Tui plans €1.1bn capital raise after demand for holidays returns
Equity issue will help pay off more than €4bn in state-backed loans taken during worst of pandemic
Tui, the world’s largest package holiday operator, plans to raise €1.1bn by selling new shares after demand shot up during the summer.
The Anglo-German group said on Wednesday that it would sell more than 523m new shares at a price of €2.15 each, a 35 per cent discount to its stock price.
The equity issue will increase its cash and available facilities to €4.5bn, and help it pay off the more than €4bn in state-backed loans it took from the German government as the Covid-19 crisis devastated the travel industry.
“We want to, we can and we will find our way back to economic strength. We are working on this relentlessly,” chief executive Friedrich Joussen said.
Tui said that its largest shareholder Unifirm, which is controlled by the family of billionaire Russian steel magnate Alexei Mordashov, had chosen to exercise all of its subscription rights. Unifirm owns a roughly 32 per cent stake in the company.
“The offering will enable us to take a significant step forward, increasing our ability to take advantage of the business opportunities resulting from the easing of Covid-19 restrictions,” Joussen added. “It will provide us with a capital structure more appropriate for more normal operating conditions.”
Travel in Europe and the US opened up slowly over the summer as vaccination rates increased, allowing hard-hit travel companies to capitalise on some of the latent demand for international holidays.
Tui said that it had taken 5.2m holiday bookings this summer, about 1.1m more than it had when it gave its third-quarter update two months ago. More than 2.6m people travelled with the group in July and August, double the number of customers in the same two months last year, it added.
The company added that winter bookings in the UK, where testing and quarantine restrictions had been more stringent than the rest of Europe, had been “trending strongly” since the government loosened travel rules on September 17.
Tui said that it expected summer 2022 to “likely recover close to normalised levels of summer 2019”, but James Ainley, an analyst at Citi, warned that so far the group had booked less than 20 per cent of its expected capacity for next year’s high season.
Ainley said that Tui would need to see “further improvements in trading” or raise more capital to reach its leverage target of three times earnings before interest, tax, depreciation and amortisation.