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LONDON, Dec 14 (Reuters) – TUI (TUIGn.DE), , the world’s largest holiday company, said it planned to repay COVID-19 support through a capital raise next year after a strong summer helped it swing back into profit and it forecast a “solid” 2023.
Germany-based TUI said it would start to cut its dependence on the German state, which had helped the group survive the pandemic when travel stopped.
The company said it would fund the repayments through a capital increase next year, estimated by the chief financial officer to be in the range of 1.6 billion to 1.8 billion euros.
Shares in TUI, which have lost 40% of their value in the year to date, dipped 4% to 141 pence in early deals.
“We believe it will be difficult for the share price to make progress ahead of this (rights issue),” Peel Hunt analysts said in a note.
TUI will use the capital increase to repay Germany’s Economic Stablisation Fund (WSF) a sum between 730 million euros and 957 million euros.
In return it will receive back the equivalent rights to its shares. It also plans to cut it credit lines from development bank KfW.
TUI, which operates holidays, hotels, cruise ships and an airline, posted underlying earnings (EBIT) of 409 million euros ($435 million) for the year to end-Sept, compared to a 2 billion euro loss the previous year.
For 2023, TUI guided to a significant increase in earnings, although it was cautious given the economic outlook.
It said average holiday prices this winter were 28% higher than pre-pandemic levels, which would help cushion against inflation.
“We expect 2023 to be a solid and good year, but we are very aware of external market factors,” said new chief executive Sebastian Ebel, the former CFO who is two months into the top job.
($1 = 0.9399 euros)
Reporting by Sarah Young; Editing by Kate Holton and Paul Sandle
Our Standards: The Thomson Reuters Trust Principles.
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