Tour Operator TUI Explores Ways to Repay State Aid

TUI AG is exploring ways to raise fresh capital to help the German travel firm pay back state bailouts, people with knowledge of the matter said.

The company is working with advisers to consider options including a potential share sale, according to the people, who asked not to be named because the information is private. It is discussing raising about 1 billion euros ($1.2 billion) through a capital increase, though the final size could change, the people said.

TUI is likely to wait at least a few weeks before deciding whether to proceed with any fundraising, the people said. It may wait until after the summer holiday season to assess how much it needs, according to the people.

Shares of Hanover, Germany-based TUI fell as much as 3.9% in London, where it has its main listing, after Bloomberg reported on the plans.

The world’s largest tour operator has raised billions of euros from three bailouts since the coronavirus pandemic slammed its business ferrying mainly British and German tourists to warm-weather destinations. TUI, which operates airlines, hotels and cruise ships, has called on the German government and private investors to pitch in on prior fundraisings.

Travel Restart

With travel making a tentative restart, European airlines including Deutsche Lufthansa AG are setting plans to raise capital that would restore their balance sheets.

Deliberations are ongoing, and details of the potential fundraising could change, the people said.

TUI has seen strong bookings growth in its European markets for several weeks, with the exception of the U.K., the company said in an emailed statement.

“Our general statement that we are continuously looking at all possible scenarios with regard to the pandemic and refinancing has not changed,” the company said. “Additional financing measures have not yet been decided and no banks have been mandated.“

TUI shares were off 1.1% to 393.6 pence as of 1:51 p.m. in London, trimming the company’s market value to 4.33 billion pounds ($6.1 billion).

At a separate press briefing Wednesday, the company said that in Germany, its biggest market by customers, pent-up demand has been “extreme” and available beds at some luxury destinations like the Maldives that also draw customers from Asia are beginning to become scarce.

In the U.K., TUI has canceled trips from in recent weeks as the government puts the brakes on plans to ease border restrictions. It has also sold resort interests in Spain and Italy to raise cash.

Bailout DateSizeMakeup
March 2020EU1.8bKfW state loan
August 2020EU1.2bState loan top-up, convertible bonds
December 2020EU1.8bCapital increase including private investors, state silent participation, more state loans and guarantees

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