TUI agrees new €1.2b government aid package

People wear face coverings as they stand outside a TUI travel agents shop following the outbreak of the coronavirus disease in Chester, Britain, August 10, 2020. — Reuters pic
People wear face coverings as they stand outside a TUI travel agents shop following the outbreak of the coronavirus disease in Chester, Britain, August 10, 2020. — Reuters pic

FRANKFURT, Aug 12 — Tourism giant TUI and the German government agreed today to a second massive aid package, in a sign of how the effects of the coronavirus pandemic are still battering the industry.

The Hanover-based company agreed to a €1.2 billion (RM5.9 billion) package with German public lender KfW, intended to bolster the firm through its winter 2020/21 season. 

The new funds add to the €1.8 billion government loan that the company agreed to in April.

The company previously announced that it would cut 8,000 jobs worldwide to reduce costs.

TUI’s hotels, flights and cruise ships were empty at the height of worldwide lockdowns and have struggled to reopen as major destinations such as Spain have seen virus infections spike and been subjected to further quarantines.

The additional money means TUI would have credit lines of €2.4 billion, according to the company. The new funds comprise €1.05 billion in loans and €150 million in convertible bonds.

“The €1.2 billion stabilisation package strengthens TUI’s position and would provide sufficient liquidity in this volatile market environment,” TUI said in a statement.

CEO Fritz Joussen said the group had already introduced “massive cost reductions in good time and implemented them quickly and consistently”.

“However, no one knows at present when a vaccine or medication will be available and what effects the pandemic will have in individual markets in the coming months,” Joussen added.

“Therefore it is right and important to take further precautions together with the German government.”

TUI announces its third-quarter results tomorrow. — AFP

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