Tour company rearranges travels. - FTI Seeks Insolvency Declaration, Including for Consumers
A major German tour operator, FTI from Munich, recently filed for bankruptcy. This shouldn't come as a surprise, considering their financial situation has been shaky for years. They were on the verge of a deal with the US company Certares, who would've acquired them at the end of summer, but it came too late.
The filing of bankruptcy was announced by FTI on Monday and it's expected that other subsidiaries will follow suit soon.
It's been a tough time for FTI, with bookings falling short of expectations despite some positive news. To make matters worse, many suppliers demanded prepayment, which increased FTI's liquidity needs. Unfortunately, they couldn't cover this until the investor process was completed.
The German government had originally rejected further financial support for FTI since they still had to pay back loans received during the pandemic. FTI had received around 600 million euros from the Economic Stabilization Fund. The total debt for FTI amounts to a whopping 1 billion euros.
Those who had booked summer vacations through FTI are initially left with no choice but to cancel their trips. However, consumers are insured through the German Travel Guarantee Fund (DRSF) if they had chosen a package tour. FTI is also setting up a free support hotline for these customers and has a FAQ available online.
For those who had only booked a single item, like a hotel, they're not protected by DRSF. FTI is currently working on finding solutions for these customers.
The focus is now on completing remaining trips in an orderly manner. However, trips scheduled to start after Tuesday, June 4, 2024, may not take place at all or only partially.
A foreseeable bankruptcy?
FTI had been putting on a positive front until the end, insisting that media reports were based on "old figures" and that sales were boosting. But the risk of default had been looming for months. This is further evident by the fact that they had to deposit the maximum security of nine percent with DRSF in February. FTI confirmed this to Capital.
In autumn 2022, FTI's capital was only 2.4%, a clear sign of financial instability. Loans seem to have been the main force keeping the company afloat before bankruptcy. image1
In the last balance sheet, it's evident that FTI was in a precarious state before the insolvency. Despite the positive spin, it appears FTI was already in deep financial trouble before it eventually collapsed. image2
Read also:
Due to FTI's filing for bankruptcy, many tour operators will be unable to provide package tours as promised, forcing customers to cancel their summer vacations. Fortunately, consumers who booked package tours are protected by the German Travel Guarantee Fund (DRSF).
Despite FTI's insolvency, tour operators like FTI Tourism may still be able to provide services for customers who booked individual items, such as hotels, but they will need to find alternative solutions to ensure these trips go ahead.
