The world's largest travel company needs public money again after two aid packages worth billions.
The German TUI group receives further state aid against a possible financial crash in the corona crisis. As the world's largest travel operator from Hanover announced on Wednesday, TUI agreed with the federal government as well as private investors and banks on a financing package with a total volume of 1.8 billion euros. In addition to air traffic and gastronomy, the tourism industry is particularly hard hit by the decline in demand during the pandemic.
The financing package strengthens TUI's position and provides the group with sufficient liquidity reserves, it said. “This also offsets the travel restrictions that were adopted until the beginning of the summer season 2021.” The package had become necessary due to the increasing travel restrictions due to the increasing number of infections and the associated short-term booking behavior of some customers.
According to TUI, the package specifically provides for a capital increase of around 500 million euros, which will be shouldered by private investors. In addition, there is a silent contribution from the state economic stabilization fund (WSF) amounting to 420 million euros that can be converted into TUI shares. In addition, there is a non-convertible silent contribution by the WSF in the amount of 280 million euros.
This was preceded by negotiations with the German government. Two people named by the WSF are to become members of the TUI Supervisory Board. The state WSF serves to stabilize the economy as a result of the coronavirus pandemic. It provides companies with stabilization measures to strengthen their capital base and to overcome liquidity bottlenecks. Politicians had already decided on a billion dollar rescue package for AUA parent Lufthansa.
After the agreement on the silent participations at TUI, the EU Commission still has to check whether it is permissible state aid. According to TUI, there is also a state guarantee of 400 million euros or, alternatively, a corresponding increase in the non-convertible silent contribution of the WSF and an additional credit line from the state bank KfW for 200 million euros. An existing credit line from KfW will be extended until July 2022.
The silent contributions by the WSF are connected with further restrictions, among other things with regard to investments in other companies, as long as the WSF remains invested.
In the spring, TUI was the first major German company to be supported by the state development bank KfW with a loan of 1.8 billion euros. In addition to Lufthansa and TUI, the travel competitor FTI is also publicly supported. At the end of September, TUI had added 1.2 billion euros in the form of a second credit line and a bond, which the federal government can also convert into own shares in TUI. Negotiations about a third auxiliary tranche have now ended.
The TUI Group is ailing, despite ongoing austerity measures and the shedding of thousands of jobs, because customers are avoiding many holiday destinations despite some regional bright spots. Travel warnings and notices create a high level of uncertainty among consumers.
Business is also always significantly weaker in winter than in summer – TUI is now even more forced to secure its solvency. With a view to the new year, TUI management had recently been somewhat more optimistic. It should also be decisive how quickly large-scale vaccinations against the new coronavirus can start.
