Travel operator TUI is back to the market with its begging bowl out again. Not for the first time in this crisis the slow return to normality for tourism is causing problems, putting more strain on its balance sheet than an elephant on a tricycle.
The assumption through the pandemic has been that TUI would never go to the wall, despite a very messy balance sheet, because the German authorities would always step in to bail it out.
“However, the state-backed loans it received weren’t handouts, they do need to be paid back hence the need to go out and raise more funds through a rights issue,” said AJ Bell’s Russ Mould.
“With 32% shareholder the Mordashov family planning to take up its full entitlement the issue has a good chance of being well supported.
“The question is whether TUI is raising enough. Chief executive Fritz Joussen talks about taking a ‘significant step closer’ to repaying its debts with the government, but it could risk alienating shareholders if it has to return once more with its hand out.
“At least the company is able to point to a recovery in bookings as restrictions are eased, although given lingering uncertainty associated with the pandemic, guidance for the 2022 summer season to return to pre-pandemic levels may be treated with understandable caution.”