Tag Archives: TUIfly Germany

European Commission approves €1.25 billion German measure to recapitalize TUI

The European Commission has approved German plans to contribute up to €1.25 billion to the recapitalization of TUI AG (TUI), the parent company of the TUI Group, as part of a wider support package. The measure was approved under the State aid Temporary Framework.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “As many other companies active in the tourism sector, TUI has been hit particularly hard by the coronavirus crisis. With this measure, Germany will contribute up to €1.25 billion to TUI’s recapitalization and help the company weather the crisis. At the same time, the State will be sufficiently remunerated for the risk taxpayers assume and the support will come with strings attached to limit distortions of competition. I welcome the participation by private investors to the plan, as it limits the need for State aid while contributing to the recovery of TUI.”

The German recapitalization measure

TUI is a German major leisure tourism group operating in several Member States. Through its various subsidiaries, TUI operates hotels, cruise ships, airlines, aircrafts, travel agencies, tour operators and online portals. TUI suffered substantial losses due to the coronavirus outbreak and the travel restrictions that Germany and other countries had to impose to limit the spread of the virus. Despite the liquidity support measures already granted to the company by Germany in March and August 2020 (under the schemes SA.59433, SA.56814 and SA.56863, as amended by SA.58021), the significant drop in travel demand and the measures implemented to limit the spread of the virus continue to deteriorate the financial situation of the group. As a result, TUI is currently facing a risk of default and insolvency.

Germany notified to the Commission, under the Temporary Framework, a State recapitalization of TUI of up to €1.25 billion. The recapitalization comprises:

  • €420 million silent participation convertible into TUI’s equity; and
  • up to €680 million non-convertible silent participation (€400 million of which will only be provided in case the envisaged €400 million in guarantee measures is not provided by the Länder or the Federal government); and
  • €150 million of convertible warrant bond.

The Commission found that the recapitalization measure notified by Germany is in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. In particular, as regards:

  • Conditions on the necessity, appropriateness and size of the intervention: The measure will not exceed the minimum needed to ensure the viability of TUI and will not go beyond restoring its capital position before the coronavirus outbreak. When assessing the proportionality of the recapitalization measure, the Commission took also into account the other State aid measures in favor of the company in the context of the coronavirus outbreak.
  • Conditions on the State’s entry, remuneration and incentives to exit from the capital of the company: The recapitalization aid will prevent an insolvency of TUI, which would have serious consequences on German employment and the economy. Germany will receive an appropriate remuneration for the investment and there are additional mechanisms to incentivize TUI to redeem the State’s silent participation and the warrant bond obtained as a result of the recapitalization. Germany submitted a business plan until fiscal year 2025 prepared by TUI to demonstrate the impact of the recapitalization instruments. It also committed to work out a credible exit strategy within 12 months after the aid is granted, unless the State’s intervention is reduced below the level of 25% of equity by then. If six years after receiving the recapitalization aid the State’s intervention is not reduced below 15% of TUI’s overall equity, a restructuring plan for TUI will be notified to the Commission.
  • Conditions regarding governance: Until the State has exited in full, TUI and its subsidiaries are subject to bans on dividends and share buybacks, other than in relation to the State. Moreover, until at least 75% of the recapitalization is redeemed, a strict limitation of the remuneration of TUI’s management, including a ban on bonus payments, is applied. These conditions aim at incentivizing an exit of the State as soon as the economic situation allows.
  • Prohibition of cross-subsidization and acquisition ban: To ensure that TUI does not unduly benefit from the recapitalization aid by the State to the detriment of fair competition in the Single Market, it cannot use the aid to support economic activities of integrated companies that were in economic difficulties already on 31 December 2019. Moreover, until at least 75% of the recapitalization is redeemed, TUI is in principle prevented from acquiring a stake of more than 10% in competitors or other operators in the same line of business.
  • Public transparency and reporting: TUI will have to publish information on the use of the aid received, including on how the use of the aid received supports the company’s activities in line with EU and national obligations linked to the green and digital transformations.

The Commission concluded that the recapitalization measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member States: the measure aims at restoring the financial position and liquidity of TUI in the exceptional situation caused by the coronavirus pandemic, while maintaining the necessary safeguards to limit competition distortions. TUI does not hold a significant market power on the relevant markets on which it operates.

On this basis, the Commission approved the measure under EU State aid rules.

The recapitalization measure is part of a larger recapitalization package, which also foresees (i) a capital increase by private investors of up to €500 million, (ii) potentially up to €400 million in guarantee measures by the Länder or the Federal government (still to be agreed, see also above), (iii) a prolongation from March 2021 to July 2022 of a €500 million liquidity facility from the coronavirus program of the Federal Development Bank (KfW), and (iv) a €200 million secured revolving credit facility to be provided by the KfW and other commercial banks.

TUIfly aircraft photo gallery:

TUIfly aircraft slide show:

TUI Group finalizes its order for one Boeing 787-9, converts two 787-8 orders to the larger 787-9

Boeing logo (medium)

Boeing (Chicago, Seattle and Charleston) and TUI Group, one of the world’s largest integrated leisure travel companies, have finalized an order for one 787-9 Dreamliner with an option for one further 787-9. The order is valued at $257 million at current list prices. TUI Group also announced that it will substitute two unfilled orders for 787-8s for two 787-9s.

TUI Group logo-1

The European leisure group will operate a fleet of 13 787-8s from this summer and with today’s announcement will add three 787-9s to its fleet within the next three years.

The 787-9 complements and extends the 787 family. With the fuselage stretched by 6 meters (20 feet) over the 787-8, the 787-9 will fly up to 40 more passengers an additional 830 kilometers (450 nautical miles) with the same exceptional environmental performance – 20 percent less fuel use and 20 percent fewer emissions than the airplanes they replace.

There are six airlines in the TUI Group operating 144 medium and long-haul aircraft, including the 787. The airlines are TUIfly, Thomson Airways, TUIfly Nordic, Jetairfly, Corsair International and ArkeFly (Arke), serving more than 180 destinations around the world. Throughout its history, Boeing has delivered more than 165 airplanes to TUI Group airlines. As well as the orders for 787s, TUI Group also has ordered 60 737 MAXs.

In addition to TUI Group’s selection of the efficient 787 Dreamliner and 737 MAX, TUI Group is a partner on the Boeing ecoDemonstrator 757, which is currently testing new technologies to reduce airplane carbon emissions and noise.

Videos: The Thomson Boeing 787-8.

Video: Flight review: Thomson Boeing 787-8 to Puerto Plata: This is a flight review of our Thomson Airways Boeing 787-8 Dreamliner flight to Puetro Plata (Gregorio Luperón International Airport) in the Dominican Republic in the Caribbean. We flew in economy class called “Dreamliner Class” on the Dreamliner. All footage of the journey is filmed from the economy class cabin. Our flight crew was mainly British with a Scandinavian stewardess on board too. Our Thomson Airways Dreamliner (Boeing 787-8) had registration number G-TUIA and was named “Living the Dream”. Our flight started at Copenhagen Airport in Denmark and the aircraft passengers where mainly Scandinavians (Swedish and Danish nationality). Our charter holiday trips where booked via Star Tour (name for TUI in Denmark) (Fritidsresor as TUI are called in Swedish) which is the same as TUI travel in the UK and Germany.

Copyright Photo below: Evert Keijzer Ironbird Photography/AirlinersGallery.com. Jetairfly (TUI Airlines Belgium) Boeing 787-8 Dreamliner OO-JDL (msn 34425) beautifully flies over the English Channel in the 2012 TUI livery.

Jetairfly aircraft slide show: AG Airline Slide Show

 

 

 

TUI to cut costs and services at TUIfly, TUIfly to drop its yellow airplanes

TUIfly‘s (Hannover) parent, TUI AG (TUI Group) wants to cut costs at the German airline subsidiary by 65 million euros ($88.9 million) each year by cutting back on free services for passengers and lowering staff costs according to the daily Sueddeutsche Zeitung and this report by Reuters.

The new cost savings program is called “Max Thrust”. TUIfly will expand the fleet by four new aircraft for medium-haul flights and two planes for long-haul operations according to the report.

Tuifly plans to divide its cabin into three classes from May and stop offering free newspapers, inflight entertainment and blankets according to the report.

Read the full report from Reuters: CLICK HERE

In another report by Romania-Insider.com, TUIfly is also considering moving 350 maintenance jobs to Romania in order to reduce costs.

Read the full report: CLICK HERE

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. TUIfly will reportedly drop its trademark yellow canary fuselages for the new TUI Group blue brand. Boeing 737-8K5 WL D-AHFY (msn 30417) lands at EuroAirport serving the Basel/Mulhouse/Freiburg area.

TUIfly: AG Slide Show

TUIfly to add long-haul Caribbean routes from Hamburg

TUIfly (TUIfly.com) (Hannover) will launch new long-haul leisure routes from Hamburg in November to the Caribbean. According to Airline Route, twice-weekly flights will be started to Barbados on November 22, Cancun on November 2, La Romana on November 29 and Punta Cana on November 1. The four new routes will be flown by TUI partner airline Arkefly (Amsterdam) Boeing 767-300s.

Copyright Photo:

Arkefly: AG Slide Show

TUIfly: AG Slide Show

 

TUIfly’s Boeing 737-8K5 D-AHFZ now promotes CEWE Photobooks

TUIfly (TUIfly.com) (Hannover) has always embraced the use of logojets as a way to increase revenue.

The latest logojet has just been painted at Dublin. The pictured Boeing 737-8K5 D-AHFZ (msn 30983) (above) is now promoting the CEWE Photobooks (Mein CEWE Fotobuch) (CEWE.de). The German company specializes in photo products including photobooks.

This aircraft was previously painted in this attractive blue ARD German TV lottery special livery (below) before being repainted in this red design.

Top Copyright Photo: Paul Doyle.

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Bottom Copyright Photo: Ton Jochems.