Tui bolsters finances with $226m sale and leaseback deal for 737s
Package holiday firm Tui has agreed a sale and leaseback for five new Boeing 737 Max-8 aircraft with BOC Aviation Ltd, which will raise $226m (£173m) for its finances.
The firm said that the deal was part of its “asset right” strategy, which will see it sell existing assets to finance the purchase of new ones.
The deal comes after the coronavirus pandemic decimated the travel and holiday market, with further damage on the cards as fears of a second wave grow.
Tui, which has said it will have to cut 8,000 jobs as a result of the pandemic, has called it the “worst crisis” in aviation history.
Last week the UK branch of the tour operator said that it would close 166 stores due to the pandemic, which has accelerated a shift to online bookings.
Although it said it would not release the list of stores that will close while the consultation takes place, Tui added that it would not shut any of the stores which have reopened after lockdown.
The tour operator said that the decision will impact 900 jobs, but only 270 of these are at risk of being cut.
After the closures the firm, which takes 70 per cent of its holiday bookings online, will still have 350 stores across the UK and Ireland.
Last week the firm took another hit after the UK’s blanket quarantine advice meant that it was forced to cancel all is holidays to Spain until 10 August at the earliest.
Today’s deal with Singapore-based BOC is on standard commercial terms, Tui said, creating a lifetime lease obligation of around €223m to begin at the end of its 2021.
Over the course of the crisis BOC has done deals worth a combined $5.5bn with carriers such as Southwest and United Airlines.
It says it is offering better prices to airlines than would be available in a stronger market.