TUI: quarterly loss widens as Covid-19 shutdown bites

(CercleFinance.com) - TUI said on Wednesday that its underlying loss had widened in its second quarter, after the tour operator was hit by the global travel suspension that followed the coronavirus outbreak.


TUI's underlying loss reached 680.9 million euros over the past quarter, increasing from 242 million euros in the same period a year ago.

The German tourism company said it was hurt by costs arising from COVID-19 shutdown, and most notably ineffective hedges, as well as additionally replacement lease costs relating to the grounding of the Boeing 737 Max.

To cope with the situation, TUI aims to permanently reduce its overhead cost base by 30% across the entire group, which is expected to impact 8,000 jobs globally.

In its statement, TUI said it is a "resilient" business set to emerge "stronger, much leaner and more flexible" after the crisis.

Analysts seemed more skeptical.

"Based on TUI's disclosure we calculate that each month of "zero traffic" leads to cash consumption of 450 million euros-850 million euros (pre layoffs) vs. available liquidity 2.1 billion euros", UBS noted.

TUI's London-listed shares were down over 1.5% on Wednesday morning.

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