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Bloomberg
TUI AG stopped burning cash as holiday bookings surged following European government moves to relax travel restrictions.
The world’s biggest tour operator reported cash inflows during the three months through June of 320 million euros ($376 million), excluding financing costs, the first time it’s recorded a positive number since the onset of the Covid-19 pandemic. That’s after revenue surged to 650 million euros in the quarter from 72 million euros a year ago.
“Especially in Germany and in the continental European markets, the current booking figures show a high pent-up demand,†TUI Chief Executive Officer Fritz Joussen said in a statement. A further easing of UK travel rules should lead to another booking spree in the three months through September, he said.
Despite the positive free cash flow, TUI still posted a loss of 940 million euros as travel remained significantly below pre-pandemic levels. While the company has added 1.5 million summer bookings since May, capacity for the high season remains at about 60% of 2019 levels.
Still, the company’s liquidity position is “very safe,†with 3 billion euros available, Joussen said in an interview with Bloomberg TV. While the winter season remain uncertain, revenue should be boosted by existing reservations and short-term bookings yet to come, he said.
TUI has raised billions of euros from three bailouts since the pandemic hammered its core business, which is taking mainly British and German tourists to warm-weather destinations. The company, which operates airlines, hotels and cruise ships, has relied on the German government and private investors to pitch in on prior fundraisings.
Provided the pandemic doesn’t take a fresh turn for the worse, the return to positive cash flow will give management some breathing room as they try to plot TUI’s exit from the crisis. The company is considering a capital raise of as much as 1 billion euros to help repay those state bailouts and shore up its balance sheet.