Frankfurt Looking back may sober some Tui investors. The travel group, which was hit by the pandemic, did not come out of the red in the past quarter. The adjusted loss before interest and taxes (EBIT) amounted to 329 million euros after a minus of 633 million euros in the same period last year. The bottom line is a consolidated loss of 321 million euros.
But the quarterly report that Tui boss Friedrich Joussen presented on Wednesday morning also contains some good news. Sales from January to March amounted to 2.1 billion euros, more than seven times the second quarter of 2021. “We expect a significant positive operating result for the year as a whole,” said the manager confidently for the coming weeks and months.
Such optimistic promises are typical of the Tui boss. But there is much to suggest that Joussen can meet his ambitious forecast. The tourism industry is about to make a comeback.
A current survey by the European Tourist Association ETC shows that there is a great desire to travel in Europe. Three out of four people then stated that they wanted to travel in the next six months, primarily to Mediterranean destinations. The survey was conducted in ten countries in March. The war in Ukraine was already raging.
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The longing for vacation is reflected in the current figures from Tui. Joussen said bookings had been above pre-crisis levels in the past six weeks. In Great Britain, the current value is already eleven percent higher, in Germany the number of bookings has even risen to 135 percent in the last few days compared to before the crisis.
Lufthansa also reports high booking numbers
Tui isn’t the only one who feels the urge to take a break. Lufthansa is also reporting strong demand for flight tickets. “Fortunately, the fading pandemic is finally allowing more personal encounters again,” said CEO Carsten Spohr on Tuesday at the company’s annual general meeting: “We see that every day at the airports, on our planes and also in our incoming bookings.”
In the current year, Lufthansa wants to complete 75 percent of the normal flight offer again, and by 2023 it should be 95 percent. The current figures are so good that Spohr no longer rules out reaching the figures that the group managed before the pandemic before 2025, but earlier.
>> Read about this: Lufthansa boss Spohr wants to reach full capacity before 2025
The holiday airline Condor is therefore already planning for the coming winter. The airline wants to serve long-haul routes from Düsseldorf and Munich again. It should go far away to destinations like Punta Cana or Cancún. Condor boss Ralf Teckentrup describes people as “hungry for vacation”.
The situation is similarly good in the domestic travel industry. According to the Federal Statistical Office, the number of overnight stays in Germany rose by 175.7 percent to 25.1 million in March compared to the same month last year. This value is only around a quarter below that before the crisis began.
Three out of four Europeans want to travel in the next six months, primarily to Mediterranean destinations.
(Photo: IMAGO/Chris Emil Janssen)
“The industry can look forward to the Whitsun business and the summer with confidence. There is a good pre-booking situation in many destinations,” said Norbert Kunz, Managing Director of the German Tourism Association (DTV), at the beginning of the week, visibly satisfied.
Concerns about the impact of inflation on travel budgets
However, it is unclear whether the current boom will continue or whether it is mainly a catch-up effect after two years of the pandemic. The ETC expressly points out that although many people wanted to travel, only 25 percent had already fully booked their vacation.
Tui boss Joussen has so far not observed any significant impact of the war in Ukraine. The concern in the industry is that people are holding their money together and spending less on travel because of the sharp increase in inflation. “We’re watching this very closely,” said Joussen.
Currently, however, customers would continue to book longer holidays and higher categories. In the past winter, Tui achieved prices that were 13 percent higher on average, and in summer the prices were even 20 percent higher. The British market, where winter bookings can already be made, has so far shown that this trend is continuing. “The higher prices offset the higher costs for fuel, for example, so we are also confident of being able to achieve a positive result for the full year,” said Joussen.
In the past quarter, the travel group achieved sales of 2.13 billion euros, nine times as much as in the same period last year.
(Photo: Reuters)
A recent survey by the travel platform Skyscanner confirms the trend towards higher spending on vacations. “49 percent of respondents plan to spend more this year,” said Naomi Hahn, the company’s chief strategy officer. This may be a reaction to lost travel time and canceled vacations over the past two years. On the other hand, in the most recent ETC survey, the proportion of people who want to spend a little less on holidays has increased slightly.
The period between April and October is the most important for tourism. This is where she earns her money. The industry can really use the boom. This can be seen in the example of Tui. During the pandemic, the group was absorbed by the state in several steps with a total of 4.3 billion euros. The mountain of debt that has accumulated as a result must be repaid. Last but not least, investors are waiting for this, and they need to regain their trust in the company.
The company is making progress. The group was able to reduce its net financial debt from 5.1 billion to 3.9 billion euros by the end of March. Available liquidity stood at 3.8 billion euros at the end of March, although Tui returned an initial unused credit line of 700 million euros to the state.
At the same time, the group was able to generate a cash flow of 439 million euros in the first half of the year. This means that Tui has not burned any more money in the first six months of the offset financial year. In the first half of the previous year, the so-called cash flow was still negative at minus 1.47 billion euros. At the same time, the equity at group level is no longer negative, it is now 216 million euros.
Joussen recently announced in an interview with the Handelsblatt that he intends to return further credit lines to the state. That should further reduce the interest burden. So far, the company has transferred around 280 million euros to the federal government for interest and the provision of credit lines. The news on Wednesday was well received on the stock exchange. After the Tui share had initially turned negative in the early morning, the paper was just slightly positive in the morning.
More: “Will be more profitable than before the crisis” – Tui boss Joussen wants to return more government loans