Financial turbulence

Cost-cutting, state aid and insolvencies

DER Touristik is also switching to short-time working.
DER Touristik
DER Touristik is also switching to short-time working.

German travel companies are rapidly cutting costs but smaller firms are starting to close down as the corona crisis sweeps over the industry.

Tour operators and travel agents alike are quickly switching to short-time working (known as ‘Kurzarbeit’ in German), with the government paying part of employee salaries for several months in order to prevent layoffs.

The latest leading tour operator to make this move is DER Touristik, following on from TUI and FTI. DER Touristik is introducing up to 80% short-time working for six months from April until September. “We’re doing this to secure as many jobs of our staff as possible,” said Central Europe chief Ingo Burmester.

TUI Germany is going on to 40% short-time working for tour operator workers and 50% for travel agency staff. However, TUI Group as a whole has gained government approval for a state-backed €1.8 billion bridging loan to increase its bank credit facilities.

CEO Fritz Joussen underlined: “TUI is a very healthy company. We were economically successful before the crisis and will be again after the crisis. Our business model is intact and we have over 21 million loyal customers. However, 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.”

In contrast, smaller travel businesses with much tighter finances are now starting to disappear. For example, Comtour, a specialist in India and Sri Lanka holidays founded 20 years ago, has declared insolvency.

Another victim is the holiday homes portal Casamundo which is shutting its Hamburg office with job losses. Parent company Hometogo aims to retain the brand and keep the portal trading, however.