Coronavirus: TUI receives further billions in aid from the state

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A closed Tui office in Chester, UK

PHIL NOBLE / REUTERS

The travel group 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. According to TUI, the use is subject to the condition that the group also issues a convertible bond of 150 million euros to the Economic Stabilization Fund (WSF). The WSF belongs to the federal government, which could then hold up to nine percent in TUI if it were converted into shares.

Credit only under conditions

In addition, the creditors of the tourism group, which has been hard hit economically by the corona pandemic, have to waive a bond due in October 2021 to limit TUI's debt. All conditions and other formal requirements must be met by September 30, 2020.

At the beginning of April, a bank consortium had already approved a first large loan secured by the state development bank KfW for 1.8 billion euros to cushion the consequences of the pandemic. TUI thus complemented an existing loan program, but remained looking for ways to increase its financial strength.

The previous loan is apparently insufficient. TUI is already pursuing a tough austerity course with job cuts and lower investments, but only expects a recovery in the medium term; the delayed summer season has only been running since June.

TUI: Provided for longer travel restrictions

The TUI Group had also already 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 closed. Management and staff are now discussing implementation details.

Trade unions criticized the cuts: the corporate management had failed in recent years to build up adequate reserves and paid high shareholder dividends for this. In addition, one should not cut jobs with the help of state money through the KfW loan.

The second loan may now offer the employees a perspective. The purpose of the measure is to help the company through the crisis, said a spokeswoman for the Federal Ministry of Economics.

TUI was also confident. "The stabilization package of 1.2 billion euros strengthens the group's position by providing sufficient liquidity in a volatile market environment," it said. And: "Long-term travel restrictions and impairments caused by Covid-19" would also be "covered".

apr / Reuters / dpa