TUI had already received a loan of 1.8 billion euros – but the money was not enough. Now further state aid is to be paid to the ailing travel company. Thousands of jobs will still be lost.
The world’s largest travel company TUI is to receive further state aid to bridge the business slump in the Corona crisis. Among other things, an existing loan from the KfW development bank will be increased by 1.05 billion euros, as the company announced in Hanover. TUI had already been awarded a first aid loan of 1.8 billion euros.
Another 150 million euros are to flow through the construction of a convertible bond that the company intends to issue to the Federal Economic Stabilization Fund (WSF). In the event of a conversion into shares, this could then take a stake of up to nine percent in TUI. The issue of the bond was one of the agreed framework conditions for further help, it said.
Tough austerity course with job cuts
The tourism industry is one of the sectors hardest hit by the pandemic. TUI needs the money to secure further financing after around three months of business failure between mid-March and mid-June. The delayed summer season has only been running since June. TUI is already pursuing a tough austerity course with job cuts and lower investments, but only expects a recovery in the medium term.
“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.”
Unions criticize a lack of reserves
At the beginning of April, a bank consortium cleared the way for the first state-secured large loan to cushion the consequences of the pandemic. TUI thus complemented an existing loan program, but remained looking for ways to increase its financial strength. CEO Fritz 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 your 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.