(Alliance News) - Tui AG on Wednesday said it has secured a EUR1.2 billion "stabilisation package" from the German government, giving the tour operator extra funds to weather the Covid-19 crisis which has battered the travel sector.
Shares in the Anglo-German company were were 2.8% higher at 393.20 pence in London on Wednesday afternoon. They were as low as 362p earlier in the session.
Tui has agreed with KfW, Germany's state-owned development back, to increase its existing tranche by EUR1.05 billion. It follows a first KfW tranche of EUR1.8 billion which Tui received back in April.
"The EUR1.2 billion stabilisation package strengthens Tui's position and would provide sufficient liquidity in this volatile market environment to cover Tui's seasonal swing through Winter 2020/21 and thereafter and in the case of any further long-term travel restrictions and disruptions related to Covid-19," Tui said.
"Including the additional stabilisation package, Tui AG would, as of today, have cash and available facilities of EUR2.4 billion."
Tui does have a couple of hurdles to get through in order to secure the extra cash. It must issue a convertible bond of EUR150 million to the Economic Stabilization Fund, established by the German government.
Tui must also secure a waiver from bondholders for senior notes due in October 2021.
Both conditions must be met by the end of September.
The travel sector has been among the worst hit by Covid-19, with lockdown measures crippling demand and emptying skies.
Tui in May had said it is looking to permanently reduce its cost base by 30% - which the firm explained will result in 8,000 jobs "either not being recruited or reduced".
By Eric Cunha; ericcunha@alliancenews.com
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TUI AG (TUI)