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TUI AG said it plans to generate 1 billion euros ($1.3 billion) in operating profit by 2015 and resume its dividend as new Chief Executive Officer Friedrich Joussen overhauls Europe’s largest tour operator.

Joussen, who took over from Michael Frenzel in February, will cut administrative costs and jobs at the corporate headquarter in Hanover, Germany, reduce interest costs to about one third of the current 160 million euros each year, lower the number of hotel brands and restructure its Hapag Lloyd cruise business, he said in a statement today.

TUI, which last paid a dividend in 2008, has been struggling to maintain profitability as consumers increasingly book flights and hotels on the Internet, and TUI failed to build up a strong presence in the thriving market for cruises. TUI had a net loss in three of the past seven fiscal years, and investors have labeled Frenzel’s reign as two lost decades.

“The current financial year will be a year of transition on our path towards resuming dividend payments,” Chief Financial Officer Horst Baier said in the statement.

The company will streamline operations with its largest unit, TUI Travel Plc, of which it owns 54.5 percent, and introduce a joint customer relationship management and synchronize online strategies as well as their brands of tour operators and hotels. The companies agreed on performance targets for travel activities in Germany, Russia and France, as well as its specialist & activity business.

Closer Ties

The closer integration follows a failed combination of the two companies earlier this year. The value of TUI’s stake in the U.K. company is equivalent to the German parent’s entire market capitalization.

Jobs at the company headquarter will be cut to “less than 100,” or about half the current 186, while personnel costs will also be trimmed at Hapag Lloyd.

TUI today reported a net loss of 248.4 million euros for the quarter ended March 31, as it booked charges to trim the corporate holding, wrote down the value of a hotel project in Italy and booked provisions for a longer startup phase to increase its fleet of cruise ships. The loss compares with a deficit of 185.2 million euros a year earlier. Sales rose 1.9 percent to 3.34 billion euros.

The company said it lifted its guidance for this year, and anticipated underlying earnings before interest, tax and amortization to improve, while reported earnings on that level will increase “slightly.” TUI said it eventually plans to pay out about 50 percent of its net cash flow in forms of dividends.

Editor: Benedikt Kammel.

To contact the reporter on this story: Richard Weiss in Frankfurt at To contact the editor responsible for this story: Benedikt Kammel at

Tags: tui travel