Tui tumbles after convertible offering, UK holiday plans in focus

Tour operator Tui (LON:TUIT) saw its shares fall in early trade after the company announced plans to launch a convertible bond. The size of the Anglo-German company’s convertible bond is initially set at EUR 350mln but could be extended to EUR 400mln.

“Tui intends to use the proceeds from the Offering to further improve its liquidity position as the Covid-19 crisis continues and subsequently for the repayment of existing financing instruments,” the company said in a statement.

Travel plans
The announcement comes at a precarious time for companies in the travel and leisure industry. With summer season fast approaching, the prospects of vacations in UK and Europe appears to be diminishing and could end up being more costly than usual.

The UK’s Department for Transport has today published its framework to safely reopen international from the UK. Recommendations include the launch of a new traffic light system and ‘green watchlist’, and the introduction of travel certification.

“The report, produced by the Global Travel Taskforce, shows how international travel could resume from 17 May 2021 at the earliest, in an accessible and affordable way,” the Department for Transport said.

Being ‘affordable’ is one of the key issues facing the government. Travellers to countries on all three lists – Green, Amber, or Red – would have to take numerous polymerase chain reaction (PCR) tests, which could run into the hundreds of pounds and make international travel even more expensive.

Due to the large number of PCR tests required, Which? estimates that a trip to Greece, which requires five tests, would cost an estimated £370 per person. France could cost £420, Spain £330, and Italy £310.

The government has said cheaper tests could be used when holidaymakers return home and that they were looking into whether the government could provide pre-departure tests.

Of note, UK holidaymaker Jet2 PLC (LON:JET2) has today said it will extend the suspension of flights and holidays up to and including June 23rd due to “lack of clarity and detail” from the UK government.