Potential bankruptcy of travel group FTI may result in nearly half a billion euros of losses for the federal government.
Per reports from government officials, FTI received roughly €595 million in Economic Stabilization Fund (WSF) assistance during the pandemic, with 95 million euros of that being repaid prior to their bankruptcy. This leaves 84% of the funds unpaid. The FTI bankruptcy is predicted to account for nearly half of the anticipated losses for the WSF, which are anticipated to be in the region of €1.1 billion, as per "Handelsblatt".
Another factor contributing to the WSF's losses is the bankruptcy of the department store chain Galeria. The projected loss from this bankruptcy is €524 million. The failures of auto suppliers A-Kaiser and Frimo, machine builder Global Retool, and fashion companies Görtz and Orsay have increased the projected damage by an additional 73.8 million euros.
WSF originated from the financial crisis of 2008. In response to the Corona pandemic, the federal government substantially expanded the financial instrument to aid struggling businesses. To mitigate the energy crisis following Russia's invasion of Ukraine, the federal government added an additional €200 billion to the pot. Although the losses are substantial, the WSF still proved to be a profitable venture for the government, according to "Handelsblatt," with profits from aid measures reaching €1.23 billion.
The sale of Lufthansa shares generated a further €760 million, while holiday company Tui contributed an additional €130 million in interest payments and a €251 million compensation when repaying state aid. Additional income was also earned from interest and profit participation by other supported businesses.
On Monday, FTI filed for bankruptcy in Munich. In the short term, their insolvency and its effects will impact customers who have booked services with FTI Touristik. This includes the FTI brand in Germany, Austria, and the Netherlands, as well as services like 5vorFlug and rental car brands DriveFTI and Cars and Camper. Customers who reserved FTI services through platforms such as Check24 or Ab-In-den-Urlaub are also affected.
Read also:
- The potential insolvency of FTI could lead to a significant Euro-denominated loss for the Federal Government, given the nearly half a billion euros in Economic Stabilization Fund (WSF) assistance they provided to the travel provider.
- According to a report in AFP, FTI received approximately €595 million from the WSF during the Coronavirus pandemic, with €95 million being repaid before their eventual bankruptcy.
- The handover of Lufthansa shares, holiday company Tui's interest payments, and compensation for repaying state aid contributed additional income to the WSF.
- Despite the anticipated losses, including €524 million due to the Galeria department store chain bankruptcy, WSF has managed to make a profit of around €1.23 billion, as claimed by 'Handelsblatt'.
- The insolvency of FTI, which filed for bankruptcy in Munich on Monday, may impact millions of customers who have booked services through FTI Touristik, 5vorFlug, DriveFTI, and Cars and Camper, among others.
- Amid the Coronavirus crisis, the Federal Government expanded the WSF to its current size, with the aim of aiding struggling businesses, including those facing insolvency or bankruptcy.
