Good news for Europe’s third-largest tour operator FTI and presumably also for German taxpayers: The new investor Certares, which wants to take over the heavily indebted company, will also take over the group’s financial liabilities. FTI announced this in a short press release on Thursday. FTI did not provide any information about the amount.
The Munich-based travel group, like other tour operators, slipped into a crisis during the pandemic due to lockdowns and travel restrictions. In order to prevent the company, which employs around 11,000 people worldwide, from going bankrupt, the German state also stepped in. 595 million euros flowed to FTI from the economic stabilization fund, and the Free State of Bavaria and the federal government also guaranteed a loan of 280 million euros. So far, FTI has only paid off a small portion of its debts.
In mid-April, FTI announced that Certares wanted to take over the company for the symbolic purchase price of one euro and invest 125 million in order to finance the next phase of growth and digital transformation. Industry representatives then continued to puzzle over what would happen to the debts that weighed on the company, especially since the Federal Ministry of Finance (BMF) is said to have announced at a secret meeting of the Bundestag Tourism Committee a week later that it was not prepared to forgive debts. Like that Handelsblatt t reportedCertares had previously sought a haircut from both the federal government and the Brussels EU Commission.
The news that Certares will take over the debt does not come as a surprise to him, says Felix Kolbeck, professor at the Faculty of Tourism at Munich University of Applied Sciences and an expert in accounting for tourism groups. According to the press release, the consortium of investors led by Certares has signed an agreement “to acquire financial liabilities of FTI, following a standard market procedure.” According to Kolbeck, this means that the Federal Ministry of Finance will now sell the claims it makes to FTI to Certares, probably at a small discount. “But this is still good news, also for taxpayers, because if FTI had become insolvent without a new investor, the state would get little to no money back,” said Kolbeck. For an investor like Certares, acquiring debt is also interesting because, as part of its strategic investment management, it could replace the high-interest loans from the Economic Stabilization Fund with loans with a lower interest rate.