €100m more than it did in the equivalent period for 2020. However, its financial position will improve during the July-to-September quarter as cash received from forward bookings is translated into confirmed revenues.
It has 4.2m bookings lined up for the whole summer, compared with about 9m before Covid-19 struck.
Tui said the strong rebound in customer deposits reflected “strong pent-up demand, with government regulation a clear limiting factor to our operations”.
The company has focused on reopening in destinations with relatively high vaccination rates and low hospital admissions, with the Balearics, Canaries and Greek islands forming most of its planned capacity for rest of the summer.
There were further signs of pent-up demand for winter long-haul travel as well as early sales for summer 2022, which hit an all-time high, at more than double the forward bookings at the same point before Covid-19.
The company, which has been bailed out multiple times by banks, investors and the German government, will still have to raise more money to cut the debt pile it has built up during the coronavirus crisis.
However, Joussen said Tui’s negotiations with lenders had eased its short-term liquidity pressures. “We are not burning cash any more,” he said. “The good thing is we have the time.”
