(Alliance News) - Tui AG on Tuesday said it is undertaking a business restructuring programme to save cash in the face of the Covid-19 pandemic and is evaluating options to achieve the "optimal balance sheet structure".
Under the so-called Global Realignment programme, the Anglo-German tour operator plans to reduce overhead costs by 30% across the entire company, which will potentially impact 8,000 jobs. It is targeting permanent annual savings of more than EUR300 million, with the first benefits expected to be delivered from the year ending September 30 and full benefits to be delivered by financial 2023.
Tui said it has reduced its capacity for the fourth quarter to 25% from 30% and is focussing on low-risk destinations, enabling customers to continue their holidays as planned.
Bookings for summer season are currently 83% down versus prior year and average selling prices are down 19%, the company said, adding that winter bookings are down 59% and selling prices are up 3%.
Tui said it is more positive about summer 2021 season, when it expects to operate 80% adjusted capacity. Bookings for the season are up 84% and average selling prices up 10% versus prior year period.
As of Sunday, Tui had cash and available facilities of EUR2.0 billion.
"After having agreed additional liquidity support by the German Federal government, we continue to evaluate options to achieve the optimal balance sheet structure to support the business over the longer term," Tui said.
Shares in Tui were down marginally at 270.90 pence each in London on Tuesday morning.
By Tapan Panchal; tapanpanchal@alliancenews.com
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TUI AG (TUI)