TUI Group expects strong travel summer 2022

The strong return of the operating business generated significant cash inflows in the period under review, resulting in a free cash flow of 1.24 billion euros. TUI continues to have KfW credit lines to fall back on, but is not currently drawing on them. Following the return of credit lines of around 700 million euros, the Group had around 3.4 billion euros in liquid funds at its disposal at the beginning of April. The liquidity position was further improved by the significant increase in business momentum and the continued global realignment with successful cost management. As at 6 May 2022, TUI had 3.8 billion euros in financial resources.

TUI had announced that it would reduce the Corona aid as quickly as possible and lower the Group’s debt. At the end of the period under review, TUI’s net debt stood at around 3.9 billion euros, compared with around 5.1 billion euros in the previous quarter. The target remains unchanged at a gross leverage ratio of below three. Due to the positive business development, the stabilisation of the market and the ongoing transformation of the company, the basis has been created to gradually return the KfW credit lines and to reduce the German government's participation.

The booking trend remains unabatedly high. In the period under review, 1.9 million guests travelled with TUI – almost ten times as many as in the same period last year (Q2 2021: 0.2 million). For Winter 2021/22 and Summer 2022 combined, TUI currently counts 11 million customers. After the short-term dampener due to the omicron variant, bookings are picking up significantly. In the past six weeks in particular, new bookings were above the comparable level for summer 2019. As in the weeks before, the particular momentum continues above all in TUI Germany and TUI Netherlands. Both markets saw double-digit growth in Summer 2022 bookings in April, above the comparable booking level for Summer 2019. In terms of the overall development of bookings for Summer 2022, TUI UK continues to lead the way, currently showing an increase of 11 per cent compared to Summer 2019.

Group-wide, booked volumes are currently at 84 per cent of summer 2019, the last regular financial year before the Corona pandemic. TUI confirms its expectation to almost reach the booking level of summer 2019 in summer 2022. Two trends are confirmed: Holidaymakers continue to book more at short notice and at the same time spend more money on their trip. Average prices remain high at +13 per cent for Winter 2021/22 and +20 per cent for Summer 2022. The reason for this continues to be the high proportion of package tours booked. Customers trust the TUI brand and hand over the complexity of travel planning with flights, transfers and hotel rooms to TUI tour operators in the markets. At the same time, TUI guests book longer stays on average and they have more budget for additional services, such as a higher hotel or room category.

TUI had announced that it would reduce the Corona aid as quickly as possible and lower the Group’s debt. At the end of the period under review, TUI’s net debt stood at around 3.9 billion euros, compared with around 5.1 billion euros in the previous quarter. The target remains unchanged at a gross leverage ratio of below three. Due to the positive business development, the stabilisation of the market and the ongoing transformation of the company, the basis has been created to gradually return the KfW credit lines and to reduce the German government's participation.

For Winter 2021/22, TUI had advised to reach the lower to middle corridor of 60 to 80 per cent of pre-crisis capacity. In Q2 2022, 71 per cent of pre-crisis 2019 capacity was operated. This puts the Group above the mid-range corridor of original expectations for the period. Overall, more than 3.3 million guests travelled with TUI in Winter 2021/22. The significantly improved business performance with strong booking momentum saw turnover climb to 2.13 billion euros in the period under review – nine times as much as in the same period of the previous year (Q2 2021: 248 million euros). The usual seasonal loss was almost halved to -330 million euros (previous year: -633 million euros).

The Markets & Airlines segment with the regions North (UK, Ireland, Sweden, Norway, Finland, and Denmark), Central (Germany, Austria, Switzerland, Poland) and West (Netherlands, Belgium and France) recorded 1.9 million passengers in the reporting period. The load factor across all markets was 84 per cent. Overall, the regions' results improved due to a strong pick-up in business, especially in the second half of the reporting period. The Northern Region reduced its seasonal loss to -181 million euros (Q2 2021: -221 million euros), the Central Region narrowed its loss to -21 million euros (Q2 2021: -123 million euros) and the Western Region posted an underlying EBIT of -57 million euros (Q2 2021: -83 million euros). Overall, the result of the Markets & Airlines segment improved by 168 million euros compared to the previous year. 

For the third consecutive quarter since the start of the pandemic, the Hotels & Resorts segment achieved a positive result. In the months January to March 2022, underlying EBIT was 24 million euros (previous year: -103 million euros). Average revenue per bed-night rose by 17 euros year-on-year to 86 euros, while occupancy rate improved by 29 percentage points to 65 per cent.

For the Cruises segment, the Group expects a recovery in the second calendar half of the year. In the reporting period, many ports were still closed and restricted routes in January and February, so that normal business activities were not possible. In January, only eight of the total of 16 ships were in service; since April, the entire fleet of TUI Cruises, Hapag-Lloyd Cruises and Marella Cruises has been in operation again. In addition, the trend towards later and shorter-term bookings continues in this segment as well. Underlying EBIT in the segment totalled -74 million euros in the period under review (Q2 2021: -55 million euros).

The development in TUI Musement, the growth area for tours and activities, benefits from digitalisation, the integrated business model, the breadth of offerings in popular destinations and the return of the operating business by opening up destinations. In Q2 2022, almost 700,000 excursions, activities and tours were sold, ten times more than in the second financial quarter last year. The number of transfers increased more than eightfold to 2.5 million. The sector's typical winter loss was almost halved in the reporting period, with underlying EBIT at -17 million euros (Q2 2021: -29 million euros). TUI Musement is to become the leading global platform for excursions, tours and activities, which is why exclusive offers in particular are being consistently expanded. The "TUI Collection" portfolio has been relaunched and will grow from 350 to 650 high-quality experiences available only from TUI. In addition, the Group expects an increase in sales via third-party providers, so that sales of excursions, activities and tours in TUI Musement will outperform the increase in capacity planned for the Markets & Airlines segment in financial year 2022.