TUI is negotiating further state aid in exchange for hard cuts in its airlines

In early April, TUI received a loan of EUR 1.8 billion which might not be sufficient

The ailing German tour operator TUI held talks in Berlin about two weeks ago about a possible new financial aid of about EUR 1.2 billion from the Economic Stabilisation Fund (WSF), a financial tool set up the German federal government to mitigate the effects of the corona pandemic on the economy.

In early April, the state-owned KfW bank had already granted TUI a loan of 1.8 billion euros. To reduce costs, TUI is now planning hard cuts in its airlines. “There will be a change in the fleet structure at TUI fly, unfortunately, this will also have an impact on employment,” said TUI Germany boss Marek Andryszak to the Frankfurter Allgemeine Zeitung newspaper.

TUI fly Germany currently operates a fleet of 35 Boeing 737-800 aircraft and intended to grow to 39 planes, but this goal was not reached because of the grounding of the Boeing 737 MAX jets, ordered in large numbers by the Group.

The corona pandemic has also a restrictive effect on the fleet, and thus on employment. Management expects the Boeing 737-800 fleet to be halved. TUI fly Germany has around 2000 employees, among which 1400 pilots.

Plans for a return to long-haul flights from Düsseldorf with two Boeing 787 Dreamliners have been postponed. Additional pressure arises with the end of an agreement with Eurowings by which TUI leases aircraft to the Lufthansa subsidiary.

The TUI Group also operates airlines in other European countries, in which cuts could also be imminent. To reduce the total fleet of 150 planes, the company can take advantage of a recently announced agreement with Boeing by which TUI can extend part of its outstanding order for 61 Boeing 737 MAX aircraft over a longer period than originally planned. Since older aircraft are scheduled to leave the fleet at the same time, the airlines are shrinking as a result. The agreement is part of the compensation for financial damage from 737 MAX grounding, which also provides for cash payments and credits for future TUI orders.

Yesterday, at a press conference, TUI Western Region Managing Director Gunther Hofman said that TUI fly Belgium did not request state aid from the Belgian government, as it could count on the German group to provide funds when needed.

Source: F.A.Z.