Tui, Europe’s biggest holiday company, has made fresh cuts to its winter schedule, blaming changing travel restrictions, as it reported an 83% slump in summer holiday bookings this year.
The Anglo-German travel firm now expects to operate just 25% of its winter schedule, as customers continue to book holidays at the last minute to try to avoid changes in travel advice.
The package tour operator revealed in August that it had made loss of €2bn (£1.8bn) in the first nine months of its financial year, and did not expect bookings to return to normal until 2022.
Tui has previously announced plans to cut 8,000 jobs and shut 166 high-street travel stores in the UK and Ireland, enabling it to permanently reduce its costs by 30%.
It said that it reduced its costs by 70% during the lockdown period, when it cancelled all of its holidays.
Tui’s chief executive, Friedrich Joussen, said the firm had taken 1.4 million customers on holiday between restarting its package trips in mid-June and the end of August, but warned that the outlook remained uncertain.
“Destination availability at present is highly influenced by government policy and development of the pandemic, meaning the environment remains volatile, and is likely to remain so for the next few quarters,” Joussen said.
Like other travel companies, Tui has come under financial pressure to refund its customers for holidays that they were no longer able to take.
Tui’s UK arm committed earlier in September to paying any outstanding refunds for cancelled package holidays by the end of the month, following a deluge of complaints from customers to the regulator, complaining that the travel company was not paying refunds within the 14 days mandated by consumer protection law.
Amid frequently changing travel restrictions, Tui said it wanted to see governments adopt a regional risk-assessment policy, rather than blanket bans against travel to destinations where coronavirus cases are rising, as well as more Covid testing for passengers when arriving at or departing from a destination.
Tui is “remarkably upbeat given the circumstances”, said Russ Mould, investment director at stockbroker AJ Bell, adding that despite its optimism, Tui has seen a decline in booking volumes, holiday prices and capacity.
“There is pressure on cash management in the business, with Tui having to balance outgoings such as running costs and customer refunds with money coming in from new bookings. The current rise in coronavirus cases in the UK and many parts of Europe would suggest net cash outflow is going to increase,” Mould said.