Ber­lin gives Tui ex­tra €1.2bn to stay in the air

Travel agent look­ing to tap in­vestors and con­sid­ers sell­ing non-core as­sets as ‘all op­tions are on the ta­ble’

The Daily Telegraph - Business - - Business - By Si­mon Foy

TRAVEL ti­tan Tui is eye­ing a stock mar­ket fundrais­ing and the sale of sub­sidiaries af­ter swing­ing to a mas­sive half-year loss fol­low­ing a Covid col­lapse in busi­ness.

The com­pany said all op­tions are on the ta­ble in the fight for sur­vival as it un­veiled losses of €1.5bn (£1.4bn), with rev­enues col­laps­ing to €71.8m – down 98.5pc on a year ear­lier. Tui has se­cured a fresh €1.2bn life­line from Ger­man min­is­ters to help it get through the win­ter.

When asked if the com­pany is con­sid­er­ing tap­ping up in­vestors for more money and sell­ing off some di­vi­sions, chief ex­ec­u­tive Fritz Joussen said: “Yes that’s what it is. That’s what it is ex­actly.”

Mr Joussen added that any dis­pos­als would not be distressed or forced sales and the com­pany would seek a fair price.

Mark Irvine-Fortes­cue, an an­a­lyst at Stifel, said Tui is likely to raise more money through a rights is­sue as it seeks to rebuild its shat­tered fi­nances and bring down its high lev­els of debt. It is feared the com­pany could face fur­ther pain in com­ing months af­ter new re­stric­tions were im­posed amid a fresh surge of in­fec­tions in Spain and other pop­u­lar hol­i­day des­ti­na­tions.

Tui was at a stand­still for most of the quar­ter to June, but has partly restarted op­er­a­tions since mid-May.

How­ever, only 55 of its ho­tels opened dur­ing the pe­riod – about 15pc of the to­tal.

The com­pany said that sum­mer book­ings have col­lapsed 80pc this year, and it has slashed ca­pac­ity for the win­ter and sum­mer 2021 by a re­spec­tive 40pc and 20pc.

In a rare ray of light for the crip­pled in­dus­try, bosses said that book­ings for next sum­mer are al­ready up 145pc on 2020 lev­els as cus­tomers re­place hol­i­days can­celled when the cri­sis hit.

The com­pany – which em­ploys around 70,000 peo­ple – ex­pects a re­turn to nor­mal from 2022.

Bosses an­nounced plans in May to cut up to 8,000 jobs around the world as it pre­pares for a smaller hol­i­day mar­ket. The move is part of a €300m cost­cut­ting drive.

It said last month that a third of UK high street stores will be shut as part of a rad­i­cal shift to move op­er­a­tions on­line, with 900 roles at risk.

Div­i­dend pay­outs and share buy­backs will be re­stricted un­til the Ger­man res­cue pack­age is re­paid, Tui said. It was pre­vi­ously given €1.8bn of state­backed loans in early April by Ber­lin, tak­ing to­tal tax­payer sup­port to €3bn.

The com­pany did not pro­vide any outlook for the cur­rent fi­nan­cial year, but said it ex­pects to break even in the three months to Sept 30.

An­a­lysts at Jef­feries said long-term gross debt lev­els of around €7bn would be un­sus­tain­able and could lead to covenant risks. They added: “Tui’s high fixed cost base, cap­i­tal com­mit­ments and more lev­ered bal­ance sheet are not well suited to the cur­rent cri­sis, or in a back­drop of po­ten­tial in­dus­try changes.”

Mean­while Mr Irvine-Fortes­cue at Stifel added: “The in­dus­try re­cov­ery looks set to be a bumpy one, with con­sumer con­fi­dence buf­feted by U-turns on travel re­stric­tions and quar­an­tine, as well as fear of the virus and the eco­nomic outlook.”

Shares closed down 6pc at 344.7p in Lon­don. The stock was trad­ing above 900p be­fore the cri­sis hit.

Fritz Joussen, chief ex­ec­u­tive, said that any dis­pos­als would not be distressed sales and it would seek a fair price

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