World's biggest tour operator TUI returns to positive cash flow

LONDON • TUI AG stopped burning cash as holiday bookings surged following European government moves to relax travel restrictions.

The world's biggest tour operator reported cash inflows for the three months ended June of €320 million (S$510 million), excluding financing costs, the first time it has recorded a positive number since the Covid-19 pandemic. That is after revenue surged to €650 million for the quarter from €72 million a year ago.

"Especially in Germany and in the continental European markets, the current booking figures show a high pent-up demand," TUI chief executive officer Fritz Joussen said yesterday.

A further easing of travel rules in Britain should lead to another booking spree in the three months through September, he said.

Despite the positive free cash flow, TUI still posted a loss of €940 million as travel remained significantly below pre-pandemic levels. While it has added 1.5 million summer bookings since May, capacity for the high season remains at about 60 per cent of 2019 levels.

Still, the company's liquidity position is "very safe", with €3 billion available, Mr Joussen said in an interview with Bloomberg TV. While the winter season remains uncertain, revenue should be boosted by existing reservations and short-term bookings yet to come, he said.

The shares traded 0.7 per cent higher as at 10.41am in London, where the company has its main listing. The stock is up 16 per cent this year after slumping 52 per cent last year.

TUI has raised billions of euros from three bailouts since the pandemic hammered its core business, which is taking mainly British and German tourists to warm-weather destinations. The company, which operates airlines, hotels and cruise ships, has relied on the German government and private investors to pitch in on prior fund-raisings.

Provided the pandemic does not take a fresh turn for the worse, the return to positive cash flow will give management some breathing room as it plots TUI's exit from the crisis.

The company is considering a capital hike of as much as €1 billion to help repay those state bailouts and shore up its balance sheet.

BLOOMBERG