(qlmbusinessnews.com via theguardian.com – – Wed, 13th May, 2020) London, Uk – –
Coronavirus forces Europe’s largest travel group to permanently cut costs by 30%
Tui plans to cut up to 8,000 jobs in response to the coronavirus chaos engulfing the tourism industry.
Europe’s largest travel group said it needed to reduce costs permanently to tackle “unquestionably the greatest crisis the industry and Tui has ever faced”.
It lost €740m (£650m) in the first three months of the year, requiring a rapid German state bailout as the company bled cash and cancelled most of its holidays until June.
Travel restrictions in most of its main markets have destroyed demand for holidays, with nine in 10 Tui employees furloughed or given pay cuts in a desperate attempt to lower costs. Tui had more than 70,000 employees in September.
The German government backed a €1.8bn loan in March to help the company survive, but Tui said the travel industry would change permanently after the pandemic, requiring significant cuts.
Tui told the stock market on Wednesday: “We are targeting to permanently reduce our overhead cost base by 30% across the entire group. This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced.”
The pandemic has forced the travel industry to shrink significantly, despite job retention schemes. Tui’s job cuts come after British Airways revealed plans to axe 12,000 roles, and Ryanair and Virgin Atlantic said they would cut 3,000 jobs apiece.
Tui was reviewing its business to identify areas to cut and could pull out of entire markets or destinations. Cuts to its airline were highly probable and it would “divest and address” unprofitable businesses.
Tui said it was ready to restart holiday travel, but it also warned of the difficulties faced by travel companies trying to operate with the prospect of a vaccine still far off.
The company said it was preparing to implement physical distancing measures at airports and on aircrafts. It would also call for mandatory masks and stop buffets and team sports in its hotels and cruise ships “without compromising customer enjoyment and travel experience”.
However, customers were still making inquiries online, indicating a continued demand for travel despite the pandemic and economic crisis, Tui said. “Customers want to travel as soon as tourism can take off responsibly and safely,” it said.
By Jasper Jolly