New boss Sebastian Ebel said Tui’s goal, as it was under his predecessor Fritz Joussen, remained to return state aid received during the pandemic "as quickly as possible" to reduce the airline and operator’s net debt and interest burden.
Tui will find the latest repayment through capital increases – issuing new or selling additional shares in the business.
The agreement comprises several elements, including full repayment the silent participation provided by Germany’s Economic Stabilisation Fund (WSF) of €420 million and a remaining warrant bond worth €59 million, taking back the WSF’s options to convert its support for Tui into shares in the business.
Compensation for these conversion rights and interest brings the total repayment "to at least €730 million" said Tui on Tuesday (13 December).
Once the aid granted to Tui by the WSF has been fully repaid, its only remaining Covid support will be credit lines – flexible credit – provided by Germany’s state bank KfW. Tui has pledged to "further significantly reduce" these credit lines.
Tui Group chief executive Ebel called for shareholders to approve the deal, and said it was the right time to get these support measures off its books. "Tui is stable again and on its way back to profitable growth," said Ebel.
"Summer 2022 was strong, our consistently implemented transformation is paying off more and more, which is also reflected in our figures. Of course, we still have a challenging road ahead of us. But our strategy, our future-proof business model, the relaunch of tourism, and promising customer and travel trends make us confident about our way back to normality."
Mathias Kiep, Tui Group chief financial officer, added: "If the planned measures are successfully implemented, we will be able to further significantly improve Tui’s financial situation and achieve our targeted debt level of a gross leverage ratio of well below three faster.
"With such a possible full repayment of the WSF aid and the reduction of the KfW credit lines, we strengthen our balance sheet, we benefit from lower interest payments and we gain further financial and entrepreneurial flexibility in implementing our strategy for future profitable growth."
