Visiting Places for Leisure - Travel agency FTI seeks bankruptcy protection.
The third-largest travel business in Europe, FTI, has declared bankruptcy. On Monday, FTI Touristik GmbH, which is the parent company of the FTI Group, filed for bankruptcy at the Munich District Court. They stated, "We're working to ensure that ongoing trips end when planned." Those trips that haven't begun may not take place after Tuesday (June 4th), or they might only partially go ahead.
Initially, it's just the tour operator brand FTI Touristik that's impacted. More bankruptcy applications will be filed for other group companies in the future.
Things looked safe for the company as it got 595 million euros in government aid from the Economic Stabilization Fund during the Coronavirus pandemic. A consortium led by US investor Certares planned to acquire the FTI Group for one euro while investing an additional 125 million euros into the company. But, competitors had to agree to the deal.
However, the company recently reported that booking numbers were much lower than expected. Plus, several suppliers demanded immediate payment. This created a heightened need for cash, which couldn't be covered until the investor process ended. "Handelsblatt" reported that there was a sudden liquidity gap of millions at FTI. The government denied additional aid for the company over the weekend.
The newly formed German Travel Security Fund will now step in. It's there to reimburse customer prepayments, transport stranded tourists, and house them until they can travel home.
The FTI Group, with approximately 11,000 employees, has struggled due to the pandemic. It's a major crisis for the travel industry. Last year, the company, the third-largest European travel company after TUI and DER Touristik, bounced back due to increased demand. In the 2022/2023 fiscal year, the company saw a 10% increase in sales, reaching 4.1 billion euros, and had a profit in the low double-digit millions. The company didn't provide more details about the profit. The largest shareholder was the Egyptian investor family Sawiris.
