Tui’s feeling beach-ready, thanks partly to a big bailout from Berlin

Tristan da Cunha, here we come. Travel firm Tui will have given one tiny cheer at the end of last week, when the UK government finally confirmed the resumption of international leisure travel with a threadbare “green list” of far-flung countries, where desperate holidaymakers can safely venture without a 10-day quarantine on return.

For those who want to stay in the northern hemisphere, at least Portugal made the cut, although Tui executives are doubtless examining the pool facilities in fellow green-lister the Faroe Islands right now. Tui, the world’s biggest tourism company, will give more details of the state of the holiday market when it reports first-half results on Wednesday.

International travel from Britain can resume on 17 May – another step towards normality – and Tui is banking on a rush of vaccinated people booking summer holidays. It’s going to be busy in the Algarve, unless Greece goes green in June.

It has, of course, been one long terrible year for the travel industry, and the fate of Hanover-based Tui – Touristik Union International – reminds us it’s not just the Brits who are being kept off the sunbeds for now.

The company had pinned hopes on its German customers travelling over the Easter holidays, but fresh coronavirus restrictions put paid to that, and it announced the closure of 48 UK high street branches in March.

Unlike poor old Thomas Cook, Tui was lucky enough to be rescued by its government. Berlin bailed it out several times by Berlin during the Covid crisis, leaving it with a €2.1bn (£1.8bn) financial cushion. “That should be enough until summer, until the business takes off,” chief executive Fritz Joussen said at the time.

Tui posted a €699m loss for the three months to the end of December, with revenues down 88%. The focus on Wednesday will be on summer trends and bookings for the Anglo-German group, which last year took just 2.5 million people on holiday – about a tenth of its usual number. It plans to offer 80% of its usual number of holidays (compared with 2019 levels) this summer – though a fair chunk of reservations will be rollovers from last year’s cancellations.

However, it appears investors believe it will take more than a life-threatening pandemic to stop rich westerners demanding a sunshine break, or even a cruise. In a show of faith in the travel giant’s ability to navigate the Covid crisis, a €300m bond issue for Tui’s cruises arm was more than five times oversubscribed. A 6.5% return can’t be ignored in days of rock-bottom interest rates, but it’s hard to imagine such a clamour a year ago to invest in plague ships marooned at sea.

But who wants to be a party pooper with holidays around the corner? Flight prices jumped last week, although Tui said it would not put up prices for package holidays – it still has plenty to sell. Instead, it is tempting customers with a cut-price £20 Covid test package for those travelling to green-list countries, potentially saving families hundreds of pounds on their holiday. There is also, in the small print, free Covid cover – should it turn out that holidaymakers are not magically immune after all. But that’s a problem for another day.

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