The travel and hospitality industry - FTI travel group seeks bankruptcy protection, cancels upcoming journeys.
The third-largest travel company in Europe, FTI, has declared bankruptcy. The Munich District Court has appointed lawyer Axel Bierbach as the temporary insolvency administrator for the parent company FTI Touristik GmbH. The company stated that they are working hard to ensure that ongoing trips are completed in an organized manner. Trips that have not yet started may be canceled or partially carried out starting on June 4th.
It appears that only the event brand FTI Touristik is immediately affected by the bankruptcy filing, with similar applications set to be filed for other group companies.
The German government does not anticipate providing a comprehensive state rescue for German tourists impacted by FTI's bankruptcy. The German Press Agency shared this information after a meeting of the crisis staff at the Foreign Office in Berlin. According to the Foreign Office website, FTI is insured against bankruptcy through the German Travel Security Fund (DRS), which means that payments made - including the full travel price if already paid and installments - are protected in the event of bankruptcy. This protection applies to female customers and consumers who have booked package tours. It is estimated that around 65,000 tourists are currently on vacation with FTI.
FTI had seemed to be in a secure position, as they received a total of 595 million euros in state aid from the Economic Stabilization Fund (WSF) during the Corona crisis. A consortium led by US financial investor Certares planned to acquire the FTI Group for one euro, with the intention of injecting an additional 125 million euros of fresh capital into the company. However, approval from competitors was necessary.
According to FTI, their booking figures have been significantly below expectations. Furthermore, suppliers had begun demanding cash on delivery. As a result, there was an increased liquidity requirement that could not be covered until the investor process's conclusion. "Handelsblatt" reports that a sudden liquidity gap of several million euros has appeared at FTI. The federal government has chosen not to provide FTI with any more state aid. A spokesperson for the Economy Ministry stated in Berlin on Monday that there were budgetary, legal, and economic reasons why no further aid beyond the "very large aid measures" has been granted.
The FTI Group, with around 11,000 employees, has been struggling during the pandemic. The industry has been hit with a severe crisis. In the last business year, the company recorded a 10% revenue increase to 4.1 billion euros and generated a profit in the double-digit million range. The company did not provide further details on the result. The main shareholder was the Egyptian investor family Sawiris.
The German Travel Security Fund is now taking action. It is responsible for reimbursing customer prepayments, arranging for the return transport of stranded tourists, and providing accommodation for these tourists until their return transport.
The fund, which was organized by the German tourism industry and overseen by the Federal Ministry of Justice, was set up following the insolvency of the travel company Thomas Cook in September 2019. At the time, the insurance company only provided limited coverage, and the state stepped in with millions.
The FTI Group, which had around 11,000 employees, faced significant challenges during the pandemic. It had only recently started to recover after the travel industry was hit by a severe crisis. The third-largest European travel company experienced a 10% revenue increase to 4.1 billion euros in the latest business year and posted a profit in the double-digit million range. The company did not disclose any further information on the result. The main shareholder was the Egyptian investor family Sawiris.
Provisional insolvency administrator Bierbach was at the FTI headquarters in Munich in the afternoon, reviewing documents and speaking with key stakeholders. A spokesperson for the law firm was unable to provide any additional information at this time. Most recently, Bierbach was in the news as the insolvency administrator for the retail chain Sport Scheck, which he managed to sell to an Italian investor.
