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German tourism giant TUI to slash 8,000 jobs over coronavirus crisis

The world's biggest tourism group TUI said Wednesday it planned to slash 8,000 jobs in a bid to cut costs as the industry struggles to stay afloat with travel severely curtailed by the coronavirus pandemic.

German tourism giant TUI to slash 8,000 jobs over coronavirus crisis
A TUI plane parked at Hanover airport on April 8th. Photo: DPA

“We are targeting to permanently reduce our overhead cost base by 30 percent across the entire Group,” said TUI of the cuts affecting one in 10 jobs.

“This will have an impact on potentially 8,000 roles globally that will either not be recruited or reduced.”

In total the company employs around 70,000 people worldwide. The head office of TUI is based in Hanover, where the bulk of the firm's some 4,000 staff in Germany are employed.

Highlighting the impact of the crisis, the group reported a net loss of €763.6 million for its second quarter to March.

READ ALSO: German tourism giant TUI suspends most operations over coronavirus fears

To halt transmission of the coronavirus, many countries have slammed borders shut and banned tourism, leaving planes grounded and cruise ships idle at ports while hotels are left empty.

To survive the crisis, TUI had sought a lifeline from the government, signing a deal in early April for a €1.8 billion state-guaranteed loan to keep it afloat.

It is one of the biggest examples of German companies making use of a huge government rescue package aimed at cushioning the impact of the pandemic on Europe's top economy.

The German government has promised “unlimited” credit to help companies weather the coronavirus storm.

READ ALSO: Germany unleashes biggest post-war aid package against coronavirus

TUI had announced job cuts before the coronavirus pandemic hit.

In July 2019, the tourism group said it planned to cut around 450 jobs in Germany within the next two and a half years as it moved to digitise more of its business operations.

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COVID-19

Court turns down AfD-led challenge to Germany’s spending in pandemic

The German Constitutional Court rejected challenges Tuesday to Berlin's participation in the European Union's coronavirus recovery fund, but expressed some reservations about the massive package.

Court turns down AfD-led challenge to Germany's spending in pandemic

Germany last year ratified the €750-billion ($790-billion) fund, which offers loans and grants to EU countries hit hardest by the pandemic.

The court in Karlsruhe ruled on two challenges, one submitted by a former founder of the far-right AfD party, and the other by a businessman.

They argued the fund could ultimately lead to Germany, Europe’s biggest economy, having to take on the debts of other EU member states on a permanent basis.

But the Constitutional Court judges ruled the EU measure does not violate Germany’s Basic Law, which forbids the government from sharing other countries’ debts.

READ ALSO: Germany plans return to debt-limit rules in 2023

The judgement noted the government had stressed that the plan was “intended to be a one-time instrument in reaction to an unprecedented crisis”.

It also noted that the German parliament retains “sufficient influence in the decision-making process as to how the funds provided will be used”.

The judges, who ruled six to one against the challenges, did however express some reservations.

They questioned whether paying out such a large amount over the planned period – until 2026 – could really be considered “an exceptional measure” to fight the pandemic.

At least 37 percent of the funds are aimed at achieving climate targets, the judges said, noting it was hard to see a link between combating global warming and the pandemic.

READ ALSO: Germany to fast-track disputed €200 billion energy fund

They also warned against any permanent mechanism that could lead to EU members taking on joint liability over the long term.

Berenberg Bank economist Holger Schmieding said the ruling had “raised serious doubts whether the joint issuance to finance the fund is in line with” EU treaties.

“The German court — once again — emphasised German limits for EU fiscal integration,” he said.

The court had already thrown out a legal challenge, in April 2021, that had initially stopped Berlin from ratifying the financial package.

Along with French President Emmanuel Macron, then chancellor Angela Merkel sketched out the fund in 2020, which eventually was agreed by the EU’s 27 members in December.

The first funds were disbursed in summer 2021, with the most given to Italy and Spain, both hit hard by the pandemic.

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