Holiday company TUI is in talks with the German government about an extra €1.5 billion to €1.8 billion in state aid as two bailouts from earlier this year have not been enough for travel company to cope with the coronavirus-related travel slump, people close to the matter have said.
The money could come from Germany's new economic stabilisation fund WSF and could include a mixture of equity and hybrid capital, the people said. They also said that various options are still under discussion and that no decisions have been taken.
Another person said that €1 billion to €2 billion in additional aid are under discussion.
TUI has already received a total of €3 billion of state-backed loans in two tranches this year. The current talks are focussing on strengthening the company's capitalisation, the sources said.
TUI said that, after the renewed travel restrictions, it is considering all options for its finances for the next few months, declining to comment on a possible third bailout.
The German government declined to comment.
TUI's largest shareholder, Russian billionaire Alexey Mordashov, who owns 25% of the London-listed company, had no immediate comment. Sources familiar with the situation have previously said that he is expected to participate pro rata in a potential capital increase.
TUI has said that it could issue new shares, but clarified last month that it wanted to wait for its share price to recover before any capital increase. It also said that asset sales were also an option to generate cash.
The company, which took 23 million people on holiday last year, lost €1.1 billion in the quarter through June after COVID-19 halted travel, wiping out revenue and straining its balance sheet as it burned through approximately €550 million to €650 million a month.
The German government is seeking to buy new shares in TUI at a large discount as that would potentially allow an exit without losses at a later point in time, the people said.
A potential equity investment by the government would also help to safeguard an additional injection of non-voting capital dubbed silent participation by the government, they added.
Financial Results Expected Next Month
TUI is expected to report financial results for its full fiscal year next month.