MIAMI – The TUI Group is to consolidate its five airlines operating in Germany, Belgium, the Netherlands, the UK, and Sweden.
With the new setup, the airlines will be operated by a joint management team while key functions will be regrouped in competence centers.
According to the German newspaper Handelsblatt, the reason behind the move is, as explained by Marco Ciomperlik, Chief Airlines Officer at TUI Group, to be better equipped for the post-pandemic recovery with an adjusted fleet and bundled flight operations.
The TUI Group and its five airlines own a total of 140 aircraft but the only activities which were common among them were limited to purchasing while for the remainder of operations each airline acted and managed on its own, a situation that TUI is set- to change.
Five Air Operator Certificates, One Ops Center
Individual AOCs (Air Operator Certificate) will remain as such being required to continue flight operations, as well as the countries’ already well-established brands, indicated Oliver Lackmann, Head of TUIfly and responsible for all five AOCs as Chief of Flight operations. He also stated that “flight operations will be much leaner in the future than before because many functions will be consolidated in centers of competence.”
The Chief of Flight operations cited, as an example, the management of daily operations that, for the future will be concentrated in London-Luton Airport (LTN) and no more from Hannover that has relinquished these operations in exchange for other responsibilities. The new organization will bring to TUI a better economical situation in terms of liquidity."I believe that there is hardly any airline group that has integrated its individual flight operations as deeply as we are doing now." Marco Ciomperlik CEO Chief Airlines Officer, TUI Group Click To Tweet
Via financial negotiations, TUI has obtained an extension of credit lines and the availability of US$5.57bn (€4.7bn) up to the summer of 2024. It has also completed the sale of its minority stake in the RIU Real Estates portfolio, mainly hotels, but has retained marketing and operations, a deal that brought in US$6.41m (€541m) with another US$154m (€130m) becoming available by 2023.
Regrouping More Than about Reducing Costs
All the above will not suffice for TUI to survive the COVID crisis with the bank considering the carrier has sufficient funds for the short term but stands at risk in the long term. The view is that the group has to undertake cost-cutting actions and streamline its restructuring. One example stands in a large number of flight operations and their complexity, a situation that will now change with the regrouping of airlines.
A further advantage will be brought in by the fleet usage, particularly for spare aircraft whose management will be deployed where and when necessary, a move expected to reduce delays by approximately 25%. On the personnel side, the new organization will permit workforce reductions of approximately 40%.
However, CEO Marco Ciomperlik, said the restructuring was not aimed to reduce costs, adding, “Even if then restructuring will definitely have a positive effect in triple-digit-millions, we primarily wanted to to take the complexity out of the system.”
Article sourced on the Handelsblatt newspaper
Featured image: TUIfly Boeing 737-800 D-ATUK. Photo: Phil Wilco/Airways