Tui, europes largest tour operator, has made further cuts to its winter holiday schedule and warned of a hit from more refund requests as travel disruption continues.
In august, the hanover-based holiday company said it expected to break even during the late summer months as travel resumed and customer confidence returned.
But on tuesday, tui downgraded its view, saying that volatile changes to travel advice across europe had created more demand for customer refunds and discouraged travellers from booking holidays for winter.
We therefore now expect to see a cash outflow for late august and september, tui said.
The company said it planned to cut its winter holiday offering by a further 20 per cent, meaning it would now operate at about 40 per cent of last years levels.
Bookings for summer were 83 per cent down compared with last year, tui added. this equated to 15 per cent of its summer holidays being sold as opposed to 97 per cent at the same point last year.
Travel companies have lobbied governments to stop making last-minute changes to travel policies that have caused sudden surges in cancellations and hit consumer confidence, dashing chances for the industry to recover after months of little to no travel.
But in order to contain a second wave of the virus, countries such as the uk have continued to enforce periods of quarantine on travellers arriving from nations with increasing rates of the virus.
Tui said it would prefer a regional risk assessment policy being applied by each government rather than a blanket travel policy and greater testing availability upon arrival in destinations.
Last week, the tour operator was instructed by the uks competitions and markets authority to pay all customer refunds due for holidays cancelled as a result of the pandemic by the end of september after receiving thousands of complaints from holidaymakers that had yet to be reimbursed.
Under eu regulations, travel companies are required to offer a full cash refund within 14 days if holidays are cancelled under circumstances out of customers control.
As a result of the ruling and the demand for refunds as travel advice changed, tui said it had available funding of 2bn, compared with 2.4bn it announced in august after it agreed two state-backed loans from the german government.
Analysts at barclays estimated that the companys monthly cash burn in the past month was 400m.
In may tui launched a 300m cost-saving programme, which will result in a reduction of 8,000 jobs across its workforce.
The company said that it had not ruled out disposals or a rights issue.