Holiday company TUI has touched the brakes on its summer holiday plans, lowering capacity for July onwards to 75% of 2019's level from 80% previously, as Europe's peak travel season hangs in the balance.
Germany-based TUI has secured multiple bailouts from the German government to see it through the pandemic, and, like most airlines and travel companies, is banking on a big travel rebound this summer to restore its battered finances.
But hopes for a recovery have been thrown into doubt over the last week due to rising COVID-19 cases in some European countries including Germany, which alongside Britain is TUI's biggest customer market.
Speaking at the company's annual general meeting, TUI chief executive Fritz Joussen said that demand for travel is strong but "conditions for tourism need to be created at the political level" through vaccinations.
"The end of travel restrictions now seems within touching distance," Joussen said.
TUI, which took 27 million people on holiday a year before the pandemic, said that although it has slightly trimmed capacity, it has the ability to flex it up at short notice.
Joussen said that a recovery in travel could bring in liquidity of €2 billion this summer, allowing the company to start repaying some of the €4.1 billion of loans it received from Germany.
He said that the company is in a position to bear the debt burden taken on to survive the crisis, and to reduce it over time, helped by cost savings of €400 million per year and through plans to dispose of assets and access refinancing opportunities which become available.
TUI said that 180,000 new trips have been arranged since February, bringing its total bookings for this summer to 2.8 million - still 60% below 2019 levels, when people travelled freely before the pandemic.
Joussen said that prospects for summer travel from Britain, where more than half of all adults have now been vaccinated, are good.
But UK residents eager for a Mediterranean getaway have been repeatedly warned by government ministers that it is too early to book trips abroad for this summer.
German Debate Over Whether To Bring In A Travel Ban Or Quarantine
In Germany, where infections are rising exponentially and the vaccine roll-out is slower than in the UK, there is a debate over whether to bring in a general travel ban or quarantine requirements, which could dent TUI's outlook.
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