Tour operator TUI (TUI.L) is planning to raise €1.1bn (£940m, $1.3bn) by selling new stock after a recent boost in holiday bookings.
It is the latest travel firm to tap investors for cash in a bid to reduce its debt pile after the coronavirus pandemic ripped into its balance sheet.
In a statement on Wednesday, the Anglo-German company said that the share sale will allow it to decrease its draw on a state-backed rescue loan to zero. The sale will be offered at a discount price of €2.15 each.
During the pandemic, TUI has taken on loans of more than €4bn, as well as being bailed out multiple times by the German government.
The aviation industry is currently building back from the onslaught of COVID-19, with airline Deutsche Lufthansa (LHA.DE) also aiming to raise €2.14bn in a rights issue to help reduce a government bailout package.
Similarly, EasyJet (EZJ.L) revealed a £1.2bn ($1.6bn) capital raise last month.
Tui added that the Mordashov family, the company’s largest shareholder, planned to undertake all subscription rights linked to its 32% stake in the group under the fully underwritten 10 new shares for every 21 existing shares offer.
“We want to, we can and we will find our way back to economic strength. We are working on this relentlessly,” TUI's chief executive Fritz Joussen said.
“The capital increase is a further step. We want to repay the government loans quickly.”
He said: “The improved capital structure creates a solid foundation and enables us to take even better advantage of the opportunities arising from the recovery of the industry.”
TUI, which operates airlines, hotels and cruise ships, said summer booking had surged to 5.2 million, compared to around 9 million pre-pandemic.
It reported increased demand in August, boosted by bookings in Germany and the Netherlands which were “well ahead of summer 2019 levels in recent weeks.”
Bookings in the UK were more “subdued,” as restrictions and expensive PCR testing requirements dampened demand.
However, it now expects a wider return to international travel during the winter months as travel restrictions ease across the globe, with capacity expected to be better than in the same period last year.
“Canaries, mainland Spain, Egypt and Cape Verde are likely to form the bulk of our holiday offer this upcoming winter,” it said.
TUI is forecasting to operate at 60% to 80% of normal levels. By summer 2022 it expects volumes to have returned to pre-pandemic levels. Summer bookings for next year are already up 54% on levels seen two years ago, with a 15% rise in average selling prices.
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