By Sarah Young
LONDON (Reuters) - TUI, the world's largest tourism company, said it was considering raising new equity from shareholders or selling off parts of the business to reduce debt taken on to survive the coronavirus pandemic.
TUI, which last year took 23 million people on holiday, lost 1.1 billion euros ($1.3 billion) in the three months through June after COVID-19 halted travel, wiping out revenue and straining its balance sheet as it burned through about 550 million to 650 million euros per month.
It secured a second credit line from the German government on Wednesday, adding to a 1.8 billion euro state-backed loan taken on in April, and while the CEO said it might not need to use the latest line, the focus is now on debt.
"A rights issue or whatever kind of measure is something we are looking at," Chief executive Fritz Joussen told reporters on Thursday.
Asked how big a rights issue could be, Joussen said it was "early days", and he did not say which parts of the business were up for sale, although he insisted that any sales would not be distressed.
The state loans are due to be repaid in summer 2022 and banking sources have suggested that TUI could sell all or part of its 49% stake in the Spanish hotel chain RUI Hotels & Resorts.
With the latest German aid package, TUI said liquidity was 2.4 billion euros, giving it confidence it can make it through to 2021 even as the pandemic continues to hit travel, and as it approaches winter when holiday companies generally lose money.
TUI said that it expected normality to return by 2022 and was encouraged by bookings for summer holidays next year which were up 145%. Analysts were sceptical.
"We think plans to reduce leverage in 2021 and reach normalised profit growth in 2022 are ambitious," said Jefferies.
The company's London-based shares fell 5% to 347 pence. The stock has lost 63% of its value in the year to date.
TUI's quarterly underlying operating loss of 1.1 billion euros as revenues plummeted 98.5% to 72 million euros, compared with earnings before interest and tax of 102.3 million euros in the same period last year.
Bookings for this summer are down 81% from last year and Joussen said the situation was still "fragile". TUI's recovery was set back by new UK restrictions on travel to Spain.
The company said it was making progress with the cost cuts needed to help it withstand the crisis. It warned in May that it would need to axe 8,000 jobs and save 300 million euros a year.
(Reporting by Sarah Young; Additional reporting by Klaus Lauer and Arno Schuetze; Editing by James Davey and David Clarke/Emelia Sithole-Matarise)