* Cuts costs at TUI AG headquarters in Hanover
* Underperforming hotels, cruises to be restructured
* Sees underlying EBITA of around 1 bln eur by 2014/15
* Says will pay out 50 pct of net cash flow
* Shares rise 2.8 pct
By Victoria Bryan
FRANKFURT, May 15 German tourism group TUI AG's
new chief is cutting costs, restructuring loss-making
resorts and cruise operations, and will boost cooperation with
unit TUI Travel in a shake-up aimed at resuming dividend
payments in 2014/15.
The plan, while called oneTUI and intended to cut overlaps
between the two, does not mean another attempt at a merger with
TUI Travel, Chief Executive Friedrich Joussen said on Wednesday.
"OneTUI is designed to get more out of the existing
structure of the group. It's not an M&A programme," he told
The structure of TUI AG and 56-percent owned unit TUI
Travel, which includes one headquarter in London and one in
Hanover, is complicated and costly. TUI Travel's tour operators
include brands such as Thomson and Crystal Ski, while TUI AG
operates its own cruises and is Europe's leading operator of
Analysts and investors have suggested a merger would be the
best way of reducing overlap, but TUI AG decided against making
an offer for the remainder of TUI Travel earlier this year,
saying it made no sense at current share prices. ID:nL6N0AS1SJ]
Instead, Joussen, CEO for 100 days, said TUI AG would cut
costs by 40 percent at its headquarters in Hanover, restructure
or sell underperforming resorts, such as the Castelfalfi in
Toscana, fix problems at loss-making Hapag-Lloyd Cruises and
increase cooperation with TUI Travel.
"We will be ruthless and divest if things are not working,"
Joussen told analysts.
Measures agreed with TUI Travel's CEO Peter Long include
increasing use of the TUI brand across hotel assets, working
more closely on online strategy and setting up a joint staff
talent programme, Joussen said.
Shares in TUI AG rose 2.4 percent to the top of the MDax
index for mid-caps in Germany on news of the reshuffle
and dividend policy. TUI Travel was up 2 pct.
TUI AG has not offered a dividend since a 2007 payout of
0.25 euros, although previous CEO Michael Frenzel had back in
2011 indicated a payout could be on the way soon.
Joussen said the group was targeting operating profit of
around 1 billion euros ($1.3 billion) by the 2014/15 financial
year and a cash balance, currently negative, of around 100
The group then intends to pay out half of its net cash flow
as dividends, Joussen said.
Separately, the group posted a second quarter underlying
loss before interest, tax and amortisation (EBITA) of 197
million euros, matching expectations in a Reuters poll.
It lifted its forecast for the year, saying it now expected
underlying EBITA to improve from the record 745.7 million euros
in 2011/2012, after a strong performance from TUI Travel.