TUI boss Joussen defends Mallorca vacation

Dhe discussion about holidays in Mallorca is heating up the minds like no other. Because the number of infections locally is low, the island has not been a risk area for a few days. Since then, travel providers such as TUI have been increasingly bringing tourists there again – and thus exposing themselves to criticism for taking high risks in the middle of the third wave of pandemics.

CEO Fritz Joussen defended the strategy on Thursday. Travel is a fundamental right of freedom and must be possible when the number of corona cases is low, he said. In addition, there could be no question of a party vacation on the island. “Mallorca is empty, and if you go to the Ballermann, then there is not a single shop open.” He approved of the planned test obligation for returnees to Germany.

TUI suffers greatly from the restrictions caused by Corona. Since March of last year, the group has brought around 2.5 million customers on vacation in the few time windows in which travel was possible, 90 percent fewer than in normal times, said Joussen at the virtual general meeting.

Understanding of the compulsory vaccination

In order to curb the outflow of liquid funds, the company, supported by government aid worth billions, uses every opportunity to do business. It goes without saying that great caution and strict hygiene measures are necessary, said Joussen. He also understands that there is a compulsory vaccination that some holiday countries might impose. “We shouldn’t defend ourselves against that, on the contrary. If we have a pandemic, I think that’s part of dealing seriously with what’s going on. “

The development of liquidity shows how tense the situation is. Including the last implemented third aid package, TUI had 1.6 billion euros in liquid funds as of March 22, around 500 million euros less than seven weeks ago when the group last gave an update. The equity ratio should be only slightly above the zero line at the end of the month.

In order to be able to strengthen the balance sheet and have further options for a continued crisis, the management creates scope for further capital measures. At the Annual General Meeting, the shareholders approved several reserve resolutions, which will enable the share capital to be increased by 637 million euros. Including existing authorizations to issue new shares, TUI could raise around 1.1 billion euros. Most recently, in January, as part of the latest support, the group received 509 million euros through a capital increase.

Higher net debt

The burdens are also reflected in the debt. At the end of the first quarter, which ran from October to December for TUI with its broken financial year, the group had reported net debt of around 7.2 billion euros, significantly higher than at the beginning of the pandemic. Part of the increase was due to new accounting rules, but government aid also pushed the value up. Joussen assured that TUI could deal with the risks despite the continued high level of uncertainty. With the digital transformation planned before the crisis and an optimization of the business model, “we will be able to bear the debt burden and reduce it over time”.

Although the situation had recently deteriorated again due to more infections, the manager was optimistic for the current year. “If some of the easing applies already in April and – perhaps more importantly – credibly for the summer, then we will see good summer business in tourism this year.”

So far, TUI has 2.8 million guests on the books for this summer, including rebooking and voucher redemptions. That is around 60 percent less than at the same time in 2019. The group has slightly corrected the plans for its offer: Instead of offering around 80 percent of the capacity from the pre-crisis period in the summer, it should be 75 percent according to the current status.

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