TUI warns of 8,000 job losses as it cuts costs
World’s biggest package-holiday company seeking to cuts costs by 30% in face of Covid-19 crisis
The world’s biggest package-holiday company is seeking to offer more local breaks in the hope of encouraging a revival in tourism before the end of summer
Travel group TUI said it could eliminate as many as 8,000 jobs to cut costs and slim down its business as people travel less and favour different locations following the coronavirus outbreak.
The world’s biggest package-holiday company is seeking to pare costs by 30 per cent and offer more local breaks in the hope of encouraging a revival in tourism before the end of summer, it said.
Like other travel companies, TUI was left reeling as the pandemic shut national borders and wiped out flights. While some countries are still largely in lockdown, chief executive Fritz Joussen said there’s an appetite for vacations this year and that Europe must open up.
“Summer holidays in Europe can now gradually be made possible again, responsibly and with clear rules,” Mr Joussen said. “People want to travel. The season starts later, but could last longer.”
Mr Joussen said TUI need to reinvent its portfolio to adapt to realities including changed travel seasons, with new destinations and more local offerings. The company’s Chinese unit has already restarted with trips and flights within the country. The first German hotels are set to reopen in coming days, and European destinations are ready to welcome holidaymakers, he said.
He also predicted a “renaissance of overland travel” that could see more Germans driving to Mediterranean sunspots such as Croatia. Joussen said uncertainty over when different countries will open up to travel is making customers holding bookings more and more frustrated, and that “they increasingly don’t understand that we cannot give them an answer.” Cost cuts could amount to about €400 million, he said. Measures will include “rightsizing” TUI’s airline arm, though plans envisage delaying deliveries of Boeing 737 Max aircraft rather than canceling them outright. The group has 72 Max jets on order, of which 15 have been delivered, though the model is currently grounded after two fatal crashes.
TUI, which has been granted a €1.8 billion bridging loan from German state bank KfW, had reserves of about €2.1 billion as of May 10th, according to the statement. “We moved from a very, very critical situation to a critical situation, Joussen said. “So we are fairly upbeat.”
TUI reported an underlying second-quarter loss before interest and tax, depreciation and amortization of €540 million, versus a loss of €106 million a year earlier.
Joussen said he expects a full recovery of tourism demand by 2022, reasoning that unlike retail and business transactions, technology cannot offer an alternative to vacations. – Bloomberg