TUI AG Investor Relations

Significant increase in turnover and operating earnings in Q2 / Earnings growth considerably driven by container shipping /

Thu, 14 Aug 2008 06:00:00 GMT

Hanover, 14 August 2008

In the second quarter of 2008, TUI AG achieved significant increases in turnover and operating earnings, both in tourism and container shipping. Turnover by the Group’s divisions grew by 20 per cent year-on-year to 6.2 billion euro (previous year: 5.2 billion euro) in the second quarter. Operating earnings by the divisions (underlying EBITA) rose to 216 million euro (previous year: 35 million euro). Besides a gratifying performance by the tourism division, the earnings growth was considerably driven by the substantial increase in operating earnings by container shipping. TUI’s Executive Board therefore continues to expect a significant increase in underlying earnings by each of the two divisions, tourism and container shipping, for the year as a whole.

Due to special items, arising in particular from the strategic realignment of flight operations, Group earnings decreased considerably to –125 million euro (previous year: 71 million euro) in the second quarter. Earnings per share accounted for –0.24 euro for the second quarter (previous year: 0.19 euro).

In the context of the implementation of the strategic realignment of airline operations by TUI Travel, a sale-and-lease-back agreement worth 526 million US dollars had been concluded in June 2008 for 19 aircraft owned by TUI Travel. This transaction by TUI Travel resulted in a book loss of 102 million euro due to the dollar/euro exchange rate. In connection with the strategic realignment of airline activities TUI Travel incurred further expenses of 56 million euro, resulting from the measurement of individual aircraft still owned by TUI Travel and the reversal of existing exchange rate hedging instruments. In addition, an impairment of 73 million euro was required for the airlines Hapag-Lloyd Flug and Hapag-Lloyd Express, operating under the TUIfly brand¹.

As at 30 June 2008, the Group’s net debt totalled 3.1 billion euro, down from 3.9 billion euro as at the end of the 2007 financial year.

Detailed development of the tourism division

TUI’s tourism division comprises the three segments TUI Travel, TUI Hotels & Resorts and the cruise business of Hapag-Lloyd Kreuzfahrten and TUI Cruises. Turnover by the tourism division totalled 4.7 billion euro (previous year: 3.7 billion euro) in the second quarter, up 28 per cent year-on-year. The turnover growth was driven by all tourism segments, with TUI Travel in particular recording significant increases in turnover due to changes in consolidation. Operating earnings by tourism (underlying EBITA) grew by around 91 per cent to 86 million euro (previous year: 45 million euro).

In the second quarter, TUI Travel increased its turnover by around 29 per cent to 4.5 billion euro (previous year: 3.5 billion euro) due to the first-time consolidation of the First Choice activities. Underlying EBITA by TUI Travel grew by 40 million euro year-on-year to 71 million euro (previous year: 31 million euro). Besides the consolidation effects this growth was partly attributable to the increase in average margins and load factors in the Mainstream business in the Central Europe and Northern Europe sectors. The integration of activities in the British market continued to progress according to plan so that the expected synergies were leveraged accordingly. The development was also driven by the positive performance of the Specialist Holidays, Activity and Online Destination Services sectors.

TUI Hotels & Resorts also increased its turnover by around ten per cent to almost 100 million euro in the second quarter (previous year: 91 million euro). Both occupancy and average revenues per hotel bed rose slightly year-on-year. In the second quarter, underlying earnings by the hotel sector totalled 15 million euro, matching the gratifying level achieved in 2007.

The cruises sector comprises Hapag-Lloyd Kreuzfahrten and the TUI Cruises activities currently being established. The turnover generated by Hapag-Lloyd Kreuzfahrten climbed by 29 per cent to around 47 million euro (previous year: 36 million euro) in the second quarter. The rise in demand created a further improvement in the occupancy of the ships and a year-on-year increase in average revenues per day. Following a minor loss in the 2007 reference quarter, operating earnings (underlying EBITA) were balanced in the second quarter of 2008 (previous year: -1 million euro).

Detailed development of container shipping

Turnover by the division grew by 2.6 per cent to around 1.5 billion euro (previous year: 1.4 billion euro) in the second quarter. This growth resulted from a considerable improvement in freight rate levels, with slight volume growth. It was adversely impacted by the considerable weakening of the US dollar exchange rate against the euro. In the second quarter, operating earnings rose significantly by 110 million euro to 115 million euro (previous year: 5 million euro).

In the second quarter, Hapag-Lloyd increased its transport volume by 3.7 per cent year-on-year. The total transport volume accounted for 1.43 million standard con-tainers (TEU). This volume growth was driven by the Trans-Pacific, Latin America and Australasia trade lanes, while the Far East and Atlantic trade lanes remained below 2007 volume levels. All trade lanes with the exception of Australasia considerably increased their average freight rates (+16.2 per cent). The strongest increase was achieved by the Far East trade lane (+28 per cent).

Prospects

In the light of the performance achieved in the first half of the year, the TUI Group’s tourism entities expect a substantial improvement in earnings year-on-year for the overall year 2008.

The key earnings drivers in TUI Travel are the expected synergies from the merger between TUI and First Choice as well as margin enhancements attributable to the capacity-and product-related initiatives launched in the Mainstream sector. Earnings will additionally benefit from the sustained growth of the Specialist Holidays, Activity and Online Destination Services sectors. The hotel sector is planning further increases in the number of bed nights, driven among others by the expected positive development in the long-haul segment. The cruises sector expects solid demand for cruises and a stable political framework in the destinations.

Considering the gratifying performance in the first half of the year and the current development of business, TUI AG continues to expect earnings by container shipping to rise significantly year-on-year in the 2008 financial year despite an overall slowdown in the economic scenario. As before, risks for the overall year relate to the effects of the crisis in the financial markets on the development of world trade, a final assessment of which is not yet possible. Earnings will also be affected by the development of shipping bunker prices. At the same time, the development of earnings by container shipping will reflect the further development of the US dollar exchange rate against the euro.

From today’s perspective, a final assessment of the development of Group earnings is not possible at this point due to the planned separation of container shipping operations from the Group.

Separation process in container shipping progressing according to plan

The separation process in container shipping is progressing according to plan and will be continued. Upon the submission of the non-binding bids, TUI AG has now invited bidders for a second round and launched the due diligence process. The completion of the bidding process is expected for the autumn at the earliest.

¹ In line with the status of the negotiations on a potential merger with the airlines Germanwings GmbH and Eurowings Luftverkehrs AG, the assets and liabilities associated with Hapag-Lloyd Flug and Hapag-Lloyd Express had to be classified as a disposal group in the balance sheet as at 30 June 2008.

Contact:
Björn Beroleit, Director Investor Relations, phone +49 (0)511 – 566 1310
Nicola Gehrt, Senior Manager Investor Relations, phone +49 (0)511 – 566 1435

Turnover by divisions

€ million	Q2 2008	Q2 2007	Var. %	H1 2008	H1 2007	Var. %
Tourism	4,721.6	3,680.3	+ 28.3	8,344.9	6,319.7	+ 32.0
TUI Travel	4,575.2	3,553.6	+ 28.7	8,046.6	6,058.9	+ 32.8
TUI Hotels & Resorts	99.9	90.7	+ 10.1	193.8	174.9	+ 10.8
Cruises	46.5	36.0	+ 29.2	104.5	85.9	+ 21.7
Central operations	18.6	44.0	- 57.7	31.8	75.0	- 57.6
Continuing operations	4,740.2	3,724.3	+ 27.3	8,376.7	6,394.7	+ 31.0
Container shipping	1,510.1	1,472.5	+ 2.6	2,961.3	2,896.2	+ 2.2
Discontinued operation	1,510.1	1,472.5	+ 2.6	2,961.3	2,896.2	+ 2.2
Turnover by divisions	6,250.3	5,196.8	+ 20.3	11,338.0	9,290.9	+ 22.0

Underlying EBITA by divisions

€ million	Q2 2008	Q2 2007	Var. %	H1 2008	H1 2007	Var. %
Tourism	86	45	+ 91.1	- 135	- 180	+ 25.0
TUI Travel	71	31	+ 129.0	- 169	- 213	+ 20.7
TUI Hotels & Resorts	15	15	–	28	31	- 9.7
Cruises	0	- 1	+ 100.0	6	2	+ 200.0
Central operations	15	- 15	n/a	22	- 2	n/a
Continuing operations	101	30	+ 236.7	- 113	- 182	+ 37.9
Container shipping	115	5	n/a	133	- 31	n/a
Discontinued operation	115	5	n/a	133	- 31	n/a
Earnings by divisions (EBITA)	216	35	+ 517.1	20	- 213	n/a

EBITA by divisions

€ million	Q2 2008	Q2 2007	Var. %	H1 2008	H1 2007	Var. %
Tourism	- 146	11	n/a	- 451	- 224	- 101.3
TUI Travel	- 159	- 3	n/a	- 483	- 257	- 87.9
TUI Hotels & Resorts	13	15	- 13.3	26	31	- 16.1
Cruises	0	- 1	+ 100.0	6	2	+ 200.0
Central operations	15	- 21	n/a	22	- 8	n/a
Continuing operations	- 131	- 10	n/a	- 429	- 232	- 84.9
Container shipping	89	13	+ 584.6	90	150	- 40.0
Discontinued operation	89	13	+ 584.6	90	150	- 40.0
Earnings by divisions (EBITA)	- 42	3	n/a	- 339	- 82	- 313.4

Profit and loss statement

€ million		Q2 2008	Q2 2007	Var. %	H1 2008	H1 2007	Var. %
Turnover		4,740.2	3,724.3	+ 27.3	8,376.7	6,394.7	+ 31.0
Cost of sales		4,447.5	3,517.3	+ 26.4	8,019.8	6,264.8	+ 28.0
Gross profit/loss		292.7	207.0	+ 41.4	356.9	129.9	+ 174.7
Administrative expenses		322.6	236.9	+ 36.2	699.8	398.0	+ 75.8
Other income/other expenses		- 99.7	+ 8.4	n/a	- 82.1	19.9	n/a
Impairment of goodwill		76.1	–	–	76.1	–	–
Financial result		- 100.5	- 53.6	- 87.5	- 193.6	- 105.5	- 83.5
- Financial income		63.9	64.0	- 0.2	72.4	80.0	- 9.5
- Financial expenses		164.4	117.6	+ 39.8	266.0	185.5	+ 43.4
Share of results of joint ventures and associates		+ 5.3	+ 10.2	- 48.0	+ 12.9	+ 15.4	- 16.2
Earnings before taxes on income		- 300.9	- 64.9	- 363.6	- 681.8	- 338.3	- 101.5

Reconciliation to underlying earnings:
Earnings before taxes on income		- 300.9	- 64.9	- 363.6	- 681.8	- 338.3	- 101.5
Interest result and earnings from the valuation of interest hedges		93.7	54.8	+ 71.0	176.6	106.5	+ 65.8
Impairment of goodwill		+ 76.1	–	–	+ 76.1	–	–
EBITA from continuing operations^*)		- 131.1	- 10.1	n/a	- 429.1	- 231.8	- 85.1
Adjustments
Gains on disposals		–	–		–	–
Restructuring		190.6	8.7		217.7	10.3
Purchase price allocation		11.7	–		53.2	–
Other one-off items		29.9	31.0		45.6	39.3
Underlying EBITA from continuing operations		101.1	29.6	+ 241.6	- 112.6	- 182.2	+ 38.2

Earnings before taxes on income		- 300.9	- 64.9	- 363.6	- 681.8	- 338.3	- 101.5
Taxes on income		- 23.9	- 139.9	+ 82.9	- 138.2	- 205.9	+ 32.9
Result from continuing operations		- 277.0	75.0	n/a	- 543.6	- 132.4	- 310.6
Result from discontinued operation		151.7	- 4.5	n/a	140.2	97.9	+ 43.2
Group profit/loss for the year		- 125.3	70.5	n/a	- 403.4	- 34.5	n/a
- attributable to shareholders of TUI AG of Group profit		- 55.6	58.9	n/a	- 222.4	- 57.6	- 286.1
- attributable to minority interests of Group profit		- 69.7	11.6	n/a	- 181.0	23.1	n/a
Group profit/loss		- 125.3	70.5	n/a	- 403.4	- 34.5	n/a
Basic earnings per share	in €	- 0.24	+ 0.19	n/a	- 0.93	- 0.28	- 232.1
Diluted earnings per share	in €	- 0.24	+ 0.20	n/a	- 0.93	- 0.28	- 232.1

*) EBITA is equivalent to earnings before interest, taxes on income and impaiment of goodwill.

TUI Travel PLC: Third Quarter Results 2008

Wed, 13 Aug 2008 22:00:00 GMT

The following documents were released by TUI Travel PLC on 14 August 2008:

Results for the third quarter and nine months ended 30 June 2008 (Unaudited)

A presentation will be available under:

http://www.tuitravelplc.com/tuitravel/investors/presentations/

Statement by the Supervisory Board of TUI AG

Thu, 10 Jul 2008 22:00:00 GMT

Hanover, 11 July 2008

At yesterday’s meeting, the Executive Board of TUI AG in-formed the Supervisory Board about the status of the process to separate from container shipping. Furthermore the Board also dealt with the demands raised by one of the shareholder groups.

In this regard, the Supervisory Board notes: The separation process is continued according to plan. The Supervisory Board expects an initial evaluation of non-binding bids by mid-August.

A final evaluation of the different separation options (trade sale, merger or spin-off) will only be possible once binding bids will have been submitted by this autumn. Only then will the Board be able to take a balanced decision with due care and in the interest of all shareholders. However, an important consideration already to be mentioned at this point is that a spin-off would require a prior repurchase of TUI AG bonds in excess of two billion Euros. Due to the resulting balance sheet and funding structures, this would not only weaken the credit standing of the two companies emerging from the transaction in a lasting manner. The spin-off would also necessitate a refinancing of the two groups that would be practically impossible to implement without an injection of new capital (a share issue). From today’s perspective, a spin-off would destroy value and would thus not be in the interest of shareholders. Moreover, a spin-off would require a 75 per cent majority of votes at a general meeting.

In the light of the ongoing decision-making process, the demand currently raised by a shareholder group for a decision by the Executive Board to apply for a shareholder’s resolution to decide on the separation process for the container shipping operations is premature. It goes without saying that TUI AG will ask its shareholders for their consent in due time should this be required by statutory law.

In addition, the Supervisory Board again reviewed the change of control clause for Executive Board members and established that this clause is not unusual and legally not objectionable. It also reviewed the business relationships between TUI AG and the tourism-oriented shareholder groups. In this context, the Supervisory Board noted that both the general business relations and the purchase options are subject to customary market conditions. In the case of a purchase option being exercised, the value has to be determined by an independent auditor. The purchase options do not grant the right to acquire shares below market value.

Contact:
Björn Beroleit, Director Investor Relations, phone +49 (0)511 – 566 1310
Nicola Gehrt, Senior Manager Investor Relations, phone +49 (0)511 – 566 1435

TUI presents its new winter programme in Boltenhagen / Böttcher: “Holiday business is going well – despite rising flight prices“

Sun, 06 Jul 2008 22:00:00 GMT

Hanover/Boltenhagen, 7 July 2008

“Despite a down-turn in consumer confidence the demand for holidays remains at a very high level,“ said TUI Deutschland chief executive Dr Volker Böttcher on Friday at the presentation of the winter pro-gramme in the Baltic Sea resort of Boltenhagen. The significant reduction in capacity in the German charter flight market led this summer to a perceptible decrease in the number of bargain offers. At TUI alone the consistently applied amended capacity policy resulted in a drop of about 50 percent in holidays sold at short notice at reduced prices. “We are selling more products at full price than we have for a long time. And more than 40 percent of all holidays are booked at least five months in advance,“ according to Böttcher. As far as TUI Deutschland is concerned he expects the summer business to return strong margins with revenue up by about two percent. Presently, growth is in fact considerably higher, yet during the course of the season it is expected to fall off somewhat. The reason for this is the capped capacities which means certain holidays will be booked out during the next few weeks.

Summer trends
Demand is particularly strong this summer for the Mediterranean destinations of Turkey, Tunisia, Morocco, Egypt, Malta, the Cape Verde Islands and Spain. A decline can be seen in Bulgaria and Cyprus. The positive euro-dollar exchange rate for con-sumers is benefiting long-haul destinations in the USA and Canada, but also the figures for Mauritius, the United Arab Emirates and Australia are up. The Dominican Republic, Mexico, Thailand and South Africa have lost some ground. In the sector in which customers make their own travel arrangements, East European destinations have percentage growth rates with high double digits, and also there is also a good demand for the traditional countries of Germany, Austria and Switzerland.

Taking a broad view of all products and destinations TUI is observing an increasing shift away from the pronounced cheap is cheerful fad of the last few years. “When customers delve through the brochures it is noticeable that they frequently go for the high quality products,“ continued Böttcher. Comfort, lifestyle and sustainability are playing an increasingly greater part and this is reflected in a revenue growth of presently 13 percent in TUI’s premium segment. Very much in trend are also health holidays with a preventative character, round trips and all-inclusive offers. Already every fourth beach package holiday sold is such an all-round carefree package.

More distinctive offers
During the next few years TUI wants to raise itself above its competitors by more strongly developing its products with unique characteristics. The proportion of guests that stay in TUI exclusive hotels is now at 41 percent. Over the next three years it is intended to increase this figure to 53 percent. TUI has extended the uniqueness of its product range for the winter 2008/2009 season. As the first major German tour operator TUI, the market leader, will publish a green holiday brochure, an online-based brochure which will exclusively contain environmentally approved hotels and offers. At the same time, TUI – as announced at the ITB in March – is starting in its new winter programme a climate initiative in cooperation with the internationally recognised Myclimate foundation. From now on TUI passengers have the opportunity to make a CO2 compensation. The minimum contribution is two euros, but anyone who would like can pay more by referring to a compensation calculator (www.tui-klimarechner.de). For every climate donation made TUI will contribute an extra 50 cents per booking. The first project being sponsored is a wind energy park in Turkey.

The modular offensive
TUI customers have in future the choice to book either a travel package or travel components. What was previously valid just for individual product segments can now be taken advantage of in the new winter programme at all 6,700 hotel offers. When booking flight components, access is available to the biggest tour operator flight portal offering 1.5 million flights from 22 airlines. “We want a bigger slice of the cake that has become increasingly significant over the past few years,“ stressed TUI Deutschland chief executive Dr Volker Böttcher. Modular travel components have of late been the most strongly growing market segment driven by the recent rapidly growing airline offers, the easily accessible internet as a retail channel and the increasing needs of customers for more flexibility and individuality.

More early booker and long-stay offers
TUI has further improved its offer of early booker discounts, long-stay holidays and fixed prices for children. The XXL bonus for early bookers will be offered during the winter season in 135 hotels in medium haul and 22 hotels in long haul. Guests can make savings of up to 150 euros per person and this applies to bookings up to 31 October 2008. XXS children’s fixed prices can be booked starting at 249 euros for the Canaries and for the Magic Life Clubs. Special prices are available all around the Mediterranean in 25 selected family hotels and apply up to the end of October. Long-stay holidays of four and more weeks are on offer in 105 hotels. Four weeks holiday in Tunisia for instance can be booked starting from 834 euros per person including flight and an all inclusive package.

Moderately higher holiday prices
Globally rising energy and food prices have led to higher purchasing costs for flights, hotels and transfer services in most destinations. In some long-haul destinations the price rise could be partially compensated by the favourable euro-dollar exchange rate. Also the greater offering of early booker offers has helped damp down prices. Consequently the average price increase was relatively moderate for medium-haul flights at 2.9 percent and in the segment in which customers make their own travel arrangements it was even lower at 1.8 percent, so in cases was well below the current rate of inflation. In the long-haul sector the picture is not very uniform. Holidays above all to Thailand, Australia and the Maldives are more expensive, whereas some holiday destinations were cheaper such as Brazil, the USA and Canada.

Outlook
Despite the increasingly difficult economic background in Germany Böttcher is confident as to prospects of the winter season. Böttcher: “The price increases are only moderate and holidays are the last place where people cut back.“

Contact:
Björn Beroleit, Director Investor Relations, phone +49 (0)511 – 566 1310
Nicola Gehrt, Senior Manager Investor Relations, phone +49 (0)511 – 566 1435

TUI Travel PLC: Aircraft Sale and Leaseback

Sun, 22 Jun 2008 22:00:00 GMT

The following news was released by TUI Travel PLC on 23 June 2008:

Aircraft Sale and Leaseback