Tui reaches agreement with federal government on further billion euro aid

After lufthansa, the state's entry into a rough tourism and transport group now also appears to be on the horizon for tui.

The world's leading travel provider – badly hit by corona – is to receive further federal aid to help it recover. An existing loan from forderbank k will be increased by 1.05 billion euros, tui announced on wednesday.

In april, the hanover-based company was the first major german company to be granted a loan of 1.8 billion euros. Chief executive fritz joussen sees the extension of the support framework primarily as a precautionary measure – in case customer demand does not pick up again by autumn at the latest.

Tui is to receive a further 150 million euros through the construction of a convertible bond underwritten by the economic stabilization fund (WSF). Such bonds can be exchanged for shares by the owner under certain conditions. This would allow the federal government to take an ownership stake of up to nine percent in tui. The issue of the bond is one of the conditions for the new aid tranche.

The ministry of economics in berlin confirmed the additional support. The company wants to give its employees a new perspective. The tui group had announced plans to cut up to 8,000 jobs, mainly abroad. In germany, employees of the airline tuifly may be affected. In the administration, parts of the workforce are on short-time work.

The tourism industry is one of the hardest hit by the pandemic. Tui has to secure funding after three months of lost business from mid march, the delayed summer season did not start until mid june. The group is already on a tough austerity course, and important investments have also been capped.

The management hopes that the situation will improve again after the gradual opening of important travel markets. Recently, however, there have also been new warnings, for example for regions in spain. "No one knows at the moment when there will be a vaccine or medicines and what impact the pandemic will have in individual markets in the coming months," joussen stressed. "That is why it is right and important to take further precautions together with the federal government."

He said the current agreements were a kind of safety net in the event of a major second wave of corona. Including earlier loan commitments and other financial resources, tui currently had around 2.4 billion euros in its coffers, including the new aid package.

Many employees and trade unionists are critical of the public aid, while at the same time making considerable savings. In june, for example, the workforce showed anger and disillusionment at a rally because the tuifly supervisory board had decided to halve the number of aircraft in germany. 900 full-time jobs could be eliminated and several locations closed down. Negotiations on implementation are currently underway. The group also wants to significantly reduce its entire european fleet of around 150 aircraft – and open up its airlines for partnerships with other providers.

Trade unionists and works councils also voiced their displeasure in a letter to tui's top management. In recent years, tui has failed to build up sufficient reserves and has instead paid out high dividends. Moreover, it is not allowed to cut jobs with the help of state money. However, tui can only use the first k loan on condition that no profit participation is paid to shareholders during its term.

The management is relatively satisfied with the delayed start of the summer program. Since the 15. June tuifly buried around 250,000 guests on board, reported managing director oliver lackmann last week. The goal is to be able to offer more than half of the planned capacity in the coming months. One of the top travel destinations this year was once again mallorca. Tourist regions on the turkish mediterranean coast are now also bookable again – but many other destinations outside the eu are still not.

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