Europe’s third-largest tour operator FTI Group filed for insolvency in the Munich regional court today, the German company said in a statement, as bookings continued to fall even after a recent one-euro buyout proposal. In addition to sinking orders, multiple suppliers insisted on advance payments, which FTI is no longer able to provide. The group has opened a hotline and a website for customers, the statement added.
It will have to either cancel or complete only partially all trips from June 4, potentially affecting thousands of holidaymakers at the beginning of the travel-busy summer season. The German Foreign Ministry said that the tourism industry and travel insurance fund would take care of repatriating and supporting the tourists affected but that it would provide consular support if necessary to ensure a safe return. The German Economy Ministry called the insolvency “tragic” adding that it could not provide any additional assistance.
The government needs to examine in detail what effect the insolvency will have on the recovery aid funding it had granted FTI during the pandemic, a finance ministry spokesperson said. “It must be assumed that only small recoveries can be expected from the outstanding claims,” the spokesperson said. The government had been awaiting approval for a sale of receivables as the most economical way to claw back the funds before the company filed for insolvency, the spokesperson said.
The return of the receivables is no longer possible after insolvency, the spokesperson added.
FTI employs 11,000 people worldwide and offers tours to more than 40 destinations around the world, including through its 10,000 partner agencies in Germany. In the 2022/2023 financial year, it reported annual sales of around 4.1 billion euros
Numerous Germans who are currently on holiday in destinations like Mallorca with the company or who want to go on holiday with it in the next few weeks are affected. According to a report in the Bild newspaper, employees were informed of the insolvency in a video broadcast this morning. The law firm Finkenhof from Frankfurt/Main was appointed as the insolvency administrator.
Even before the bankruptcy, the booking systems were no longer accessible, allegedly due to a technical fault. The homepage of its own hotel brand Labranda was also switched off in the morning. Five years after the bankruptcy of tour operator Thomas Cook (including Neckermann and Öger Tours), this is the second bankruptcy of a major German tour operator. The FTI management had spent the whole weekend in Berlin negotiating with representatives of the Federal Ministry of Finance and the Federal Ministry of Economics for a guarantee to cover a financing gap in the high double-digit million range in order to get through the summer. However, the federal government rejected this after lengthy talks.
The Munich-based company was already in crisis before the coronavirus pandemic. Only 595 million euros from the German government’s Economic Stabilisation Fund (WSF) and a further 280 million euros from the company’s bank UniCredit, guaranteed by the federal government and the state of Bavaria, kept FTI afloat . In mid-April, the tour operator’s rescue seemed to be within reach: US investor Certares announced that it would buy the company, which now had debts of around one billion euros, assume the debts and provide an additional 125 million euros in fresh capital. However, this idea was apparently abandoned.
The Federal Competitions Office had not yet authorised the takeover. This was expected in late summer at the earliest, i.e. at the end of August/beginning of September. And that became a problem for FTI: until then, the company, which was founded in 1983, lacked fresh money to bridge the summer. FTI, based in Munich, manages around 90 subsidiaries worldwide and employs around 11,000 people. In the past financial year 2022/2023, the group achieved a turnover of 4.1 billion euros.