TUI shares came under pressure in spite of an upbeat trading statement as the travel group confirmed it is planning a rights issue to pay back state aid received from the German government during Covid.
During the pandemic, TUI received a €4bn handout from Germany’s economic stabilisation fund, known as WSF, plus a warrant bond.
Currently, the amount owing is around €737mln but this could rise to a possible maximum €957mn depending on TUI’s share price and how much it costs to buy back shares from the government.
“We have surmounted the existential crisis, it’s behind us,” said Sebastian Ebel, the group’s new chief executive.
Mathias Kiep, chief financial officer, told reporters the amount raised through the share issue would be between €1.6-1.8bn with the process to begin early next year.
TUI needed the money to keep going when travel was effectively banned during the depths of the pandemic, but started to repay the money earlier this year.
Earlier today, TUI said that holiday demand was recovering well with prices up 28% for the winter season and that it expected 2023 to be a ‘solid and good year’.
Underlying earnings for the year to end-September 2022 were €409mln (€2.1bn loss), which Jefferies said was 3% above consensus, while net debt was reduced to €3.4bn.
Tui was “gradually pruning back the state engagement”, it said, adding that the agreement with the WSF and fund raise were “the next logical steps back to normality and complete financial independence”.
Shares fell 7% to 137.5p.