TT. Tui Travel

TIDMTT.

RNS Number : 8276G

TUI Travel PLC

18 May 2011

TUI TRAVEL PLC PENSION AGREEMENT AND REFINANCING

18 May, 2011

Pensions update

Further to TUI Travel PLC's interim results on 10 May 2011, which stated that it had reached agreement with trustees and unions to cap the rate of future growth of pensionable pay for its UK defined benefit pension schemes to a maximum of 2.5% per annum, TUI Travel is pleased to announce that measures to address the ongoing funding and management of the pension schemes have now been finalised.

The agreed measures will bring total cash savings to TUI Travel of GBP38 million per annum (including a GBP10 million reduction in annual service costs and net of royalty payments) and a reduction in forecast actuarial liability of GBP63 million.

On 31 May 2011, four of the current six schemes will merge and the three remaining schemes have been provided with a limited interest in a partnership established by TUI Travel PLC which holds the Thomson and First Choice brands. Under the partnership arrangements, TUI Travel commits to making payments of up to GBP275 million in 2026, if and to the extent that the pension schemes remain in deficit at that time. In addition the partnership, which will receive royalty payments from TUI UK for brand use, will make annual income distributions to the pension schemes totalling circa GBP16.5 million for 15 years until 2026.

The partnership's interest in the Thomson and First Choice brands will provide collateral for these payments. All revenues, profits and cash flows from the First Choice and Thomson businesses will continue to be consolidated in the Group's accounts and TUI Travel will retain day-to-day operational control of the brands. The agreement will not impact the deficit calculated on an IAS 19 basis.

Refinancing

In addition on 17 May 2011, TUI Travel successfully refinanced its banking facilities with the signing of new facilities totalling GBP1.155bn. The new facilities have a four-year term and substantially extend TUI Travel's debt maturity profile. Interest will be incurred at a margin above LIBOR dependent on the proportion of the facility drawn and it is envisaged that the average margin will be less than 2%. The covenants remain unchanged. The transaction was co-ordinated by the Royal Bank of Scotland and involved a syndicate of banks.

Peter Long, Chief Executive, TUI Travel PLC, commented:

"We are delighted that we have reached agreement with the Trustees of our UK defined pension schemes. This is a mutually acceptable solution and an innovative scheme which mitigates the Group's pension risk whilst increasing security for members' pensions. We are also extremely pleased with the successful refinancing and the continued strong support from our banking partners."

Enquiries:

 
 Analysts and Investors 
 Will Waggott, Chief Financial Officer          Tel: +44 (0)1582 
                                                 645 334 
 Paul Rushton, Director of Investor Relations   Tel: +44 (0)1293 
                                                 645 795 
 Press 
 Lesley Allan, Corporate Communications         Tel: +44 (0)1293 
  Director                                       645 774 
 Michelle Jeffery, Corporate Communications     Tel: +44 (0)1293 
  Manager                                        645 776 
 
 

TUI Travel PLC is the world's leading international leisure travel group operating in approximately 180 countries worldwide. It serves more than 30 million customers in over 27 source markets. Headquartered in the UK, the Group employs approximately 50,000 people and operates a pan-European airline consisting of 143 aircraft. The company is organised and managed through four business Sectors: Mainstream, Specialist & Activity, Accommodation & Destinations and Emerging Markets. In the financial year ended 30 September 2010 TUI Travel had revenues of GBP13.5bn and an underlying profit before tax of GBP447m. For more information visit www.tuitravelplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

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