Holiday Giant TUI Cuts Summer Capacity Plan on Virus Surge
(Bloomberg) -- TUI AG scaled back its summer holiday schedule to reflect new coronavirus restrictions in Europe, while saying it’s confident that vaccine rollouts will spur bookings later in the year.
The world’s biggest tour operator will now offer 75% of 2019 capacity in the peak travel months starting in July, it said in a statement Thursday. The Hanover, Germany-based company had previously targeted 80% of capacity, including May and June.
Confidence in a rebound for vacation travel has ebbed in recent weeks amid heightening uncertainty over when and how health curbs will be lifted. Ryanair Holdings Plc on Wednesday appealed to would-be holidaymakers not to get “panicked” by negative headlines, offering free changes to bookings through October. The International Air Transport Association put back its own annual meeting from June to October, citing concern about the easing of restrictions.
TUI “remains flexible to increase capacity again in the short term as further progress is made on pandemic response and vaccination campaigns, travel restrictions are lifted and customer demand increases,” it said.
Shares of TUI traded down 3.6% as of 11:22 a.m. in London, where the group has its main listing, bringing the decline this month to 15%.
A gloomier outlook for summer travel is impacting demand in key markets. U.K. Prime Minister Boris Johnson is expected to delay the lifting of a moratorium on leisure flights in an update set for April 5, while Germany and France have imposed new restrictions.
Customers want to travel, but “the conditions for tourism need to be created at the political level,” TUI Chief Executive Officer Fritz Joussen said at the company’s annual meeting on Thursday.
While TUI has booked 180,000 new guests since February, the overall figure for the summer is stuck at 2.8 million -- 60% below the comparable level for 2019 -- after others canceled holidays planned for Easter and early in the season.
TUI said the figures include people who chose new dates after being bumped from a holiday last year because of the pandemic. Some customers have pushed holidays into 2022, it said.
Joussen held off from issuing a financial forecast, saying that cash flows would trend toward breakeven once bookings and business normalized.
The company said it has sufficient liquidity “until the summer,” with 1.6 billion euros ($1.9 billion) in cash and available facilities as of March 22.
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