TUI AG: Pre-Close Trading & C-19 Update -2-

DJ TUI AG: Pre-Close Trading & C-19 Update

TUI AG (TUI) 
TUI AG: Pre-Close Trading & C-19 Update 
 
22-Sep-2020 / 08:00 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
             22 September 2020 
 
      TUI GROUP 
 
      Pre-Close Trading & C-19 Update 
 
Prior to entering its close period ahead of reporting its full year results 
for the twelve months ending 30 September 2020 in December, TUI Group 
announces the following update. 
 
             C-19 Highlights 
 
  · Prior to the C-19 pandemic, January 2020 saw the best booking month in 
  the company's history 
 
  · TUI was on track to deliver a strong result for financial year 2020 
 
  · Since the worldwide travel suspension in March, significant self-help 
  actions have been taken to address the impact of the C-19 pandemic across 
  the business 
 
  · Liquidity swiftly managed by securing state aid from the German Federal 
  government 
 
  · Cash fixed costs reduced by more than 70% during the immediate lockdown 
  period 
 
  · Comprehensive compensation agreement finalised with Boeing 
 
  · Completed the Hapag-Lloyd Cruises disposal to TUI Cruises joint venture 
  in a challenging environment 
 
  · First tour operator to successfully restart operations across multiple 
  markets and destinations, helped by the advantage of our integrated and 
  diversified business model 
 
  · Global Realignment Programme launched to permanently reduce overhead 
  cost base by 30% across the Group 
 
  · Summer 2020 and Winter 2020/21 capacity reduced as a result of recent 
  volatile changes in travel restrictions 
 
  · Overall FY20 Q4 cash outflow remains as expected 
 
  · As at 20 September 2020, cash and available facilities on a pro forma 
  basis including additional stabilisation package, would amount to 
  &euro2.0bn 
 
             Chief Executive of TUI Group, Friedrich Joussen, commented: 
 
"We have successfully restarted our operations; customers are enjoying their 
holidays with newly adapted hygiene protocols and we have taken 1.4m 
customers on their holidays since restart1. 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. 
 
"Leisure holidays remain important to customers and have been one of the 
most missed activities2 during the pandemic, with leisure travel expected to 
recover faster than business travel. Our integrated model, underpinned by 
our trusted and leading brand, offering differentiated products and 
attractive value propositions, combined with proven flexibility in a 
volatile environment, means we are strategically well placed to benefit as 
leisure travel volume recovers over the coming seasons. 
 
"We are on track to complete the additional stabilisation package provided 
by the German Federal government as announced on 12 August with waiver 
approval secured from our Senior Notes bond holders. Our Global Realignment 
Programme is firmly underway with digitalisation initiatives accelerated 
throughout the Group. TUI will emerge a stronger, leaner, more digitalised 
business and is well positioned to benefit from the expected recovery." 
 
             1 Since restart of operations in mid-June to end of August 2020 
 
           2 BCG COVID-19 consumer sentiment survey UK, US, Italy and France 
https://www.bcg.com/en-gb/publications/2020/covid-consumer-sentiment-survey- 
             snapshot-5-18-20 [1] 
 
             Current Trading 
 
  In Markets & Airlines, we successfully restarted operations from mid-June, 
       with newly introduced comprehensive hygiene protocols in place. Since 
   restart1, we carried 1.4m customers on holiday, achieving an average load 
 factor of 84% based on adjusted capacity. Over the last month, we have been 
      impacted by continuous changes in travel advice by various governments 
across our markets. We have adapted by remixing and trimming our Q4 capacity 
        from 30% to 25%, to alternative low-risk destinations, enabling many 
 customers to continue their holidays as planned. We expect travel advice by 
 each regional government to remain highly fluid, and we subsequently expect 
  short term bookings to continue until customers are able to plan with more 
certainty. Where possible, we would prefer to see a regional risk assessment 
policy being applied by each government rather than a blanket travel policy. 
        In addition, if testing were to be made more available on arrival in 
  destination and on departure then this would also help to avoid compulsory 
             quarantine and movement restrictions. 
 
    Bookings for Summer 203 are currently 83% down versus prior year and ASP 
 down 19%. This equates to 15% sold of our original programme reflecting the 
   impact of cancellations from mid-March, versus 97% sold at the same point 
 last year. Rebased on our adjusted capacity plans, we are 82% sold to date, 
             which has been influenced by the current later booking trend. 
 
       Winter 20/21 programme3 has been further reduced by 20% since our Q3 
        update, to 40% adjusted capacity reflecting the current uncertainty 
 relating to travel restrictions. We are currently 30% sold for the adjusted 
  winter capacity, broadly in line with this time last year. Compared to the 
  normal levels of prior year, bookings are currently down 59%, in line with 
  adjusted capacity and ASP is up 3%. We will monitor and flexibly adapt our 
  capacity, in line with demand as well as travel restrictions, to ensure we 
  continue to responsibly offer our customers a range of safe winter holiday 
             options. 
 
 For Summer 21, we expect to operate 80% adjusted capacity in line with view 
 shared at our Q3 results. Although we remain early in the booking cycle, we 
    see a favourable development, with bookings up 84% and ASP up 10% versus 
  prior year3, made up of both new bookings and rebookings and helped by the 
      early launch of the Summer 21 programme. On an underlying basis we see 
  strong customer intention to travel, with many customers wanting to secure 
             their summer holidays well ahead of time. 
 
 3These statistics are up to 13 September 2020, shown on a constant currency 
             basis and relate to all customers whether risk or non-risk 
 
  Resumption of the 737 MAX remains subject to the clearance decision of the 
civil aviation authorities. Over the last few weeks, recertification flights 
        have been completed by both the FAA and EASA in Canada and in the UK 
respectively, indicating progress to return the Boeing 737 MAX to commercial 
  service by late this calendar year. We anticipate further announcements in 
             the upcoming weeks. 
 
     In Hotels & Resorts, we reopened 157 hotels, (44% of total group owned 
          portfolio) by the end of August across our worldwide destinations. 
 
 In Cruises, both TUI Cruises and Hapag-Lloyd Cruises successfully restarted 
itineraries offering short, European cruises from the end of July. Three out 
       of its seven-ship fleet were operated by TUI Cruises during the final 
quarter of our financial year. Hapag-Lloyd Cruises operated three out of its 
   five-ship fleet during the last quarter, offering similar short, European 
      cruises, such as to the Danish Sea and to the Scandia archipelagos. In 
  addition to the comprehensive hygiene measures already on board across our 
   fleets, extensive preventative protocols have been introduced. All guests 
  going forward will be provided with C-19 testing 48 hours / 72 hours prior 
 to departure as part of their cruise package, with a mandatory negative PCR 
   test result a prerequisite for travel. Marella Cruises remained suspended 
   throughout the Summer, in adherence with UK FCO guidelines and we eagerly 
             await a positive change in advice. 
 
    In Destination Experiences, excursions, tours and activities recommenced 
 from mid-June, in line with the restart of operations and capacity operated 
             by our Markets & Airlines segment. 
 
             Global Realignment Programme 
 
We have initiated the main projects of our global realignment programme to 
address group-wide costs. The programme targets to permanently reduce our 
annual overhead cost base by 30% across the entire Group and potentially 
impacts 8,000 roles. We are targeting permanent annual saving of more than 
&euro300m, with the first benefits expected to be delivered from FY20 and 
full benefits to be delivered by FY23. Projects announced and underway 
across corporate head office, Markets & Airlines and Destination Services 
are already expected to deliver close to the &euro300m target savings. 
 
             Restart monthly cash out 
 
In general, with the partial restart during the summer months, customer 
refund obligations are reducing, and we are generating immediate working 
capital inflow from new bookings. The recent volatile changes in travel 
advice have led to higher customer refund obligations over the last few 
weeks and subsequently softer working capital inflow from new bookings. On 
an operational level, we therefore now expect to see a cash outflow for late 
August and September. On balance, including net special items, we continue 
to anticipate low single-digit hundreds million outflow per month for the 
final quarter of the financial year. The implications of the recent update 
from the UK Competition & Markets Authority are already incorporated in our 
cash outflow indication above. 
 
For FY21 Q1, we now expect lower working capital from new bookings as a 
result of the recent volatile changes in travel advice. We however continue 
to expect to see lower outflow of hotelier payments for holidays operated in 
the fourth quarter from both utilising capacity where we have prepayments in 
place as well as from operating a much smaller programme versus a normal 

(MORE TO FOLLOW) Dow Jones Newswires

September 22, 2020 02:00 ET (06:00 GMT)

DJ TUI AG: Pre-Close Trading & C-19 Update -2-

year. Overall, we expect monthly cash outflow now to be slightly higher, 
between low to mid-single digit hundreds million per month. 
 
Liquidity position 
 
As announced on 12 August, we have strengthened our liquidity position by 
successfully reaching an agreement for a further stabilisation package with 
the German Federal Government for &euro1.2bn, consisting of a further KfW 
tranche for the amount of &euro1.05bn and a &euro150m convertible bond 
(alternatively a bond with warrant) subscribed by the German Economic 
Stabilisation Fund (WSF). This additional stabilisation package is subject 
to two preconditions. The first, relating to a waiver of a potential future 
limitation of TUI's financial indebtedness from the bondholders of the 
Senior Notes (due in October 2021), was approved on 9 September, with the 
amendment of the Senior Notes terms and conditions expected to become 
effective during the course of October 2020. The second precondition 
relating to the issuance of a convertible bond (alternatively a bond with 
warrant) to the Economic Stabilisation Fund (WSF) for the amount of 
&euro150m is on track. Upon fulfilment of all further customary conditions 
for disbursements, all funds would then be readily available to TUI. The 
package would provide sufficient liquidity to cover the seasonal swing 
through Winter 20/21 and better position TUI in this volatile market 
environment, should there be further periods of travel restrictions or 
disruptions relating to C-19. 
 
On a pro forma basis as of 20 September 2020, including the additional 
stabilisation package of &euro1.2bn, the Group's total cash and available 
facilities would amount to &euro2.0bn, compared to &euro2.4bn as of 12 
August 2020. 
 
The reduction reflects higher customer refund obligations during late August 
and September as a result of the recent changes in travel restrictions. FY20 
Q4 overall monthly cash out flow remains in line with our indications shared 
at our Q3 results (noting the reported cash position as of 12 August 2020 
benefitted from the remaining Hapag-Lloyd Cruises disposal proceeds). 
 
After having agreed additional liquidity support by the German Federal 
Government, we continue to evaluate options to achieve the optimal balance 
sheet structure to support the business over the longer term. 
 
Analyst & Investor Enquiries 
 
                         ANALYST AND INVESTOR ENQUIRIES 
 Mathias Kiep, Group Director Tel: [phone] 
       Investor Relations and 
            Corporate Finance 
 
                                   [phone] 
 Nicola Gehrt, Director, Head Tel: [phone] 
  of Group Investor Relations 
 
 Contacts for Analysts and Investors in UK, Ireland and 
                                               Americas 
 Hazel Chung, Senior Investor Tel: [phone] 
            Relations Manager 
 
                              Tel: [phone] 
       Corvin Martens, Senior 
   Investor Relations Manager 
 
     Contacts for Analysts and Investors in Continental 
                           Europe, Middle East and Asia 
   Ina Klose, Senior Investor Tel: [phone] 
            Relations Manager 
       Jessica Blinne, Junior Tel: [phone] 
   Investor Relations Manager 
 
Cautionary statement regarding forward-looking statements 
 
The present announcement contains various statements relating 
to TUI Group's and TUI AG's future development. These 
statements are based on assumptions and estimates. Although we 
are convinced that these forward-looking statements are 
realistic, they are not guarantees of future performance since 
our assumptions involve risks and uncertainties that could 
cause actual results to differ materially from those 
anticipated. Such factors include market fluctuations, the 
development of world market prices for commodities and 
exchange rates or fundamental changes in the economic or 
political environment. TUI does not intend to and does not 
undertake any obligation to update any forward-looking 
statements in order to reflect events or developments after 
the date of this announcement. 
 
ISIN:           DE000TUAG000 
Category Code:  TST 
TIDM:           TUI 
LEI Code:       529900SL2WSPV293B552 
OAM Categories: 3.1. Additional regulated information required to be 
                disclosed under the laws of a Member State 
Sequence No.:   84582 
EQS News ID:    1134589 
 
End of Announcement EQS News Service 
 
 
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September 22, 2020 02:00 ET (06:00 GMT)