The Tui Group is “fundamentally sound” and will resume “profitable operations” as soon as travel restrictions are lifted, chief executive Fritz Joussen has told shareholders.
Joussen told an extraordinary general meeting (EGM) of the company’s stockholders: “Tourism remains a growth sector. There is no reason to assume travel will become less important to people after the pandemic.
“People want to travel. The pandemic does not change it – 2021 will be a transition year, but after that tourism will return.”
Seeking shareholder approval for a package of financial measures worth €1.8 billion and supported by the German state, Joussen posed a question to the meeting, saying: “Is this business model sound or obsolete?”
He argued: “Before the pandemic we had 27 million customers and before the pandemic we had the strongest growth.
“The integrated business model of Tui is fundamentally sound and able to resume profitable operations as soon as travel restrictions are lifted.”
He added: “How will Tui look after the crisis? We used these months to strengthen our positioning.
“We reduced our overhead costs by 30%. We raised our annual cash reduction target from €300 million to €400 million.
“There are good reasons for an optimistic outlook. We see light at the end of the tunnel.”
The financial package provided by the German state development bank KfW and Germany’s economic support fund WSF is the third Tui has sought through the pandemic, taking the total funds accessed to €4.8 billion.
Joussen explained: “We started 2020 with the best start in the company’s history. Government measures forced us to suspend our operations. We turned into a company with no turnover. There were only disbursements and no revenue.”
He said: “We agreed very quickly a stabilisation pact with the KfW.”
But he added: “The state gives funds but not for free. Before coronavirus we were able to fund ourselves much more cheaply.
“Thanks to our integrated model we were able to provide holidays right at the opening of borders [in the summer]. We were able to welcome 40,000 guests on our cruise ships without a single coronavirus case.
“[But] from the end of August, freedom of travel was restricted. We were only able to offer limited holidays.”
Joussen said “We applied for a second package. At this time the winter market was expected to be intact. Then in November there was another severe lockdown. Government restrictions made it almost impossible to operate.
“We developed a third package – the reason for this meeting.”
He told shareholders: “You have to see it in an integrated way. It was the only feasible financing option for us. There were no sufficiently promising alternative financing options on the market.
“The first and second packages focused on loans from the state and will be repaid with interest.
“The third package is wider – a loan of €1.091 billion, a credit facility of €200 million and a capital increase of €500 million.
“It is a very good sign that Unifirm, our largest shareholder, already agreed to participate in the capital increase.”
Unifirm, an investment vehicle of the Russian Mordashov family, already owns almost 25% of Tui.
Joussen urged shareholders to approve the package, saying: “I have no doubt that Tui can return to its successful path from before the pandemic.”
The shareholder votes showed overwhelming support for the proposals with a majority of 98%-99.5% of share capital represented at the meeting in favour of the board’s three resolutions.
