TUI will benefit from an additional €1.2 billion in public funding from the German State, in addition to an initial contribution of €1.8 billion. At the end of July, the British the British division of TUI announced the closure of 166 agencies in the United Kingdom and Ireland. Updated on 13/08/2020.
TUI has reached an agreement which increases the credit line of KfW, guaranteed by the German State, by €1.05 billion. This additional cash provision is notably conditional on the issuance of a convertible bond by the group (a potential 9% stake in TUI's capital) for an amount of 150 million euros.
Once the two conditions precedent have been lifted, TUI will have a total of 2.4 billion euros in financial facilities at its disposal. The second contribution will enable TUI to cover a decline in activity during the winter season and even beyond during 2021.
Reorganisation and agencies closures
In mid-May, the group embarked on a major reorganisation. Its implementation first resulted in the start, in June, of the restructuring of its French division. This project, which has been on hold for a year, involves the withdrawal of TUI France from its 65 directly-operated agencies and the elimination of up to 583 positions out of a total of 904.
At the end of July, it was the British branch's turn to announce the closure of 166 agencies in the United Kingdom and Ireland. These closures will affect 900 employees, however 630 jobs will be reintegrated in the remaining 350 agencies, as well as teleworking in sales and customer service.
Andrew Flintham, Managing Director of TUI UK and Ireland said:
"We want to be in the best position to deliver excellent customer service, whether in a store, by phone or online, and we will continue to put the customer at the heart of what we do. It is therefore imperative that we make these difficult cost decisions, that we look after our colleagues during such unprecedented period and that we also provide modern customer service."
Following the Covid-19 crisis, TUI has seen a decline in bookings, as well as a change in consumer behavior, with the acceleration of internet use and thus the increase in online shopping, all of which has led to this decision.
"Our customers' habits have already changed in recent years, with 70% of TUI's UK bookings being made online. We believe that Covid-19 has only accelerated this change in purchasing habits, with people looking to buy online or wanting to talk to travel experts in the comfort of their own homes."
The tour operator had previously announced in May that it was cutting 8,000 jobs worldwide, cutting overheads by 30%.