23 June 2020 by lberuti
TUIGR ( TUI Group ) is the world’s largest integrated tourism company. It operates airlines, travel agencies, cruise ships, resorts and hotels, and sells end-to-end leisure travel packages. Its operations are in absolute shambles since the beginning of the pandemic. Yesterday, the UK’s biggest tour operator decided it could not wait any longer. It announced a July 11 resumption of trips from 3 British airports to destinations in Spain and Greece, but it also said that 96% of it UK holiday programme for July and 50% of its August departures will be cancelled. TUIGR was among the first companies to receive the approval of the German government for a bridging loan amounting to €1.8Bln from KfW, the state lender. One of the conditions was for TUIGR to waive dividend payments for the term of the credit. But that measure alone will be far from enough to restore the company’s cash balance given the severity of the crisis, and the FAZ quoted the CEO as saying that they are looking to sell hotels or find partners as the KfW loan is not sufficient. It is never an enviable position to try and make a deal when people know you have been weakened, and investors sanctioned TUIGR by sending its 5-year risk premium 57bps wider, making it the worst performer among the iTraxx Crossover constituents.