Travel agency rearranges tourist excursions. - FTI Seeks Insolvency Protection, Including Consumers
One of Germany's largest tour operators, FTI from Munich, has filed for bankruptcy. Their financial situation has been strained for many years, and they recently found a potential investor in the American company, Certares. However, the deal didn't go through in time.
FTI announced on Monday that they've filed for bankruptcy for FTI Touristik GmbH, encompassing the brands FTI in Germany, Austria, and the Netherlands, "5vorFlug," BigXtra GmbH, and the rental car brands "DriveFTI" and "Cars and Camper." Other group companies are expected to follow in the coming days.
The company stated that "booking numbers have been significantly below expectations despite positive news," and many suppliers had demanded advanced payment, pushing the need for increased liquidity. Unfortunately, this couldn't be met "until the closing of the investor process."
For consumers who've booked their summer vacation with FTI, they might need to cancel their trip initially. However, those who've booked a package tour can take advantage of the German Travel Security Fund (DRSF). This applies to already paid deposits or the return journey if guests are already in the destination area. Karolina Wojtal from the European Consumer Center Germany Capital explains, "Consumers receive a so-called security certificate when booking, usually hiding at the back of the documents." From this, affected parties can claim their rights. She clarifies, "That means unfortunately not that it will be fast and simple, as there's some paperwork involved. But there is this safety net."
If payments have been made to FTI and the money needs to be refunded, consumers must contact the DRSF. In past bankruptcies, online forms were set up there a few days later. "One may have to ask for a bit of patience from the consumers, because the repayment has priority," states Wojtal. "Because the repayment will likely be a priority."
FTI asserts it'll work "with high pressure" to ensure ongoing trips can be completed as planned. However, trips that haven't begun are expected to be canceled or only partially completed from Tuesday, June 4, 2024.
If only a single service, like a hotel, was booked through FTI, consumers are not protected by the legal insurance for package deals. FTI is currently checking to see if customers can still claim the booked services. However, it may prove challenging since they used many subcontractors in various hotels and travel companies in destination countries.
Tour bookings made through FTI as a broker, but services from other tour operators like TUI or DER Touristik - remain unaffected.
The government recently declined additional financial aid for FTI, as confirmed by Stephan Haufe from the Federal Ministry of Economics and Technology (BMWK) and Nadine Kalwey from the Federal Ministry of Finance (BMF) on Monday. There was no specific amount mentioned, but "Handelsblatt" reported a double-digit million-dollar amount. Haufe said, "There are budgetary, legal, and economic reasons why no further aid beyond the many large aid packages has been provided here."
The German government supported FTI through around €600 million from the Economic Stabilization Fund (WSF), but the tour operator had only returned a portion of this so far. FTI is reported to have debts of €1 billion.
Both Haufe and Kalwey regretted the insolvency of the organizer and stated that the federal government had acted constructively during the process - in the interest of taxpayers. They will now determine the individual implications of the insolvency for the federal government.
Despite FTI's attempts to represent their situation positively, the fact that there was already a high risk of default in the past few months indicates that their financial circumstances weren't as stable as they claimed. FTI could only exhibit a 2.4% equity in the fall of 2022, which suggests a high risk of default. The last balance sheet shows that FTI mostly relied on loans to keep them afloat prior to bankruptcy.
Read also:
In light of FTI Touristik GmbH's insolvency filing, consumers who have booked package tours through FTI can seek protection from the German Travel Security Fund (DRSF). This applies to already paid deposits or the return journey if guests are already in the destination area.
Due to FTI's insolvency, any tour bookings made through FTI as a broker, but services from other tour operators like TUI or DER Touristik, remain unaffected.
