Prospects

The global economy has recovered substantially since mid-2009, driven by the dynamic development in Asia. The upswing in the industrialised countries has also been stronger than initially expected. It was driven by changes in companies’ stock management policies and expansionary fiscal policies pursued by most countries.

For calendar year 2010, the economic indicators of the global economy are expected to increase, albeit with considerable regional variations. Expansion will continue to be driven by the developing countries and emerging markets. The crisis of confidence in the financial markets caused a slowdown in the economic parameters in the Eurozone in the second half of the calendar year. Since many countries only have limited fiscal policy options to stimulate economic activities due to their deficits, budget consolidation is expected to occur. The European countries, in particular, have already initiated fiscal tightening in response to pressure in the financial markets. In the United States and Japan, this policy will hinge upon continued economic recovery. Budget consolidation in the industrialised countries may also lead to a considerable slowdown in the economic development in the emerging markets.

In spite of this risk, the International Monetary Fund has again lifted its forecast for calendar year 2010 (IMF, World Recovery Continues, But Risks Increase, Says IMF, July 8, 2010) and now expects global growth of 4.6%, with growth of 3.3% in the United States, 2.4% in Japan and 1.0% in the Eurozone, as before. By contrast, the emerging Asian economies are expected to achieve growth rates almost matching the pre-crisis levels. For 2010, the IMF expects growth of 10.5% for China and 9.4% for India.

Tourism markets usually follow the general economic development with a time lag. After international tourist arrivals declined in the first three calendar quarters of 2009, this trend reversed at the end of the year. Asia, the Pacific region and the Middle East, in particular, recorded considerable growth, while international tourist arrivals grew less strongly in Europe and America. Moreover, growth in Europe was dampened by the one-week closure of airspace due to the ash cloud resulting from volcanic eruption in Iceland in April 2010.

In line with the change in TUI AG’s financial year, the information provided below relates to the expected development of turnover and operating earnings (underlying divisional EBITA) of the TUI Group for the period from 1 October 2009 to 30 September 2010.

TUI Travel   
Stable underlying earnings versus the prior year continue to be expected for TUI Travel for the financial year 2009/10. For the current Summer 2010 season, booked turnover in the Mainstream business is 6% ahead of prior year, with customer volumes up 3% year-on-year. In the completed quarter under review, however, margins were impacted by a considerable increase in the proportion of lates, in particular in the UK. The German market also saw declines in margins due to the shift in demand from high- to low-price products.

On the other hand, bookings have improved considerably over the last few weeks. An additional positive year-on-year contribution will arise from the delivery of synergies from the integration of the tourism business in the UK and cooperation between TUIfly and Air Berlin in the German market. Furthermore, a positive currency effect is expected to arise for the remaining fourth quarter of 2009/10 from the currently stronger exchange rate of Sterling against the Euro.

TUI Hotels & Resorts   
TUI Hotels & Resorts continues to expect a slight year-on-year decline in earnings for the current financial year. The anticipated positive effects of active cost management are expected to be more than offset by declines in average rates per bednight, with the weak first quarter of 2009/10 in particular impacting the development for the overall year. Should the positive booking trend for the Summer 2010 season continue to consolidate, however, this might help to catch up on previous year's earnings level.

Cruises   
For the current year 2010, the cruise market continues to be expected to grow. This may benefit the companies of the Cruises sector in their respective market segments. On the basis of the persistently positive booking trend for the Summer 2010 season, earnings are currently expected to rise slightly year-on-year.

Tourism   
Based on the current earnings estimate for TUI Travel, TUI Hotels & Resorts and Cruises, the TUI Group expects underlying earnings to be stable overall versus the prior year in its core business Tourism in financial year 2009/10.

Continuing Operations 
On the basis of the prospects for Tourism outlined above and cost savings in Central Operations, the TUI Group expects a slight year-on-year rise in earnings by Continuing Operations for financial year 2009/10.

Group result    
Overall, the TUI Group expects the Group result for financial year 2009/10 to be positive in spite of the adverse impact of the volcanic eruption in Iceland. This will be attributable above all to the clearly positive result by Container Shipping, measured at equity.