The TUI group warned today that because of the destruction of the tourism business by the coronavirus, it would either shed or not fill, up to a total of 8000 jobs.
The TUI (‘Touristik Union International’) Group wants to restart its holiday schedule in time for the Northern Hemisphere summer but simultaneously said that it needs to reduce its overhead cost base by a massive 30% hence the enormous cuts—the group employed more than 70 000 people in September last year. Currently, 90% of employees are furloughed.
TUI is losing money fast. It burned through €740 million (£650 million) in the first quarter of this year and required a German state bailout of €1.8 billion in March. TUI has said that it needed to permanently cut costs to deal with ‘unquestionably the greatest crisis the industry and TUI have ever faced.’
It said that it would open its hotels on the island of Sylt and in Mecklenburg in Germany in the next few days, but would also implement social distancing and cleaning measures on its aircraft and ships and in its hotels to better ensure the safety of its guests.
The Chief Executive Fritz Joussen said that the demand for holidays remains high and that TUI will need to ‘reinvent’ the holiday. He said, ‘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 digitalisation.’ Joussen also said that the group would divest itself of unprofitable businesses.
Like all businesses, TUI finds itself caught between a rock and a hard place. On the one hand, it must take all reasonable measures to protect (and so limit) its guests and employees, and on the other hand needs to maximise incomes and cut costs to –at the very least–ensure survival, if not make a reasonable profit.
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