European Travel Operator TUI Group To Cut 8,000 Jobs As It Restructures

TUI Group, the German-based luxury travel company, said it plans to cut 8,000 jobs as it resizes its operations to cope with the effects of the coronavirus pandemic.

The job cuts are expected to reduce costs by 30% as the company prepares for an uncertain summer holiday season due to grounded flights and travel bans.

TUI said the restructuring will impact its airline business and would also involve the disposition of some assets.

“We will right-size our airlines and order book, alongside restructuring. We will divest and address non-profitable activities within our business,” it said. “In order to return to the successful development of the past years after the crisis, we will now implement the realignment quickly.”

TUI typically employs 70,000 people during the summer and 60,000 the rest of the year.

The company posted a net loss of $826.5 million in the first quarter compared with a loss of $221 million in the year-ago period.

TUI described the Covid-19 pandemic as “unquestionably the greatest crisis the tourism industry and TUI has ever faced.”

“It is clear as a result of the Covid-19 crisis, the travel industry will evolve even faster and perhaps more profoundly than many had expected. The world will be different and TUI will be different also,” the company said.

The company also said its earnings would be significantly lower in the current fiscal year.

In the U.K., the Foreign Office has recommended a prohibition on all non-essential foreign travel. On Tuesday, Britain’s Health Secretary Matt Hancock said "big, lavish international holidays" were unlikely to occur this summer.

But TUI also said it seeks to “reinvent the holiday” through a series of measures, including the reopening of certain resort hotels in Germany "in the coming days.”

TUI said it also received a $1.95 billion state-backed loan in Germany in March after the company was forced to cancel all business activities that month.

"The demand for holidays is still very high. People want to travel,” said TUI chief executive Friedrich Joussen. "Our integrated business model allows us to start travel activities as soon as this is possible again. The season starts later but could last longer. For 2020, we will also reinvent the holiday: new destinations, changed travel seasons, new local offerings, more digitalization."

The company assured that “with cash and available facilities as well as a number of liquidity enhancing measures, TUI has sufficient funds to cover the coming months.”

TUI said it will adapt to new realities by using new social distancing and cleaning measures.

"The health and well-being of both customers and colleagues remain paramount and we are assessing how we can responsibly adapt to measures so that leisure travel can resume," the company said. "We are preparing new procedures for the airport process, on board our aircraft, in hotels and on our ships, so that any social distancing recommendations or guidelines can be implemented, without compromising customer enjoyment and travel experience."

TUI’s Chinese subsidiary has already restarted operations within the country.

Joussen also forecast a “renaissance of overland travel” which could lead to Germans driving to Mediterranean beaches instead of flying.

“We moved from a very, very critical situation to a critical situation,” Joussen said. “So we are fairly upbeat.”

Joussen added that he expects a full recovery of tourism demand by 2022.