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German travel giant TUI selling shares to repay virus bailout

·2-min read
The smile's back: TUI is raising cash to pay down debt as bookings surge amid easing of coronavirus measures (AFP/Ina FASSBENDER)

German tourism giant TUI, battered by the coronavirus pandemic, said on Wednesday it would raise over one billion euros selling stock to existing shareholders to pay off debt.

The world's largest tour operator's focus was "on refinancing and repaying government loans" now that the travel industry was taking off again, TUI CEO Fritz Joussen said in a statement.

TUI experienced a record loss of 3.1 billion euros ($3.6 billion) in 2019-2020, as its business was laid low by travel restrictions during the pandemic.

To weather the storm, the group received three bailout packages from the German government, totalling 4.3 billion euros.

Subsequently, the group has announced a significant restructuring programme in 2020, including the loss of 8,000 jobs worldwide and the sale of 20 percent of its fleet of aircraft.

As part of the 1.1 billion euro capital increase, the group's largest shareholder Unifirm Limited has committed to buy enough stock to maintain its 32 percent stake in the company.

Existing shareholders will be offered 10 new shares for every 21 they hold, with any not taken up sold by the sale's underwriters through a placement, the company said.

The sale is fully underwritten by a syndicate of banks including Barclays, Bank of America, Citigroup and Deutsche Bank, it said.

TUI raised 500 million euros from shareholders and banks in December 2020, and now has 3.4 billion euros in cash, the group said.

"We want, we can and we will find the way back to economic strength," CEO Joussen said.

The group has been buoyed by strong booking figures in 2021 as international travel reopens.

This summer, 2.6 million customers booked holidays organised by the group, twice the number that travelled with TUI between July and August last year.

Bookings for winter 2021-2022 are already over half the equivalent figure for the pre-pandemic season of 2018-2019, according to the group.

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