Coronavirus: Tour operator Tui considers issuing new shares

TUI tour operator is considering cash injection options. Credit: Getty

Holiday giant Tui (TUI) is considering issuing new shares if bookings do not recover swiftly as lockdown eases.

The tour operator may need to seek a cash injection in the coming months despite  securing a £1.6bn ($1.9bn) bridging loan from the German government.

The company, which is the world’s largest tour operator, has also been awarded cash from the UK government’s retail, hospitality and leisure grant fund which aims to support businesses “operating from smaller premises”. Businesses are allowed to claim grants for multiple properties each with a rateable value below £51,000, up to a total of €800,000.

Last week Tui confirmed it had enough money in the short term but a major equity fund-raise was an option under consideration if people were slow to book holidays once COVID-19 restrictions were lifted.

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Hundreds of millions of pounds could be raised by issuing new shares if the lockdown is not eased and if bookings do not recover, according to a Mail on Sunday report.

Major investment banks UBS (UBSG) and Citi (C) have forecast that the tour operator will need to raise more money from investors to stave off collapse.

The company made a £650m loss in the first three months of the year and has said up to 8,000 jobs could be cut in an effort to reduce costs.

TUI said it has "sufficient funds to cover the coming months", but added: "We are evaluating a variety of options with the aim to best position TUI's balance sheet and liquidity through an extended period of disruption and post crisis."