A Boeing 787 ‘Dreamliner’ plane with the logo of tourism giant TUI at Hanover airport in Langenhagen, central Germany.
JULIAN STRATENSCHULTE | AFP | Getty Images
Tui will cut up to 8,000 jobs in an effort to reduce costs amid the coronavirus crisis, the European travel company announced Wednesday.
In its half-year financial report, it described the Covid-19 pandemic as “unquestionably the greatest crisis the tourism industry and Tui has ever faced.”
“It is clear as a result of the Covid-19 crisis, the travel industry will evolve even faster and perhaps more profoundly than many had expected. The world will be different and Tui will be different also,” the report said.
“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.”
As well as being leaner in the future, the company also said it would be less “capital intensive,” focusing instead on the digitalization of the business.
“We will right-size our airlines and order book, alongside restructuring. We will divest and address non-profitable activities within our business,” it said. “In order to return to the successful development of the past years after the crisis, we will now implement the realignment quickly.”
The firm also confirmed it had been granted a loan of 1.8 billion euros ($1.95 billion) from the German government in March to help see it through the crisis.
Tui withdrew its full-year guidance for 2020, citing unpredictability due to the ongoing pandemic.
It noted that, for the first time ever, its full travel offering had been suspended, which weighed on earnings. It comes after the company saw its best-ever month for vacation bookings in January.
However, Tui claimed demand for travel remained high, with customers still searching for vacations online and wanting to travel as soon as it was safe to do so.
Tui is the latest in a string of tourism companies reducing costs through job cuts.
Last week, Virgin Atlantic announced it would cut more than 3,000 jobs to mitigate the “devastating” impact of the Covid-19 pandemic.
Meanwhile, United Airlines reportedly said in a recent company memo that it was planning to cut management by 30%, and British Airways has warned as many as 12,000 of its workers could be laid off.
The global tourism industry has been ravaged by the coronavirus crisis. In the U.S. alone, the sector is expected to lose at least $24 billion in foreign spending this year, while Chinese tourism revenue dropped nearly 60% during the country’s recent Labor Day holiday.