Friday, September 3, 2010

German Container Shipping Line Profits Reinforce Sale Rumours

TUI May Look to Offload Hapag Lloyd
Shipping News Feature

GERMANY – It may be that Michael Kuehne’s wishes for TUI AG to dispose of their remaining share of Hapag Lloyd are about to come true. Speculation surrounds TUI’s next move after they seem to be keen on purchasing the balance of stock (42.5%) in TUI Travel which they do not own. TUI sold off a large part of the German container shipping line to the Albert Ballin Corporation in April 2009 at a time when Hapag’s potential losses were damaging TUI.

Now it seems we have somewhat of a reversal, Hapag Lloyd earned record second quarter operating profits this year in the general swing upward in container carriers’ fortunes. The shipping line have even been able to resist drawing on the Government’s underwriting of a €1.2 billion loan guarantee and have just decided to issue a bond for €500 million later this month. According to reports they will also obtain a syndicated credit line for around the same amount.

TUI still own around 43% of Hapag, so the sale would give the group a boost after the travel sector suffered a big net loss what with the ash cloud problems and the general financial situation. Meanwhile with TEU volumes up around 10% and freight rates for boxes stable and up considerably from the previous year, it might make sense for everyone to see Hapag Lloyd’s investment base widen.

TUI AG however have tried to appear relaxed about a possible sale of Hapag saying that sea freight is in a recovery period and therefore worth retaining within the group. TUI may sell, but they’ll be looking for a decent price.