(Bloomberg) — TUI AG stopped burning cash as holiday bookings surged following European government moves to relax travel restrictions.

The world’s biggest tour operator reported cash inflows during the three months through June of 320 million euros ($376 million), excluding financing costs, the first time it’s recorded a positive number since the onset of the Covid-19 pandemic. That’s after revenue surged to 650 million euros in the quarter from 72 million euros a year ago.

“Especially in Germany and in the continental European markets, the current booking figures show a high pent-up demand,” TUI Chief Executive Officer Fritz Joussen said in a statement Thursday. A further easing of U.K. travel rules should lead to another booking spree in the three months through September, he said.

Despite the positive free cash flow, TUI still posted a loss of 940 million euros as travel remained significantly below pre-pandemic levels. While the company has added 1.5 million summer bookings since May, capacity for the high season remains at about 60% of 2019 levels.

Still, the company’s liquidity position is “very safe,” with 3 billion euros available, Joussen said in an interview with Bloomberg TV. While the winter season remain uncertain, revenue should be boosted by existing reservations and short-term bookings yet to come, he said.

The shares traded 0.7% higher as of 10:41 a.m. in London, where the company has its main listing. The stock is up 16% this year after slumping 52% in 2020.

Three Bailouts

TUI has raised billions of euros from three bailouts since the pandemic hammered its core business, which is taking mainly British and German tourists to warm-weather destinations. The company, which operates airlines, hotels and cruise ships, has relied on the German government and private investors to pitch in on prior fundraisings.

Provided the pandemic doesn’t take a fresh turn for the worse, the return to positive cash flow will give management some breathing room as they try to plot TUI’s exit from the crisis. The company is considering a capital raise of as much as 1 billion euros to help repay those state bailouts and shore up its balance sheet.

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“This can either be tackled by M&A or a capital increase,” Joussen said. “That decision is not made, but that is a decision which we will form over time” as the market improves.

What Bloomberg Intelligence says:

The positive cash flow “provides some important respite and reassurance for the health of the business model, confirming that pent-up demand should drive holiday bookings when restrictions ease. Yet we don’t see full operations until next summer — with this year’s peak planned at just 60% of 2019 volume — plus there’s uncertainty in the meantime, so equity raises or disposals could provide quicker balance-sheet fixes.”

— Conroy Gaynor, BI consumer analyst

While Germany has gradually eased travel rules, things have been more complicated in the U.K. Frequent changes to restrictions combined with costly testing requirements have led to fewer vacations abroad this summer. Yet even there the last two weeks gace been positive, the CEO said.

The tour operator has agreed to more than 4 billion euros of state support since the pandemic and issued about 600 million-euros worth of convertible bonds in 2021.

(Updates with further CEO comment in fifth paragraph)

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