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TUI AG has received the approval of the German government for a bridging loan of €1.8 billion from the KfW.
The funds of Germany’s state-owned development bank are to be used to increase TUI’s existing credit line with its banks amounting to €1.75 billion.
The bridge loan is subject to the approval of the banks.
One of the conditions of the KfW bridge loan is that TUI waives dividend payments for the duration of the bridge loan.
This would give TUI access to financial resources and credit lines totalling €3.1 billion at the present time.
Fritz Joussen, chief executive of TUI Group: “The commitment of the KfW bridge loan is an important first step for TUI to successfully bridge the current exceptional situation.
“Our thanks go to the German federal government, the German parliament, the government of Lower Saxony and KfW.
“They have acted quickly and in a solution-oriented manner in the interest of our customers, employees and the company.”
TUI had decided to apply for the KfW bridging loan to cushion the unprecedented effects of the Covid-19 pandemic until normal business operations could be resumed.
Following travel restrictions and travel warnings from almost all countries, the group decided to suspend touristic offers in mid-March, including packaged tours, cruises, and hotel operations, until further notice.
Joussen added: “TUI is a very healthy company.
“We were economically successful before the crisis and will be again after the crisis.
“Our business model is intact, and we have over 21 million loyal customers.
“However, we are currently facing unprecedented international travel restrictions.
“As a result, we are temporarily a company with no product and no revenue.
“This situation must be bridged.”
In the past financial year, TUI Group generated a turnover of around €19 billion and operating results of €893 million, including the costs of almost €300 million for the flight ban on the Boeing 737 MAX.
TUI added that 2020 was the strongest booking month in the company’s history.
Source: breakingtravelnews.com