Tui agrees €1.2bn rescue package with German government
Holiday firm Tui has agreed a €1.2bn (£1.1bn) rescue deal with the German government to give it the cash it needs to keep trading during the coronavirus pandemic.
The virus has decimated the holiday market, with widespread travel restrictions and grounded airlines leading to an unprecedented collapse in demand.
The majority of the funding will come from state-owned lender KfW, which will extend Tui’s existing credit line by €1.05bn.
The remaining €150m will come from the issue of convertible bonds to Germany’s Economic Stabilization Fund, the firm said in a statement.
Shares jumped 4.8 per cent on the back of the announcement.
In April KfW provided Tui with an initial €1.8bn after the pandemic sent most of the world into lockdown.
Including the additional stabilisation package, Tui now has cash and available facilities of €2.4bn.
The firm, which has announced that it will make 8,000 job cuts to cope with the downturn, has already taken other steps to preserve liquidity.
Last week it announced a sale and leaseback for five new Boeing 737 Max-8 aircraft with BOC Aviation Ltd, which will raise $226m (£173m) for its finances.
The deal is part of its “asset right” strategy, which will see it sell existing assets to finance the purchase of new ones.
Tui has also said that it will shut 166 of its UK high street stores due to the pandemic, which has accelerated the shift to online bookings.
Although it said it would not release the list of stores that will close while the consultation takes place, Tui added that it would not shut any of the stores which have reopened after lockdown.
Easing of travel restrictions in Europe has enabled Tui to benefit from a partial restart to its summer programme, though efforts have been hampered by the UK’s decision to impose mandatory quarantine restrictions on passengers returning from Spain.
As a result, the firm was forced to cancel its flights and holidays to the Iberian country.