German tour and airline operator Tui is laying 8000 employees as it looks to balance its books following its acceptance of 1.8 billion euro bridging loan from the federal government, via development bank KFW.
TUI was forced to largely discontinue its business due to the worldwide travel restrictions and it then applied for a KfW bridging loan of 1.8 billion euros. This was intended to cushion the unprecedented effects of the pandemic until normal business operations can be resumed.
The loan was approved on March 27 and On 8 April, the banks providing TUI's existing credit line of 1.75 billion euros (“Revolving Credit Facility”) also gave their approval for the contractual integration of the new credit. As at 10 May 2020, the Group had financial resources and available credit facilities of around 2.1 billion euros.
Tui said that the loans are to be repaid within a short period of time as it seeks to reduce its high level of debt and it intends to achieve this via cost-cutting measures.
“We are targeting to permanently reduce our overhead cost base by 30 percent across the entire Group. This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced,” said chief executive Fritz Jousse