28 December 2020

Ready for 2021 with optimism

Interview with Fritz Joussen

Mr Joussen, TUI has been hit particularly hard by the pandemic – despite the approved vaccines, the situation remains very tense. Where does TUI currently stand?


The first vaccinations and the approval of the BioNTech/Pfizer product in the EU are important milestones and give confidence. We should therefore start 2021 with optimism. Currently, many travel restrictions remain in place, which is why we are a company without significant revenue. That is why it was right for us to work out a third financial package early, together with the shareholders, the banks and the state. This will bridge these months and secure liquidity if the pandemic continues in the new year. The package helps to steer the company through the crisis and it helps us to concentrate on the essentials: the restructuring of individual business units, the accelerated digitalisation and the cost-cutting measures already initiated. We want to get back on track quickly after the pandemic. TUI was in good health before the crisis. Around one billion operating profit, around one billion investments per year, 21 million customers in 2019 and 14% increase in bookings at the beginning of 2020. Are there really many companies and industries that could show that? The market was intact and our business model was and is future-proof. That is why optimism and confidence prevail for me.

What distinguishes the third financing package from the previous ones?

The Corona crisis continues, now much longer than anyone expected at the beginning of the year. The new financial package secures us for the further course of the pandemic. If measures such as the capital increase are approved by our shareholders, after repayment of our outstanding bond, the maturities of the loans from the first two stabilisation packages will first be postponed. Moreover, the additional package hardly increases our leverage ratio. An additional and significant difference to the other financial packages is the broad support. Our major shareholders, the banks and the state have put it together. This shows very clearly the confidence in our business model, the long-term prospects for TUI and tourism as a growth sector. Our business model is more modern than the term package tour suggests. Moreover, TUI is not a pure tour operator that only sells packaged holidays. We develop, invest and operate, we are a hotel and cruise company with first-class brands such as RIU, Robinson, TUI Blue or Mein Schiff. The holiday hotels in prime locations by the sea will always have value. We can open up new destinations like nobody else because we have hotels and airlines. For example, Cape Verde has been developed into a popular holiday destination with the construction of the first RIU hotels, flights by our airlines and our strong distribution in Germany and Europe.

There will be an extraordinary general meeting on 5 January – why is that necessary?

The financial package contains components that have to be approved by the general meeting, i.e. the shareholders. This includes, among other things, the capital increase of around 500 million euros. This strengthens our equity capital. Debt will not increase as a result. In addition, the state has the option of converting one of the two silent participations into shares in TUI. We would also like to obtain the approval of our shareholders for this. That is why it is important that as many shareholders as possible attend the extraordinary general meeting on 5 January and vote in favour of the package. By the way, the meeting will take place virtually. Shareholders have the opportunity to follow the EGM online from their home after prior registration until 29 December, and vote digitally or by postal ballot beforehand. As is the case for many companies, this is our first virtual general meeting but we are preparing it intensively in order to achieve good decisions for TUI transparently and in close dialogue with our shareholders, even in times of the pandemic.

What happens afterwards?

Once the components of the financial package have been approved, the subscription period for the new shares to implement the capital increase will begin. Shareholders will then have the opportunity to participate directly in the capital increase. The availability of the new funds enables the repayment of the outstanding bond and provides us with the opportunity to further advance the global realignment of the Group. We will become leaner, faster and more efficient. TUI will also consistently continue on the path of digitalisation. And we are ready for the new start when travel activities resume.

What are the prospects for tourism and for TUI in 2021?

The prospects for tourism and for TUI are very good. People want to travel, tourism remains a growth industry in the long term. Everyone, including investors, agrees on this and the underlying facts support this. The travel market has grown twice as fast as the gross national product in the past decade. And this trend will continue as the situation normalises after the pandemic. The demographic data support this: people are getting older, they are healthier, they have more time and also more disposable income. But young people also support this trend: personal and sustainable experiences are replacing old status symbols such as owning a car. "Experiencing" is more important than "owning" for young people today. The demand for holidays is there – customers in all age groups indicated in a representative survey that travel was one of the most missed activities for them in the Corona year. The coming year will still be a transition year, in 2022 we expect our sector and also TUI to return to pre-Corona levels. Package holidays will play an important role in this as a safe and reliable form of travel. As I said, the name may sound a bit old-fashioned, but safety, service and comfort are a value for millions of people and especially families, in particular when it comes to annual holidays. We are in an excellent position to successfully get back on track after the pandemic.