TUI (TUI.L) said on Thursday that it swung to a pre-tax loss of more than €1.4bn (£1.3bn, $1.6bn) in its third quarter, as the coronavirus pandemic forced the world’s largest tour operator to enter “crisis mode.”
Group revenue fell by 98% to just €71.8m in the three months to the end of June, reflecting what the company called “business standstill” for most of the quarter.
TUI said that it partially resumed operations from mid-May, but the travel operator said that volumes remained significantly lower than usual summer levels.
The London-listed German travel firm said that it made an underlying loss before interest and taxes — its preferred profit metric — of €1.1bn, due to impairment charges related to the pandemic and a surge in costs from ineffective hedging contracts.
The company was nevertheless able to enter what it called “crisis mode,” reducing monthly costs by more than 70% to just €237m during the period.
TUI said that it successfully reopened 55 hotels, or 15% of its total portfolio, from the middle of May. Though hotel stays remained below normal levels, average occupancy hit 23% in the quarter as hotels reopened in Europe, Mexico, the Caribbean, and Egypt with social distancing protocols in place.
The company said that, from mid-June, it partially restarted its summer tour operator programme from Central Europe and the Benelux countries, taking customers to destinations such as Majorca and Ibiza.
But bookings for summer 2020 are down 81% overall, with its average selling price 10% lower than usual.
That means that the tour operator has sold just 16% of its originally planned travel programme, compared to 88% at the same point last year.
The results come after TUI announced on Wednesday that it would receive an additional €1.2bn (£1.08bn) aid package from the German government to help it survive the fallout from the pandemic.
“The €1.2bn stabilisation package strengthens TUI’s position and would provide sufficient liquidity in this volatile market environment to cover TUI’s seasonal swing through winter 2020/21… and in the case of any further long-term travel restrictions and disruptions related to COVID-19,” TUI said in a statement.
The company had already been approved for €1.8bn loan from KfW, the country’s state development bank in April.