Wednesday, August 12, 2020
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Worldwide tourism almost completely comes to a standstill at times due to the corona pandemic. The companies break the revenue. Industry giant Tui receives state aid. It now needs to be improved.
The travel company Tui will receive further government aid of 1.2 billion euros. “The additional stabilization package allows us to focus on the operative business and at the same time to drive forward the realignment of the group”, said Tui boss Fritz Joussen. TUI and the state-owned banking group KfW have agreed to expand the existing KfW credit line by 1.05 billion euros.
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According to the Federal Government, the additional government aid for the travel company Tui is intended to give employees a perspective. The purpose of the measure is to help the company through the Corona crisis, said a spokeswoman for the Ministry of Economic Affairs.
“The claim is subject to the proviso that Tui issues a convertible bond in the amount of 150 million euros to the Economic Stabilization Fund (WSF) and the creditors of a bond due in October 2021 waive a limit on Tui’s debt.” Both conditions and other formal requirements must be met by September 30, 2020.
“Like the first KfW loan of 1.8 billion euros, which was granted in April, the second KfW loan also increases the existing bank credit line (” Revolving Credit Facility “, RCF),” said the CEO. Tui had completely collapsed large parts of their business in the Corona crisis due to global travel restrictions.
“The stabilization package worth 1.2 billion euros strengthens the group’s position by making sufficient liquidity available in a volatile market environment,” the Hanoverians explained. “This covers both the tourist seasonality in winter 2020/21 and other long-term travel restrictions and impairments caused by Covid-19.”
At the beginning of April, a banking consortium paved the way for the first state-secured large loan to cushion the consequences of the pandemic. Tui thus supplemented an existing loan program, but remained looking for ways to increase its financial strength.
CEO Joussen had indicated that the previous sums might not be enough despite parallel savings. The Tui Group announced that it would cut up to 8,000 jobs, mainly abroad. In addition, the fleet of their airline Tuifly is to be reduced by more than half – according to reports, 900 full-time positions could be eliminated and several locations could be closed. Management and staff are now discussing implementation details. Trade unions criticize the cuts: The corporate management has failed in recent years to build up sufficient reserves and has paid high shareholder dividends in return. In addition, one should not cut jobs with the help of state money through the KfW loan.
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