TUI AG, also known as TUI Group, announced on Thursday that it had swung to a pre-tax loss of over €1.4 billion for the three months to the end of June, representing a 98% fall in group revenue. The company have described the period as a “business standstill”.
TUI said that its operations had partially resumed from mid-May, with 55 hotels (representing 15% of its total portfolio) reopening, but consumer interest remained significantly lower than typical summer volumes. The bulk of its losses resulted from pandemic-related impairment charges and added costs from ineffective hedging contracts.
To cope, the company said that it had entered “crisis mode”, in which it reduced monthly costs to a mere €237 million during the quarter – a reduction of more than 70% overall.
The news comes after TUI’s Wednesday announcement that it would receive an aid package from the German government worth €1.2 billion to help it survive the downturn in international travel.
“The €1.2bn stabilisation package strengthens TUI’s position and would provide sufficient liquidity in this volatile market environment to cover TUI’s seasonal swing through winter 2020/21… and in the case of any further long-term travel restrictions and disruptions related to COVID-19,” the company said in a statement.
Airlines and travel companies have been among the worst affected by the COVID-19 pandemic, which has resulted in travel restrictions being imposed throughout the world.
The figures show that tourists are eager to begin holidays abroad once the pandemic has abated and lockdown measures are eased. In the UK, TUI reported that holiday bookings for summer 2021 were up by 145% By contrast, its bookings for summer 2020 are down by a total of 81%, and with an average selling price 10% lower than the norm.
The CARES Act, passed in March, offered $25 billion in aid to help airlines pay employees’ salaries amid the COVID-19 pandemic provided that they refrained from laying off staff. However, with these conditions set to expire at the end of September and air travel still vastly reduced, airlines have raised concerns that they will need to cut tens of thousands of jobs in October if nothing is done.
“For these reasons, we support a clean extension of payroll support for passenger air carrier employees included in the CARES Act to avoid furloughs and further support those workers,” the senators wrote in a letter to Senate majority leader Mitch McConnell and minority leader Chuck Schumer.
Aside from being a victory for labour unions, the announcement also had a curative effect on airline stocks. Shares in American Airlines traded as much as 12% higher on Wednesday before closing at 9.5%, while United Airlines and Delta Air Lines respectively rose by 4% and 3%.
Also affected were Boeing, whose shares rose by 5.6%, and its key supplier Spirit Aerosystems, whose shares rose by almost 9%.
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The Senate letter also called for further congressional support to prop up other aspects of the air travel industry: “With air travel anticipated to remain low in the near future, Congress should also consider provisions to support and provide flexibility for businesses across the aviation industry similarly impacted, such as airport concessionaires and aviation manufacturing.”
Sara Nelson, international president of the Association of Flight Attendants-CWA, hailed the letter as a demonstration of “overwhelming bipartisan majority support” for a six-month extension of the payroll aid programme.
US Treasury Secretary Steve Mnuchin said on Tuesday that he supports “sending cheques to Americans immediately” as part of a $250 billion relief effort.
This effort is itself part of a $1 trillion aid plan intended to shore up the US economy as businesses and public events close in response to the spread of COVID-19. This aid package also includes a bailout for airlines and hotels, two industries that have been hardest hit by the pandemic.
Also on Tuesday, UK chancellor Rishi Sunak unveiled further stimulus measures for UK businesses that included £330 billion of guaranteed business loans and £20 billion in other aid. Additional measures included grants for retailers and pubs, and a business rates holiday.
“Never in peacetime have we faced an economic fight like this one,” the chancellor said in a statement, adding that help for airlines was also being considered.
In France, Finance Minister Bruno Le Maire outlined plans for a €45 billion aid package for small businesses, and pledged to “guarantee bank loans up to €300 billion”.
Elsewhere, the Australian government is reportedly weighing a second rollout of stimulus measures to combat continued stock market losses, and Japanese Prime Minister Shinzo Abe intends to form a panel of key ministers and the governor of the Bank of Japan to help the Japanese economy weather the pandemic.
Among the thousands of individuals, charities and businesses’ making donations towards hurricane Harvey relief, and in the wake of another pending hurricane in the Caribbean, KPMG has teamed with brand ambassador Stacy Lewis this weekend to make a combined donation of $390,000 to support Hurricane Harvey relief efforts. This follows Lewis' win at the Cambia Portland Classic where she donated 100% of her tournament winnings.
Stacy Lewis was raised and currently resides in the Houston, TX area and Lewis' husband, Gerrod Chadwell, is Head Golf Coach for the University of Houston Women's Golf Team. Stacy dedicated her play on this week's LPGA Tour tournament to relief efforts, which KPMG matched. Asked what the week has taught her, Stacy reflected: "Being more appreciative. It definitely puts things into perspective."
This win marks Stacy's 12th on the LPGA Tour and first victory since 2014. In addition to KPMG's donation to relief efforts, each time a KPMG Brand Ambassador wins on Tour, KPMG makes a donation of books and refurbishes a local library as part of KPMG's Family for Literacy (KFFL) initiative. To honor this special win by Stacy, KPMG will double the typical donation with 10,000 new books to be provided to children and local KPMG volunteers will refurbish two libraries in the Houston area.
KPMG US Chairman and CEO Lynne Doughtie said: "In times like this, coming together to support one another matters the most. We are touched by the generosity displayed by Stacy, and so many across the country, to help those impacted by Hurricane Harvey."
In addition, KPMG has pledged to match partner and employee contributions up to $400,000 to the KPMG Disaster Relief Fund to provide Hurricane Harvey relief.
(Source: KPMG LLP)
