Status: 02/14/2023 11:58 a.m
During the pandemic, the TUI Group had to be supported with state aid. Thanks to a strong recovery, the company now wants to pay them back soon. Shareholders are expected to approve the necessary capital increase today.
In view of the recovery of its business, the world’s largest travel provider TUI has confirmed its goal of repaying the remaining corona aid from the German state by the end of the year. “We will replace the government aid and get TUI in shape for profitable growth,” explained Chief Financial Officer Mathias Kiep today.
The support from the federal government is now to be returned in further steps, by the end of the year at least in the amount of 730 million euros plus interest. The money for this should come from a capital increase that is to be decided at today’s general meeting. In addition to a silent participation, the state aid includes a bond with warrants and a loan from the state bank KfW. The group had already announced the repayment at the end of last year.
Agreement with the Stabilization Fund
The group’s financial cushion had already been increased in previous years, for example by the former major shareholder and Russian oligarch Alexei Mordashov and by the family that owns the Spanish hotel chain Riu. At the same time, TUI drove a tough austerity course, which also resulted in numerous job cuts.
The TUI management had concluded a new agreement with the Economic Stabilization Fund (WSF) for the repayment. According to the information, the WSF will also waive the right to convert the silent participation into new TUI shares until the end of 2023 and thus become a major shareholder of the group itself. In addition, TUI wants to reduce the credit lines of the state bank KfW, which amounted to more than two billion euros at the end of 2022.
Number of shares is reduced
At the virtual general meeting today, the shareholders are to give the green light for the capital increase with a volume of an expected 1.6 to 1.8 billion euros. The capital framework for this was already approved by the Annual General Meeting last year. For the execution, however, the share capital of the company listed first in London is to be reduced and the number of shares reduced by amalgamation. The shareholders still have to approve it.
Tourism was one of the hardest hit sectors during the pandemic. Thanks to state aid worth billions and fresh money from its owners, TUI got through the threatening times. But now the travel group is leaving the Corona crisis behind: The usual seasonal loss in the winter quarter has been halved. The demand for travel is high with increased prices, the company said.
Mediterranean destinations in demand
In the past four weeks, the business volume has exceeded the pre-pandemic level with higher average prices, the group said. The average prices for winter 2022/23 are currently eight percent higher than the price level of the previous year. TUI boss Sebastian Ebel spoke of an encouraging booking dynamic for the summer. He wants to drive growth with new products, customers and thus a higher market share. In the current financial year, the adjusted operating result is expected to increase significantly.
“We’re not where we used to be yet, but we’re on the right track,” said the TUI boss. TUI shares rose 3.5 percent on the London Stock Exchange. The willingness to travel does not suffer from the higher cost of living, explained Ebel. However, destinations around the Mediterranean are more in demand than expensive long-distance trips. The devastating earthquake in Turkey dampened bookings for the popular travel destination. Customers switched to Greece or Spain. According to the TUI boss, this should only be a short-term effect.
TUI halves quarterly loss
In the first quarter of the current financial year, TUI’s turnover increased by almost 60 percent compared to the same period last year to 3.8 billion euros, the adjusted operating loss amounted to 153 million euros, the net loss in the period from October to December was around 232 million Euro.
All business units were back in operation for the first time. “In what remains a challenging market environment, TUI benefited from people’s continuing willingness to travel,” the company explained. Almost 3.3 million guests traveled with TUI in the reporting period.