While restrictions are required, holiday sales for the coming winter are down about 40% and TUI has reduced capacity for next summer by a fifth, even though bookings are currently well ahead of last year.
The company, which has borrowed almost € 2.9 billion ($ 3.4 billion) from the German government, does not expect companies to return to normal by 2022. Like many other companies, it can not yet predict its financial performance for this year due to the pandemic.
The aerial view of TUI reflects the enormous amount of uncertainty that still surrounds the future path of the virus.
The International Air Transport Association said Thursday that flights in Europe in recent months are more than 50% below the same period in 2019, despite the reopening of borders. In the first four months of the year, Europe saw a 44% decline in international tourist arrivals compared to the same period in 2019, according to the European Travel Commission.
More than 7 million jobs supported by travel and tourism in Europe are now at risk, up from an estimated 6 million in June, according to IATA. “It is desperate to see a further decline in the prospects for air travel this year, and the knock-on impact on employment and prosperity,” IATA Vice President of Europe Rafael Schvartzman said in a statement.
Vibration in GDP at risk
TUI’s revenues are simply the latest sign of the devastating impact of the pandemic on travel and tourism, which is creeping through dozens of other sectors and will limit the world economy’s ability to recover.
Without “urgent coordinated action” among major governments, travel and tourism are expected to suffer “irreversible damage”, according to the World Travel and Tourism Council.
The sector now expects the loss of 197 million jobs worldwide and a $ 5.5 trillion reduction in global GDP this year – a 62% drop compared with 2019. But at least 18.3 million of the jobs lost could be in the European Union.
The prospects are rapidly diminishing. In April, the WTTC predicted the loss of about 100 million jobs and a $ 2.7 trillion hit to GDP. The escalation in the crisis is largely due to persistent barriers to global travel, such as white quarantine measures and travel restrictions, WTTC said in a statement last week.
“The confusing patchwork of bans, quarantines and uncoordinated international tests and track measures have deterred many people from traveling all summer long in 2020, but are being removed,” it added.
“Governments around the world need to explain their policies and work hand in hand with the private sector to re-create travel and tourism so that we can restore jobs and revive the global economy,” said CEO Gloria Guevara.
The WTTC sent a letter this week signed by more than 100 industry leaders to the heads of G7 economies, including Australia, South Korea and Spain, calling for a joint response and descriptive measures to get travel back on track.
These include mandatory masking on all transportation methods, testing and tracing of contacts, and the removal of blanket quarters.
Given its “inherent global character”, travel and tourism represent one of the world’s most “integrated and interdependent supply chains,” said James Gellert, CEO of RapidRatings, which analyzes the financial health of companies worldwide.
“Everyone is affected by a reduction in travel, whether you depend on destination, such as hotel groups and restaurants or product and service providers to the companies in the travel and Friday market,” he told CNN Business.
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