TUI AG Secures Government Bridge Loan to Weather COVID-19 Shutdown
European travel and cruise giant TUI AG has secured a $2 billion bridge loan from the German policy bank KfW in order to reduce the impact of the COVID-19 crisis. The deal gives TUI access to credit and cash totaling nearly $3.4 billion.
The loan will be provided via TUI's existing credit line with its commercial bankers, and it is still subject to their approval. The terms require that TUI must waive dividend payments to its shareholders for the duration of the loan.
In a statement, TUI noted that if it were not for the novel coronavirus, it would have been headed for an exceptional season. Its bookings in January 2020 were the strongest in any month in the company's history.
"TUI is a very healthy company. We were economically successful before the crisis and will be again after the crisis. Our business model is intact and we have over 21 million loyal customers. However, we are currently facing unprecedented international travel restrictions. As a result, we are temporarily a company with no product and no revenue," said TUI CEO Fritz Joussen in a statement. "The commitment of the KfW bridge loan is an important first step for TUI to successfully bridge the current exceptional situation."
Like most companies in the sector, TUI has suspended almost all of its cruise, hotel, flight and tour operations due to the risk of spreading the novel coronavirus. On Wednesday, it let its UK customers know that it would be canceling its Marella cruise holidays through May 31 and would delay the launch of a river cruise offering until November 26.
"We are constantly monitoring the situation and will start taking people on holiday again as soon as we are able to do so. At this point in time, nobody can accurately predict when that will be," the company said.
Together with Royal Caribbean, TUI AG owns half of TUI Cruises, which competes with Carnival's AIDA brand in the German cruise market.