Tui does not expect to require further government support after securing a third financial aid package of €1.8 billion in Germany, chief executive Fritz Joussen has insisted.
Yet the group will continue to haemorrhage €250 million to €300 million a month through to March excluding working capital.
Joussen told an extraordinary general meeting of the group’s shareholders that working capital “will depend on the travel restrictions”.
The group reported a monthly cash outflow of €400 million to €450 million, including up to €200 million a month of working capital, in the final quarter of 2020.
Joussen told the meeting on January 5: “We do not expect to require any further government support from the KfW [German state development bank] or WSF [German economic support fund].”
The €1.8 billion package, announced on December 2 and agreed by shareholders this week, was the third tranche of aid agreed with the KfW and WSF, together totalling €4.8 billion.
Joussen reported Tui “has about €2.8 billion of cash equivalents” and said: “The net cash development depends on booking behaviour and advance payments for summer 2021.”
In response to shareholders’ questions, Joussen said: “We will reach the business volume of 2019 no later than 2023.
“After we have secured liquidity, our priority is to establish a solid balance sheet.
“The return to a solid balance sheet will depend on liquidity management, sales and revenue and optimisation of financing.”
He said the management of liquidity could include “the disposal of assets” and insisted: “We review all possibilities on the capital market.”
Joussen confirmed that Tui’s largest shareholder Unifirm, owned by the family of Russian investor Alexey Mordashov, “has undertaken to take a full subscription and to acquire all remaining shares not sold to a maximum of 36% of share capital”.
Mordashov currently holds just under 25% of Tui shares.
Joussen noted: “In addition, Unifirm has the right to acquire shares in the market. [But] Tui is not aware of the extent of Unifirm plans.”
He revealed Tui requested a third financial package as long ago as October 15, saying: “A key reason for the request was the increase of the pandemic and the repeated travel warnings [which] enforced a travel lockdown [making] customers reluctant to book.
“We requested a capital increase, new credit lines, the extension of certain maturities and the injection of new funds.”
Asked about conditions attached to the package, he said: “The WSF agreement is governed by a framework agreement which includes various conditions and general obligations.
“The WSF agrees not to give any business advice. Tui is required as far as legally possible to ensure two WSF representatives have places on the supervisory board.
“Tui must use the funds of the stabilisation fund cautiously. Tui has to reduce emissions and safeguard jobs. Tui also has reporting obligations to the WSF, which has the right to acquire up to 25% plus one share in Tui. In this case, the WSF would have a so-called blocking majority.”
Joussen told the meeting: “Tui is continually reviewing measures, including the sale of assets, to repay the stabilisation package as soon as possible.”
He said: “We believe 2021 will be a year of transition and continue to be categorised by uncertainties.”
But he insisted: “There are good prospects for the continuation of the company after the pandemic.
“This is an integrated business model that achieved a permanent competitive edge in the market.”