TUI Group widens Q2 loss, sets 30% cost-cut target

Potential 8,000 jobs to go

The group plans to cut overhead by 30%, potentially impacting 8,000 jobs globally, even as it readies for a resumption of travel activities in Germany and Europe.

'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,' said Fritz Joussen, CEO TUI Group. '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 digitalization.'

€740.5m loss on lower turnover

The year opened with record January bookings before the COVID-19 pandemic shut down travel. The group's second quarter loss widened to €740.5m on revenues of nearly €2.79bn, compared to the year-ago loss of €176.9m on revenues of €3.1bn.

Cruises division

Turnover in the cruises division was €243.2m, a 3.8% increase from the €234.2m the prior year. Earnings before interest, taxes, interest and amortization in the cruises group was €21.7m compared to €79.9m a year ago.

The group's cruise brands have suspended operations to mid-June so far.

Occupancy limit, enhanced screening, sanitation

TUI said it is preparing its ships so that social distancing guidelines can be implemented. A company infographic outlined such plans as restarting with lower occupancy rates, carrying no more than 1,000 passengers per ship until September. Other plans include health questionnaires, pre-embarkation screening, staggered boarding, no self-service dining, only every third seat occupied in theaters, a maximum of 10 children in kids' clubs and passenger limits in the spa and gym. There would be cleaning of frequently touched surfaces every 30 minutes, COVID-19 testing on board and additional health staff.

 €2.1bn liquidity

The TUI Group became the first German company to receive COVID-19-related state support by securing a €1.8bn bridge loan. As of May 10, the group had €2.1bn of liquidity. The loan is to be repaid within a short period so the group is undertaking extensive cost-cutting measures and targets a permanent 30% overhead reduction that could potentially impact 8,000 positions, through cuts or halting recruitment.

Cruise ship layups have saved around 50% of monthly fixed costs.

The occupancy rate for TUI Cruises in 2021 is currently 'at normal level.'