Voyage to New Destinations - FTI travel organization seeks bankruptcy protection
The third-largest travel company in Europe, FTI, filed for bankruptcy today at the Munich District Court. FTI Touristik GmbH, the parent company of the FTI Group, made the announcement.
They are working hard to ensure that trips already underway can be completed smoothly. Future trips that haven't started might not be possible or can only be partially carried out, starting from the 4th of June.
The insolvency filing initially affects only FTI Touristik, with plans to file it for other group companies as well.
Initially, it seemed like things were on a secure footing for the company, as they received a total of 595 million euros in government aid from the Economic Stabilization Fund (WSF) during the coronavirus crisis. A group led by U.S. financial investor Certares was planning to buy the FTI Group for one euro, and injecting 125 million euros of fresh capital into the company. However, the antitrust authorities needed to give their approval.
However, the company's booking figures have been significantly lower than anticipated. Moreover, many suppliers are demanding advance payments. Due to this, there was a large increase in liquidity requirements that couldn't be covered before the investor transaction was finalized. It was also reported that the state suddenly refused further aid after weekend discussions.
Now, the German Travel Security Fund is taking action. Their objective is to take charge of customers' prepayment reimbursements, the transportation of stranded tourists, and their accommodation until they can be transported back home.
The fund, a travel industry organized and overseen by the Federal Ministry of Justice, was developed following Thomas Cook's insolvency in September 2019. At the time, the insurance company only covered a fraction of the costs due to a liability limit, so the government had to intervene with millions.
FTI Group, founded in 2021, was facing significant hardships due to the pandemic, causing a crisis in the travel industry. The company, which was third-largest in Europe after TUI and DER Touristik, had recovered recently due to an uptick in demand. In the 2022/2023 financial year, they recorded a turnover increase of 10% to 4.1 billion euros and made a profit in the double-digit million range. They did not provide more information on their performance. The main shareholder was the Sawiris family from Egypt.
