Tourism: Certares is a new investor in FTI – Economy

For months, the future of the Munich tour operator has been one of the most discussed topics in the German tourism industry. Now there is news: A new investor is to take over 100 percent of FTI, Europe’s third largest travel group. This is Certares, a private equity company from the USA that specializes in the tourism industry. FTI announced the takeover on Tuesday morning. Accordingly, all previous shareholders give up their shares for one euro. So Certares gets this Pursue Basically for free, but also takes on debts in the hundreds of millions. Certares has announced that it will invest 125 million euros in FTI; the money will flow into the next phase of growth and digital transformation.

FTI announced that Certares will form a consortium to manage the company in the future. The previous owners, the Sawiris family, one of the richest families in Egypt, will also be part of this consortium and will donate money again, the company says. Until the takeover of Certares, the family owned 75.1 percent of the shares in FTI. The billionaire Samih Sawiris acquired around a third of the company’s shares ten years ago. During a capital increase during the corona pandemic in 2020, he massively expanded his shares, but this has not yet been profitable for him.

The formation of a consortium is a common procedure for the new investor, said an FTI spokeswoman for the SZ. In this way, Certares secures the knowledge and further commitment of the previous shareholders. The tour operator did not disclose any more precise conditions. FTI also did not want to comment on the immense debts or a haircut.

Good news for the industry

Certares’ entry was preceded by months of negotiations. The travel company, which has around 11,000 employees worldwide, announced last September that it was looking for a new investor. FTI boss Karl Marktgraf was pleased with the agreement in a press release. He now sees his company “in a unique position for future growth and profitability.”

Industry expert Markus Heller, managing director of the tourism-focused management consultancy Dr. Fried und Partner is positive: “The fact that there is now certainty is a very good signal for the company and the entire industry,” says Heller. It would have been devastating for the industry if the next big operator after Thomas Cook had gone bankrupt. In addition, bankruptcy would have brought down many other parties involved.

Until recently, FTI was considered the problem child of tourism. The balance sheet for the 2021/2022 financial year published in the Federal Gazette in February of this year showed how bad things were for the group during the pandemic. Accordingly, FTI only had an equity ratio of 2.3 percent and had to be saved from bankruptcy with state support; 595 million euros flowed from the federal economic stabilization fund alone. After publication, FTI announced that the company had developed well since then and achieved sales of around 4.1 billion euros in the last financial year. However, this only brought a limited sigh of relief within the industry.

The high level of debt and months of uncertainty surrounding the search for a new investor had particularly unsettled travel agencies. Some have only sold FTI trips at the express request of the customer or not at all. The reason is that they come away empty-handed if a trip cannot take place due to the bankruptcy of an organizer. For customers, however, the financial risk is low. If a package holiday is canceled due to bankruptcy, you will get your money back and you will be entitled to free transport back from your holiday destination. Ensuring this protection is expensive for the organizers. If you have an annual turnover of more than ten million euros, you are obliged to insure yourself with the German Travel Insurance Fund (DRSF). When asked, FTI informed the SZ in February that the company currently had to deposit the maximum security deposit of nine percent of sales with the DRSF.