|Bid||293.40 x 0|
|Ask||294.00 x 0|
|Day's range||290.80 - 310.90|
|52-week range||218.00 - 1,090.00|
|Beta (5Y monthly)||1.61|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||0.45 (16.85%)|
|Ex-dividend date||12 Feb 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- TUI AG, the world’s biggest package-holiday company, has just secured enough government funding to see it through the lean Covid-affected winter season. A glance at its latest quarterly earnings, released on Thursday, shows this is probably just as well.The German company reported a 1.1 billion-euro ($1.3 billion) operating loss in the quarter ending June 30, after revenue slumped 98%. It said it burned through 550 million euros to 650 million euros a month during the period. The London-listed shares fell 5%.Some people have started to brave air travel again in recent weeks, but TUI acknowledged that the situation was still fragile. Demand hasn’t fully recovered since draconian restrictions were lifted, and renewed quarantine measures against popular destinations such as Spain have added to the pain.Consumer confidence is at risk from a resurgence in cases in some countries and worsening personal finances from job losses and lost business due to lockdowns. Holidaymakers are still reluctant to fly long-haul, important for the autumn-winter season, when TUI now plans to slash capacity by 40%.The good news is that it has the German state’s backing. Additional funding agreed on Wednesday, which brought the overall aid package to 3 billion euros, is a safety net to get it through the traditionally quieter winter season, when it needs to pay its suppliers for the previous summer. It removed the threat of a short-term cash crunch, which would be devastating. When consumers are nervous about a holiday company’s finances, they avoid booking with it, and the situation spirals. Just look at what happened to British travel giant Thomas Cook, which collapsed last year.The aid comes with strings attached, though, including restricting TUI's ability to pay executive bonuses. It also includes a 150 million-euro convertible bond, which would give the German state a 9% stake in the company if ever TUI were unable to meet the interest costs.The question is how long can TUI, which has sold just 16% of its originally planned summer 2020 program, keep managing the uncertainties brought by this virus? And if the outbreak doesn’t go away soon, how much job cutting and asset sales will it take to be nimble enough to operate in a radically new market environment?While bookings for next summer are up by 145%, some of that is pent up demand from people who canceled this year’s vacations. Even so, TUI plans to operate at 80% of capacity for next summer, an indication it’s preparing for better times ahead. It optimistically expects conditions to return to normal by 2022, based on the demand it has seen since July and the level of bookings going forward.Against this backdrop, leverage looks too high. Net debt, including lease liabilities, stood at just under 6 billion euros at June 30. The company has a market capitalization of about 2.2 billion euros. It also faces about 300 million of bonds maturing in October 2021.TUI has already undertaken some self-help measures, including a plane leaseback deal and the sale of Hapag-Lloyd Cruises to a company it jointly owns with Royal Caribbean Cruises. But more disposals look inevitable. Up until now, TUI’s strategy has been asset heavy: It has an airline, hotels around the world and cruise ships. TUI still owns the ships within its Marella cruises business for example, so a sale and leaseback of these assets, as well as hotel real estate, is possible. It could also enter into a joint venture for its airline.The company said on Thursday that it was looking at options to strengthen the balance sheet, including a rights issue, although this could prove tricky given that the London-listed shares are down almost 60% over the past year. It has also outlined a big cost reduction program to save 300 million euros a year by 2023. With the extra funding and some glimmers of hope on trading, TUI just booked itself some winter sun. The danger is it turns out to be a mini-break from the ravages of the Covid-19 pandemic, rather than a long-term stay. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The European travel industry had a bad case of summertime sadness after the U.K. introduced restrictions last week on vacation getaways to Spain.But EasyJet Plc provided reason to cheer up on Tuesday when it said some travelers were still determined to take their holidays despite the prospect of having to self-isolate for two weeks on their return.In fact, with more people looking to fly over the summer than it had expected, the low-cost airline is adding flights through the end of September. It will operate at 40% of capacity in its fourth quarter, up from the 30% it had previously planned for.Yes, EasyJet’s new bookings to Spain fell sharply after the British government warned against non-essential travel to the country, and then extended the restrictions to the Canary and Balearic Islands. But a surprising number of passengers who’d already booked are still planning to head to the country, even if it means they have to quarantine when they get home. The same holds for Portugal. Faro, in the southern Algarve region, is one of EasyJet’s most popular destinations this summer, despite a similar U.K. government warning for that country.This is mildly encouraging for the European travel industry, stoking hopes that the summer of 2020 won’t be a total washout. It may be evidence of people learning to live with the virus, and a sense of comfort about being able to practice social distancing at their destination. For many, isolation is also manageable because they’ve already been working from home. Some won’t return to the office until at least the start of 2021 anyway.There is clearly a post-lockdown desire to travel, despite the health risks, for a spot of summer sun. TUI AG, the world’s biggest package-holiday company, has seen Brits switch their holidays from Spain to Greece. When governments advise consumers against all but essential travel, tour operators cancel flights and passengers are entitled to a refund. Airlines typically keep flying. As well as EasyJet, which is seeing high demand for travel to Turkey and Croatia, Ryanair Holdings Plc is operating flights to Spain normally.There may also be some expectation that quarantine policies could change. Portugal is in talks with the U.K. to lift the restrictions. Britain has also been looking at ways to ease the Spanish rules.Despite EasyJet’s crumb of comfort, the medium-term outlook still remains highly uncertain for Europe’s travel industry. Some consumers may still be unwilling to book a package tour, which usually involves staying in a hotel. So people’s last-minute summer travel budgets may go to booking a flight and a holiday rental, such as those offered by Airbnb Inc., where they can keep their distance from other holidaymakers.As I’ve written, the U.K.’s advice on Spain was brought in suddenly, rocking consumer confidence and creating confusion. Depending on how the situation evolves, there’s a risk that other countries, such as Germany, introduce similar curbs or that other destinations will face restrictions. Germany is currently advising travelers to avoid the worst-affected areas in Spain.Meanwhile, concerns about a potential second wave of the outbreak might dampen demand beyond the summer. Autumn and winter bookings were looking promising, but EasyJet said that while early signs were good for peak periods, such as Christmas, there was little visibility across the winter season as a whole.It may be that desperate holidaymakers are taking advantage of what they perceive as a window before more travel bans or virus flare-ups. That doesn’t bode well for demand further out. For now, beleaguered airlines and tour operators can enjoy some relief from their cruel summer.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- We’re not going on a summer holiday. That’s the unfortunate consequence of the U.K.’s latest travel restrictions.Just as confidence was returning in the overseas vacation market, Britain advised against all but essential travel to Spain, and then late Monday added its Balearic and Canary Islands.Coming amid what would normally be the peak season for summer holidays, this is nothing short of a disaster for tour operators such as TUI AG, the world’s biggest package-holiday company, On the Beach Group Plc and Dart Group Plc, which owns Jet2.We are right in the middle of the so-called “lates” market, generally the period from June to the end of August, where people in Europe book their holidays anywhere from one day to six weeks in advance. This period can account for up to a quarter of all bookings and tends to be more profitable in a normal year, because prices are higher nearer to the time of travel.Until the weekend announcement, the signs of summer travel resuming across Europe were good. There was high demand for domestic holiday properties, such as those offered by Airbnb Inc., and some travelers were venturing farther afield.But fears of a second virus wave, with spikes in cases being reported in Spain and Belgium, are jeopardizing any nascent recovery. The U.K.’s travel guidance bodes ill for summer holidays across Europe.First there are the practical implications. In the U.K., when the government advises against all but essential travel, tour operators cancel holidays and customers are entitled to a full refund. TUI said on Saturday that it would allow those due to travel to all parts of Spain between July 27 and August 9 to cancel, or amend their holidays to another destination or time, and receive a full refund or credit. This cash outflow comes just as it and other operators were restarting their summer programs and spending on marketing, as well as making commitments for flights and hotel rooms. TUI is particularly vulnerable to the changing guidance on Spain, because this is the top destination for both British and German holidaymakers, who account for about half of its customers. The group would be in even deeper trouble if other countries such as Germany follow the U.K. in introducing travel restrictions to Spain. But the biggest effect of the U.K.’s announcement will be on consumer confidence. Even if it scales back the restrictions, the damage may have already been done.On top of the health risks, people may be worried by the fact that the advice on Spain came with little notice. Being unable to travel at the last minute, being stuck in a destination far from home and being forced to undertake a lengthy quarantine have all suddenly become possibilities again. That does not inspire confidence in booking a holiday. Worse, it increases the risk that jitters could spread beyond the peak summer season and into the autumn and winter holiday periods, which were looking promising.Some of the money that would have been spent on Spanish holidays could find its way into domestic economies instead. Staycations already looked appealing to Britons, thanks to hotels lowering their prices in response to a new VAT cut. People might also want to take advantage of the U.K.’s “eat out to help out” initiative, whereby restaurants can offer half-price meals from Monday to Wednesday during August.But according to analysts at Bernstein, the last time there was a spike in staycations — after Britain voted to leave the European Union in 2016 — only 60% of the money that would have been spent abroad found its way into the British economy.This year the shortfall in the amount repatriated could be even more severe, as far more people are shunning foreign travel and some may still feel nervous about days and meals out. There could also be a shortage of U.K. holiday homes available in August.So let’s hope the U.K.’s warning on Spain doesn’t portend a broader effort across Europe to keep consumers at home and protect domestic economies. Such a strategy may not work, and it would cast a long shadow on tour operators and holidaymakers alike.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.