Travel business picks up – Billion capital increase at Tui

Hanover (dpa) – Business is gradually recovering at the world’s largest tourism provider Tui – in addition, the owners are significantly increasing the finances for the planned repayment of state aid.

The Hanoverians reported on Wednesday of noticeable attractive bookings in the past summer. In addition, the interest of customers for the upcoming winter and the coming year is increasing.

At the same time, the TUI supervisory board cleared the way for a new capital increase. The state-supported group, which has come under great pressure during the Corona crisis, wants to expand its scope. An important credit line no longer has to be used, it said. Lufthansa recently also issued new shares to allow taxpayer money to flow back.

Business doubles

According to Tui, customers booked well in the main summer season of this year 5.2 million trips, since the last interim result, another 1.1 million have been added. Compared to July and August 2020, when business was very limited due to the pandemic, there was a doubling. “In the last few weeks in particular, there has been a strong upward trend.” Looking back on the more meaningful summer 2019 before Corona, the bookings in Germany and the Netherlands would have been higher.

For the winter 2021 / 2022 Tui is now planning 60 to 80 Percent of the normal program. Popular destinations are the Canary Islands, mainland Spain, Egypt and Cape Verde. Most of the restrictions on short and medium-haul destinations have been lifted, and vaccination rates are high in the EU and the UK. “Therefore, a further increase in international travel can be expected this winter,” estimates Tui. Parts of the summer program were also extended into autumn.

The long-term goals are expected to recover more slowly. Among other things, the group had also put earlier plans to expand its own airline Tuifly with a few long-haul machines, on hold. The controversial austerity course at the airline had also revolved around the volume of the Group’s own capacities still required.

Increase in occupancy

Currently there is thanks to the more stable, but often very short-term bookings mean an “increase in the utilization of the fleet in the last two to three weeks before departure”, according to Tui. In the medium term, the 1.6 million deals for the summer so far 2022 are “very encouraging”. On average, the prices would be 15 percent above the level of 2019. Tui had stated that this was not due to direct increases, but mainly because customers treated themselves to more expensive offers. According to a presentation to investors, it is hoped that the entire business will «normalize» at the latest 2023 or 2024 Income from ongoing business. After an increase in January of 500 million euros, he now wants to create more financial leeway through a further capital increase. New shares for 1.1 billion euros are to be issued. The Russian main owner Alexej Mordaschow, whose group currently holds 15 percent of Tui, wants to go along with it in order to keep his stake constant.

Already closer to the goal

“With the capital increase we are taking a big step closer to our goal of quickly repaying the state loans,” said CEO Fritz Joussen. A loan granted by the KfW development bank for 375 million euros is no longer necessary because of the money, and the use of this credit line “drops to zero”. In addition, debts with other banks are to be reduced.

A silent participation and convertible bond from the federal government worth around 1.2 billion euros are not affected by the step. In addition, another KfW credit line remains in place for a little more than three billion euros. Tui has a total of 3.4 billion euros in liquid funds.

The travel and aviation industries were hit particularly hard by the coronavirus consequences. Lufthansa, which is also supported by taxpayers, had also started a capital increase in September in order to pay off its state aid. Here, the proceeds are to be used to repay silent contributions of up to 2.5 billion euros. A KfW loan of one billion euros has already flowed back.

Tui had reported rather mixed numbers after the third quarter of the financial year (end of June). In the important British market in particular, bookings remained relatively weak due to frequently changing quarantine rules, but things were already going better in Germany. The bottom line was a loss, which at 935 million euros was a third lower than in the same period of the previous year.

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