Specialist
Former C-level executive at Thomas Cook Group plc
Agenda
- Top-line impact from novel coronavirus across TUI's (LON: TUI) markets, airlines and cruises
- Cash flow constraints given customer refunds
- Cost mitigation opportunities via hotelier deposits, labour reduction and CAPEX scalebacks
- Long-term outlook, including recovery opportunities and timelines
Questions
1.
To what extent do you think the government will come in to support Tui in the novel coronavirus pandemic? What are the chances that it will get state aid and how could that be given?
2.
Do you think the customers who have already paid their deposits or the touristic advanced payments will leave the deposits or continue to pay for holidays later in the year, knowing that cancellations will give them their money back?
3.
What percentage of summer 2020 would you anticipate has been filled already typically at this time of year?
4.
How supportive do you think the banking syndicate would be in case of any potential covenant breaches or providing short-term credit lines?
5.
Could you outline Tui’s typical cash cycle when it collects deposits and when it has to pay hoteliers, for example?
6.
Is it safe to assume that Tui still has roughly 2-3 weeks’ worth of payments to be made to hotels, given that it has a 30-day post-departure payment with its hoteliers?
7.
What does the force majeure clause mean for Tui?
8.
You mentioned that working capital swings build up throughout the year and then unwinds, essentially, in December and January. Is that correct?
9.
I believe negative working capital ranges between EUR 2.5bn-5bn. Do you expect those to decline substantially and put pressure on liquidity?
10.
Is the cash that is being lost upfront being deferred? How should we break these down?
11.
Do you think the revenue not being accrued now is lost revenue or do you anticipate that customers will purchase holidays later on in the year, leading to a bounce back?
12.
Do you think customers might shift away from Tui, based on how public the current financial concerns are?
13.
What do you think the chances are that Tui will be able to refund customers with vouchers rather than cash?
14.
Are there any laws that state that Tui has to pay back a proportion in cash or can it distribute vouchers to its customers?
15.
Where are the potential cost-cutting opportunities within the hoteliers and within its own airline?
16.
The three large EBITDA producers for the business are hotels, cruises and markets and airlines. What is the percentage of fixed costs for the airline and the hotelier payments?
17.
Is there any scope to bring the fixed costs down? Are there any potential mitigation opportunities in airline specifically?
18.
What is the bare maintenance CAPEX you need to run Tui, to move to a complete cost-cutting programme within CAPEX specifically?
19.
How does the fixed vs variable costs split differ for the cruises segment compared to the markets and airline segment?
20.
How supportive do you think the leaseholders will be, for the UK market at least, in terms of waiving payments?
21.
What are the opportunities for the empty ships that are owned by the joint venture? What are the typical costs needed to run those ships despite being empty? Is there scope to reduce any fixed costs there?
22.
What are your thoughts on the payments for hotels in relation to Tui?
23.
What is the minimum amount of operating cash Tui needs on its balance sheet?
24.
Is there any upside of the Boeing compensation? What are the chances of getting it and what form could it potentially take?
25.
How does CAPEX-cutting impact the broader turnaround strategy? It has been a key focus for driving top line.
26.
Cruise expansion was a key growth strategy in driving top line in that division specifically. Do you expect Tui to pull away from its cruise expansion plan?
27.
You mentioned that late bookings are always viewed negatively in the industry from an overcapacity perspective. Are you expecting renewed pricing pressure from now until the end of the year?
28.
Will the issue of flights being grounded lead to loss of landing slots for Tui?
29.
How do you view the value of landing slots or the value of Tui’s airline fleet?
30.
Is there any scope of the lease payments that Tui is paying for its planes?
31.
There are potential concerns around the ATOL [Air Travel Organiser's Licence] renewal deadline. Do you think that the renewal date being pushed back is beneficial for the industry and for Tui?
32.
Do you think that the current situation potentially impacts Tui’s ability to retain its ATOL in the medium to long term?
33.
What triggers the ATOL fund to kick in and repay customers?
34.
Is there any level of financial protection for repatriating customers from overseas for Tui specifically?
35.
Is there any financial protection or insurance from a lost-revenue perspective that Tui has in place?
36.
Could you summarise your opinion on the current situation for Tui, the severity of it and what the likely outcome could be for this business?
37.
In 8-12 weeks, when the situation is potentially starting to resolve itself, what levels of discounting do you think we can expect?
38.
Will credit card companies hold back payments to Tui until the holidays have actually happened to avoid being on the hook if Tui goes bust? What is your view on that?
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