The state-saved Tui wants to turn things around this year. Most recently, the financial result was not enough to repay further aid – but the summer bookings should be promising.
Tui shareholders are to approve another capital increase for the largest German travel group at an online general meeting on Tuesday. The management announced plans to issue new shares last year. Among other things, the proceeds are to be used to finance the repayment of state aid during the Corona crisis.
Business has recently improved again for the Hanoverians after the pandemic low that threatened their existence, and customer bookings increased. Concrete dates for the months of October to December 2022 and the beginning of winter are now expected at the shareholders’ meeting.
Pandemic was a major setback
The cold season is usually much weaker for the tourism industry in the northern hemisphere, with providers making the majority of their sales in summer. For Tui, the development of demand is currently also of great importance in winter, because during the peak phases of the virus crisis, business had almost completely come to a standstill.
The German state and the private owners jumped in with billions in loans or additional capital to save the company from going under. The Federal Economic Stabilization Fund (WSF) also supported Lufthansa and several other companies.
The next steps for paying off the public aid packages at Tui have been mapped out. By the end of the current year, at least 730 million euros plus interest should flow back – the capital increase now being targeted should bring in the necessary funds. The financial cushion had already been increased in previous years, for example by the former major shareholder and Russian oligarch Alexei Mordashov and by the family that owns the Spanish hotel chain Riu. At the same time, Tui drove a tough austerity course, which also resulted in numerous job cuts.
Company could turn the corner
The group also wants to reduce its credit line with the state bank KfW, which amounted to more than two billion euros at the end of 2022. First of all, however, the development in winter should be awaited, CFO Mathias Kiep said recently: “How much do we need, how much buffer do we have to have in the company?”
So far it has looked like Tui could turn the corner this year. More customers have decided to book again in the past few months – despite the high inflation, which is affecting the income of many households. The demand for longer and higher quality stays has also increased, it was said when the figures for the 2021/2022 financial year were presented in December.
The bottom line was that there was still a loss of 277 million euros – but this was reduced to around a tenth of the previous year’s value. Without interest, taxes and other factors, 409 million euros remained as a profit, in 2020/2021 Tui had lost more than two billion euros on this basis. The group also wants to expand its offer with combinable individual bookings.
Climate change is also an issue
Another topic at the shareholders’ meeting is likely to be the role of tourism in climate change. Tui announced that it would reduce its emissions of harmful greenhouse gases by binding values by 2030: by 24 percent for the group’s own airlines compared to the 2019 level, by at least 46.2 percent for hotels and by 27.5 percent for cruises.
Investments in modern aircraft, general energy savings, promotion of local shopping for hotels and the use of sustainable fuels for cruise ships are planned. The industry has been criticized for its often high emissions of climate-damaging carbon dioxide (CO2) and harmful nitrogen oxides.
Source: Stern
