After the tour operator posts a €83.6 million quarterly loss, its chief executive promises a new cost-saving plan will not slash jobs.
The European tour operator giant TUI Group has pledged to start cutting costs this year after underlying losses more than doubled to €83.6 million for its first quarter.
TUI “cannot go on like always”, lamented the group’s chief executive Fritz Joussen on a conference call this morning, TTG reports.
“David Burling [chief executive markets and airline] has a huge challenge and take out costs. […] This includes distribution costs, so this means more direct [selling], more mobile,” Joussen said. “We have invested in excursions and experiences.”
He blamed the continuing effects of the “unusually long, hot summer” for the quarterly loss. Just a few days ago, both TUI and its rival Thomas Cook warned about bookings turbulence for 2019.
He said that in addition “we had the Monarch and Air Berlin bankruptcies, so the year before was very strong. We’re working against strong comparatives. The markets and airlines [segment] looks worse than it is.”
Among the positives, earnings for cruise were up more than 25% during the quarter.
As for the imminent cost savings, Joussen commented: “It’s not like we can go on like always. We need to take advantage of harmonisation and platforming the business even more than we have done.”
However, “laying people off” is not a primary focus, he said, adding: “We have different challenges in different markets.”
Emphasising how hotels, cruise, activities and services have increased rapidly in importance for TUI, Joussen painted a rosier picture for the future.
“Our competitors who have not undergone a transformation will have huge challenges, and therefore we believe we are well positioned in a market which will be challenging this year,” he said.
“We think there will be an enormous pressure in the market for consolidation and with our strategic strength, our balance sheet strength and our financial strength we will be in a good position to take advantage of consolidation.”