Tourism giant TUI on Friday said the German government had approved a 1.8 billion euro loan to help keep the group afloat as COVID-19 smashes the travel sector.
The bridging loan equivalent to $1.99 billion would be one of the biggest issued so far through German public lender KfW as part of a huge government rescue package aimed at protecting companies and employees in Europe”s top economy.
“We are currently facing unprecedented international travel restrictions. As a result, we are temporarily a company with no product and no revenue. This situation must be bridged,” CEO Fritz Joussen said in a statement.
The state loan would be used to increase TUI”s credit line with its banks, giving it access “to financial resources and credit lines totalling 3.1 billion”.
The cash lifeline is still subject to final approval by TUI”s banks, the statement added.
To receive the lifeline, TUI said it must waive dividend payments “for the duration of the bridge loan”.
Hannover-based TUI, which employs 70,000 people, is present in over 100 countries and operates a host of airlines, cruise ships and hundreds of hotels.
The group last week said it was suspending the “majority” of its operations over the coronavirus, as planes are grounded across the globe and confinement measures make holidays impossible.
Joussen praised the government for acting “quickly and in a solution-oriented manner in the interest of our customers, employees and the company.” The aviation and tourism industry are among the most visible early casualties of the coronavirus, which is infecting nearly every sector of the global economy.
German airline giant Lufthansa separately on Friday said it would apply for government aid to place 31,000 workers on shorter hours until September.
Earlier in the day, Germany”s upper house of parliament rubber-stamped Berlin”s 1.1 trillion euro rescue package, now expected to kick in from April 1.
The measures include fiscal stimulus as well as hundreds of billions in guarantees for bank loans to firms.
The government has promised “unlimited” credit to help companies weather the storm.