TUI: debt reduction before dividend distribution

TUI: debt reduction before dividend distribution

In the current environment, TUI recently announced that dividend payments and share buybacks are not planned for the time being, which did not necessarily generate a positive response from the markets. Nevertheless, a company spokesman announced to “The Shareholder” that long-term distributions for shareholders are in prospect.

Before the COVID-19 pandemic, TUI was a dividend stock and, according to Kuzey Alexander, this should be the case again in the future. However, the current focus is on reducing the high mountain of debt. In particular, the focus is on the return of a credit line from KfW Bank worth 2 billion euros, of which 550 million euros have already been repaid.

An exact date for the resumption of dividend payments was not given, which requires patience from investors. Nevertheless, the general commitment to future distributions was received positively. The TUI share improved slightly by over one percent to 6.90 euros in a friendly trading environment.

TUI is taking a prudent approach to reducing debt, which should be beneficial for the company's long-term development and shareholders. The stock's current valuation, below pre-coronavirus crash levels in 2020, is partly attributed to high levels of debt. The strategy of reducing this debt could pay off in the long term, although it could come with further challenges.