TUI to sell Montreal terminals
The executive board of Germany's embattled TUI AG, parent company of Hapag-Lloyd, said today that it will sell the Montreal Gateway Terminals in Canada, some real estate and a few small ships, all acquired in the takeover of CP Ships in 2005.
With its two core businesses, tourism and shipping, suffering financially, TUI has been under pressure to divest its shipping division by shareholders concerned by financial losses related to integration problems with CP Ships as well as the general downturn in the liner industry. TUI hopes to generate 1 billion euros ($1.31 billion) from the sales and reduce its debt to 2.5 billion euros ($3.28 billion).
As part of a group-wide 250 million euros ($328 million) cost-cutting initiative, TUI will also cut 3,600 jobs by 2008 from its tourism unit.
TUI said earnings in the shipping division would be boosted significantly by the non-recurrence of the integration costs and the synergies taking effect and hopes for revenue of 400 million to 500 million euros for 2008.
'Depending on the development of freight rates, the earnings potential may considerably exceed 600 million euros ($787 million) in subsequent years if worldwide economic growth continues,' said Michael Frenzel, TUI's chairman.