(Alliance News) - Anglo-German holiday firm Tui AG said Thursday that it lost EUR1.5 billion in just three months, as the Covid-19 pandemic kept Britons and Europeans at home.
The travel sector has been among the worst hit by Covid-19, with lockdown measures crippling demand and emptying skies.
Tui reported a pretax loss of EUR1.46 billion in the third quarter ended June 30, swinging from a EUR60 million profit a year before, as revenue plunged 98% to EUR75 million.
Third-quarter group underlying loss before interest and tax amounted to EUR1.1 billion due to suspension of operations for the majority part of the quarter, resulting in impairment charges and costs arising from ineffective hedging contracts.
For the nine months to June-end, the company's revenue fell 41% To EUR6.71 billion, resulting in a sharply widened pretax loss of EUR2.34 billion from a EUR323.3 million loss a year ago.
The nine-month underlying Ebit loss amounted to EUR2.0 billion, an increase of EUR1.8 billion versus a year prior, reflected underlying costs of EUR1.3 billion from business suspension since March, impairments triggered totalling EUR410 million, and net costs from ineffective hedges amounting to EUR189 million.
Tui said partial operations have successfully resumed since mid-May, with 55 hotels reopened in the quarter. It expects to be broadly operationally cash break-even in its fourth quarter. It said financial 2021, which will begin on October 1, will be a transition year, with business not getting back to normal until financial 2022.
Bookings for summer 2020 are down 81% and average selling price down 10%, Tui said. This equates to 16% sale of the company's original program, reflecting impact of cancellations from mid-March, versus 88% sold at the same point last year.
The company has adjusted capacity plans for both winter 2020-21 and summer 2021 from its original plans to reflect both current government advice and consumer demand.
Capacity for winter 2020-21 has been reduced by 40% and overall bookings are down broadly in line with the capacity adjustment. For the UK, bookings are down 5% and average selling price is up 2%.
Summer 2021 capacity has been adjusted by 20%, the company noted. Bookings are up significantly as customers rebook holidays.
The huge loss caused by the virus lockdown and travel restrictions forced Tui to turn to the German government for state aid. The company on Wednesday had secured an additional EUR1.2 billion from the German government on top of the EUR1.8 billion already received back in April.
Following the state aid, Tui has total cash and lending facilities of EUR2.4 billion.
Tui shares were down 4.1% early Thursday in London at 352.10 pence each. Year-to-date the stock has shed more than 60% in value.
By Tapan Panchal; tapanpanchal@alliancenews.com
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TUI AG (TUI)