For the third time in a year, the German government is rolling out a multi-billion dollar bailout package to save travel company TUI Group, badly hit by the corona crisis and travel restrictions, from ruin.
After two previous packages of loans and state guarantees – EUR 1.8 billion in April and EUR 1.2 billion in August – this is now a broader arrangement. The German government, among other things, takes a 25 percent stake in the travel group, and gives a total of 1.8 billion euros in aid. The Russian major shareholder Alexei Mordashov is also investing. The steel tycoon, one of the richest businessmen in Russia, expands his stake to 35 percent. Participation of private investors was a condition for the state aid.
The shareholders of TUI Group, the largest travel company in Europe with more than 100 aircraft, 15 cruise ships and 400 hotels under its own management, approved the move on Tuesday at a special shareholders’ meeting. It was held virtually from the TUI headquarters in the German city of Hanover. A day earlier, on Monday evening, the European Commission had already approved the aid.
With the measure, the German government is once again taking a great interest in the travel and transport sector. In the middle of last year, Germany acquired a 20 percent interest in the national airline Lufthansa. That transaction was part of a support package of 9 billion euros. The government plans to sell the shares again before the end of 2023.
Tourism worldwide has been hit hard by the corona crisis in the past year. The World Tourism Organization UNWTO, part of the UN, reported a loss of turnover of at least 740 billion euros; the jobs of 120 million people would be at risk. In the Netherlands, the travel sector is anticipating a fall in turnover of an average of 85 percent. TUI Group, also market leader in the Netherlands, suffered a loss of 3.2 billion euros on a turnover of 7.9 billion in the broken financial year 2019/2020.
People want to travel. That doesn’t change the pandemic
Friedrich Joussen top man TUI
“Overnight travel restrictions turned us into a productless company,” said Friedrich Joussen, TUI Group Chairman, Tuesday at the meeting. “But people want to travel. The pandemic will not change that. ” Joussen pointed out the relaxation in the summer. “Within 36 hours of the start of the sale, the first two flights to Mallorca were fully booked on June 15th.”
The severe lockdowns imposed in many countries in November, making popular holiday destinations inaccessible again, turned TUI back into “a business with no turnover”. Government support remains necessary, according to the CEO. TUI has now cut 8,000 of the 72,000 jobs worldwide; the company wants to save 400 million annually.
The billions of euros that Germany makes available for transport and tourism are not isolated. All over Europe, governments help especially airlines. In December, Brussels approved aid from the Polish government to airline LOT (650 million euros), from France to Corsair (136.9 million) and from Italy to Alitalia (73 million). Air France KLM previously received support in 2020 from the Netherlands (EUR 3.4 billion in loans and guarantees) and France (EUR 7 billion). There is a lot of speculation about a second package (recapitalization).
In that billion dollar dance the Dutch travel world feels like a lonely wallflower. The sector benefited from general measures. For example, TUI Netherlands and its Dutch airline received € 18.5 and € 13.3 million in NOW support respectively. But where aviation received sector-specific support, it did not go to the travel sector.
Also read the interview with travel entrepreneur Hans de Wilde who went bankrupt in 2020: ‘The travel sector is in the damn corner, I understand that’
“Restaurants and gyms had to close, but could come up with alternatives. Home delivery, boot camps in the park. Not the travel sector, ”said Hans de Wilde, former owner of Tenzing Travel at the end of December NRC. “We lost a year of turnover. And in those months we also did a lot of work. ” Tenzing Travel was one of the few travel companies to go bankrupt in 2020.
Support measures such as NOW and TVL have now been adjusted so that companies with large losses receive more subsidies. This should benefit (smaller) travel companies, among others. Before March, the rules of the game must also be clear from the ‘voucher bank’. This is a credit facility of an estimated 400 million euros that travel companies can use if they cannot bear the financial obligations related to issued vouchers. It is still unclear how many individual companies can borrow, possibly 50 million maximum. They should be allowed to borrow not 100, but no more than 80 percent of their outstanding voucher obligations.
TUI survives thanks to billion-dollar support in Germany
Source link TUI survives thanks to billion-dollar support in Germany