Hanover-based TUI Group on Friday received the approval of the German government for a bridging loan of 1.8 billion euros from the KfW, Germany’s state-owned development bank.
The new funds are to be used to increase TUI’s existing credit line with its banks (amounting to 1.75 billion euros), giving access to financial resources and credit lines totaling 3.1 billion euros.
“The commitment of the KfW bridge loan is an important first step for TUI to successfully bridge the current exceptional situation,” said TUI Group CEO Fritz Joussen.
TUI had decided to apply for the KfW bridging loan to cushion the unprecedented effects of the coronavirus (Covid-19) pandemic until normal business operations could be resumed. Following travel restrictions and travel warnings from almost all countries, the Group had to suspend its tourism offers in mid-March, including packaged tours, cruises, and hotel operations, until further notice.
“TUI is a very healthy company. We were economically successful before the crisis and will be again after the crisis… 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,” Joussen added.
In the past financial year 2019, TUI Group generated a turnover of around 19 billion euros and operating results of 893 million euros, including the costs of almost 300 million euros for the flight ban on the Boeing 737 MAX. Excluding the costs from the flight ban, operating results were at the level of the record year 2018 (1.2 billion euros). At the beginning of February 2020, bookings for the current summer were 14 percent higher than previous year. January 2020 was the strongest booking month in the company’s history.