Tui : No surprise in the numbers but surprisingly high outflow of cash since June end

All,

No major surprises in the reported numbers to the end of June.  However, several analyst questions focused on the cash outflow from quarter end (June 30th) to yesterday of c.€800m and having spend more time on the numbers we are unfortunately no wiser.  We have a call into the Company awaiting reply.

Firstly, the Company appear confident that the new KfW facility is unlikely to be used as the normal seasonality outflow in Q1 (Oct-Dec) is going to be significantly lower than normal times due to lower summer bookings.  Additionally, as some customers have cancelled plans for 2020, Summer 2021 bookings running 145% higher than previous years.  These higher bookings does not appear to be transferring to higher deposits as Summer 2021 deposits are typically lower with more than 6-12months timeframe.  

The Company has successfully relaunched its business over the June/July period, with increased bookings and increasing number of destinations.  But to put into context, 16% of their original capacity of Summer 2020 is sold.  (This represents 57% of adjusted capacity due to measures taken to reduce over capacity). 

Management are guiding towards broadly cashflow break-even in Q4 (July-Sept) at an operational level.  However, the cash level at June 30th was €2,043m, with €1.2bn available as at 12th August 2020, an outflow of €800m so far. 

There was only c.€700m of deposits from Customers whose holidays have been cancelled, which is classified differently to holiday deposits which have yet to happen (€2.5bn) but it is unlikely that this figure would have reduced that much in the last 6 weeks.  We have called the Company but haven’t had a reply.

Happy to discuss further.

Tomas