Agenda

1. Presentation of the approved annual financial statements as at 31 December 2007, the management report, the approved consolidated financial statements, Group management report, the report of the Supervisory Board and the explanatory report on the information pursuant to sections 289(4) and 315(4) HGB
   
   
2. Resolution on the appropriation of the net profit available for distribution for the 2007 financial year
   
   
3. Resolution on the ratification of the actions of the Executive Board for the 2007 financial year
   
   
4. Resolution on the ratification of the actions of the Supervisory Board for the 2007 financial year
   
   
5. Appointment of the auditor for the 2008 financial year
   
   
6. Vote of no confidence at the Annual General Meeting in the Chairman of the Executive Board of the company, Dr. Michael Frenzel pursuant to section 84(3) sentence 2 AktG.
   
   
7. Cancellation of the authorised capital pursuant to section 4(4) of the TUI AG Charter; new authorisation of the Executive Board to increase the share capital (authorised capital) with the option to exclude subscription rights – employee shares – (amendment to the Charter)
   
   
8. Cancellation of the authorised capital pursuant to section 4(5) of the TUI AG Charter; new authorisation of the Executive Board to increase the share capital (authorised capital) with the possibility of excluding subscription rights in accordance with sections 203(2), 186(3) sentence 4 AktG etc. (amendment to the Charter)
   
   
9. Cancellation of the authorisation granted by resolution of the Annual General Meeting on 10 May 2006 relating to the issue of bonds and granting of new authorisation to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) with the option to exclude subscription rights in accordance with sections 221(4), 186(3) sentence 4 AktG etc. and the creation of new conditional capital (amendment to the Charter)
   
   
10. Resolution on the new authorisation to acquire and use own shares in accordance with section 71(1) no. 8 AktG and to exclude subscription rights
    
    

1. Presentation of the approved annual financial statements as at 31 December 2007, the management report, the approved consolidated financial statements, Group management report, the report of the Supervisory Board and the explanatory report on the information pursuant to sections 289(4) and 315(4) HGB

2. Resolution on the appropriation of the net profit available for distribution for the 2007 financial year

The Executive Board and Supervisory Board recommend that a sum of € 62,811,393.75 from the total net profit available for distribution of € 87,587,215.40 be used to distribute a dividend of € 0.25 per share on the share capital of € 642,299,113.43 existing as at 31 December 2007. The remaining sum of € 24,775,821.65 should be carried forward to new account.

3. Resolution on the ratification of the actions of the Executive Board for the 2007 financial year

The Supervisory Board and Executive Board recommend ratification.

4. Resolution on the ratification of the actions of the Supervisory Board for the 2007 financial year

The Supervisory Board and Executive Board recommend ratification.

5. Appointment of the auditor for the 2008 financial year

The Supervisory Board recommends the appointment of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover, as the auditor for the 2008 financial year and also for the review of the half-yearly financial report for the first half of 2008.

6. Vote of no confidence at the Annual General Meeting in the Chairman of the Executive Board of the company, Dr. Michael Frenzel pursuant to section 84(3) sentence 2 AktG.

The notice of this agenda item is made in accordance with section 122(2) AktG at the request of shareholder Richard Mayer, Munich. In contrast to Mr. Mayer, the Executive Board and Supervisory Board see no ground for a vote of no confidence in the management of the company and its strategic realignment by Dr. Frenzel. The Executive Board and Supervisory Board recommend that any motion of no confidence in Dr. Frenzel proposed at the Annual General Meeting be rejected.

7. Cancellation of the authorised capital pursuant to section 4(4) of the TUI AG Charter; new authorisation of the Executive Board to increase the share capital (authorised capital) with the option to exclude subscrip­tion rights – employee shares – (amendment to the Charter)

By the resolution under agenda item 8 of the Annual General Meeting of 18 May 2004 the Executive Board was authorised, with the consent of the Supervisory Board, to increase the share capital of the company by up to € 10,000,000.00 by issuing new bearer shares (under an amendment to the Charter made in 2005: registered shares) with the option to exclude subscription rights (on the issue of employee shares). Partial use of the authorisation has been made; the sum of € 6,742,354.91 is still available.

In light of the fact that the authorisation is due to lapse next year, it is recommended that a new authorisation with an authorised capital and cancellation of the existing authorised capital be approved in accordance with section 4(4) of the Charter.

It should be ensured that the cancellation of the existing authorised capital as defined in section 4(4) of the Charter does not take effect until it has been replaced by a new authorised capital in accordance with the following proposed resolution.

The Executive Board and Supervisory Board recommend that the following resolution be passed:

a) Pursuant to section 4(4) of the Charter of TUI AG, the authorisation of the Executive Board, with the consent of the Supervisory Board, to increase the share capital by up to € 6,742,354.91 in total (employee shares) until 17 May 2009 should be cancelled with effect from the date of registration of the new authorised capital to be passed by resolution in accordance with paragraphs b) and c) below.

b) The Executive Board should be authorised, with the consent of the Supervisory Board, to raise the share capital of the company in one or more stages until 6 May 2013 by up to € 10,000,000.00 (in words: ten million euros) in total by issuing new registered shares in return for contributions in cash (authorised capital) and to take decisions on the content of the shares and the terms of share issuance. Shareholders’ subscription rights may, with the consent of the Supervisory Board, be excluded in order to be able to issue the shares created from the authorised capital to employees of the company and its Group companies.

c) New authorised capital of € 10,000,000.00 should be created. Section 4(4) of the Charter should be amended as follows:

“The Executive Board is authorised, with the consent of the Supervisory Board, to raise the share capital of the company in one or more stages until 6 May 2013 by up to € 10,000,000.00 (in words: ten million euros) in total by issuing new registered shares in return for contributions in cash (authorised capital) and to take decisions on the content of the shares and the terms of share issuance. Shareholders’ subscription rights may, with the consent of the Supervisory Board, be excluded in order to be able to issue the shares created from the authorised capital to employees of the company and its Group companies.”

d) To ensure that the cancellation of the existing authorised capital of € 6,742,354.91 does not take effect without being replaced by the new authorised capital in accordance with the above resolution, the Executive Board is instructed to file the cancellation of the existing authorised capital of € 6,742,354.91 in accordance with section 4(4) of the Charter with the commercial register with the proviso that the cancellation will not be registered until such time as the new authorised capital of € 10,000,000.00 is registered.

8. Cancellation of the authorised capital pursuant to section 4(5) of the TUI AG Charter; new authorisation of the Executive Board to increase the share capital (authorised capital) with the possibility of excluding subscription rights in accordance with sections 203(2), 186(3) sentence 4 AktG etc. (amendment to the Charter)

By the resolution under agenda item 9 of the Annual General Meeting of 10 May 2006, the Executive Board was authorised, with the consent of the Supervisory Board, to increase the company's share capital by up to € 64,000,000.00 by issuing new registered shares with the option to exclude subscription rights pursuant to section 186(3) sentence 4 AktG. This authorisation can no longer be used for a capital increase with an exclusion of subscription rights due to the fact that a convertible bond with an exclusion of subscription rights was issued in June 2007.

It is therefore recommended that this authorised capital be cancelled and replaced by a new authorisation to ensure that the Executive Board continues to have the necessary means for raising capital at its disposal and shall in future be able to adapt the equity capital­isation of the company to the commercial requirements.

It should be ensured that the cancellation of the existing authorised capital in accordance with section 4(5) of the Charter does not take effect until it is replaced by new authorised capital in accordance with the following proposed resolution.

The Executive Board and Supervisory Board recommend that the following resolution be passed:

a) The authorisation of the Executive Board, with the consent of the Supervisory Board, to increase the share capital by up to € 64,000,000.00 in total (authorised capital) until 9 May 2011 pursuant to section 4(5) of the Charter of TUI AG should be cancelled with effect from the date of registration of the new authorised capital to be passed by resolution in accordance with paragraphs b) and c) below.

b) The Executive Board should be authorised, with the consent of the Supervisory Board, to raise the share capital of the Company in one or more stages until 6 May 2013 by up to € 64,000,000.00 (in words: sixty-four million euros) in total by issuing new registered shares in return for contributions in cash (authorised capital). Shareholders are, in principle, entitled to subscription rights. The shares may be acquired by one or several banks with the obligation that the shares are offered to shareholders for subscription. The Executive Board may, with the consent of the Supervisory Board, exclude shareholders’ subscription rights if the issue amount of the new shares is not significantly lower than the market price for shares with the same terms that have already been issued. The number of new shares issued on the basis of this authorisation, plus such shares as are issued or sold on the basis of an authorisation to sell pursuant to sections 71(1) no. 8 sentence 5 and 186(3) sentence 4 AktG after the passing of the resolution on this authorisation on 7 May 2008 (date of resolution) until such time as it has been exercised must not exceed the limit specified in section 186(3) sentence 4 AktG of 10% of the share capital as per the date of the resolution or the share capital existing as per the date of issue of the new shares, if this value is lower. Further, shares that are or are to be issued on the basis of bonds with conversion rights or warrants or conversion obligations issued in accordance with section 186(3) sentence 4 AktG during the term of this authorisation until such time as it has been exercised should be taken into account when calculating this limit.

The Executive Board may further, with the consent of the Supervisory Board, exclude shareholders’ subscription rights due to fractions.

The Executive Board is authorised, with the consent of the Supervisory Board, to stipulate the further details of the capital increase and its implementation.

c) New authorised capital of € 64,000,000.00 should be created. In this context section 4(5) of the Charter should be amended as follows:

“The Executive Board is authorised, with the consent of the Supervisory Board, to raise the share capital of the Company in one or more stages until 6 May 2013 by up to € 64,000,000.00 (in words: sixty-four million euros) in total by issuing new registered shares in return for contributions in cash (authorised capital). Shareholders are, in principle, entitled to subscription rights. The shares may be acquired by one or several banks with the obligation that the shares are offered to shareholders for subscription. The Executive Board may, with the consent of the Supervisory Board, exclude shareholders’ subscription rights if the issue amount of the new shares is not significantly lower than the market price for shares with the same terms that have already been issued. The number of new shares issued on the basis of this authorisation, plus such shares as are issued or sold on the basis of an authorisation to sell pursuant to sections 71(1) no. 8 sentence 5 and 186(3) sentence 4 AktG after the passing of the resolution on this authorisation on 7 May 2008 (date of resolution) until such time as it has been exercised must not exceed the limit specified in section 186(3) sentence 4 AktG of 10% of the share capital as per the date of the resolution or the share capital existing as per the date of issue of the new shares, if this value is lower. Further, shares that are or are to be issued on the basis of bonds with conversion rights or warrants or conversion obligations issued in accordance with section 186(3) sentence 4 AktG during the term of this authorisation until such time as it has been exercised should be taken into account when calculating this limit. The Executive Board may further, with the consent of the Supervisory Board, exclude shareholders’ subscription rights due to fractions. The Executive Board is authorised, with the consent of the Supervisory Board, to stipulate the further details of the increase in capital and its implementation.”

d) To ensure that the cancellation of the existing authorised capital of € 64,000,000.00 does not take effect without being replaced by the new authorised capital in accordance with the above resolution, the Executive Board is instructed to file the cancellation of the former authorised capital of € 64,000,000.00 in accordance with section 4(5) of the Charter with the commercial register with the proviso that the cancellation shall not be registered until such time as the new authorised capital, which is also € 64,000,000.00, is registered.

9. Cancellation of the authorisation granted by resolution of the Annual General Meeting on 10 May 2006 relating to the issue of bonds and granting of new authorisation to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) with the option to exclude subscription rights in accordance with sections 221(4), 186(3) sentence 4 AktG etc. and the creation of new conditional capital (amendment to the Charter)

By resolution under agenda item 10 of the Annual General Meeting on 10 May 2006 the Executive Board was authorised, with the consent of the Supervisory Board, to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) (hereinafter referred to as “bonds”). The Executive Board, with the consent of the Supervisory Board, made use of this authorisation on 1 June 2007 with the issue of a convertible bond for € 694,000,000.00. In order to retain the option to issue such bonds in the future, a recommendation is to be made to the Annual General Meeting that a resolution should be passed granting new authorisation to issue bonds and approving new conditional capital that enables conversion rights and/or warrants to be serviced or conversion obligations from this new authorisation to be fulfilled. The authorisation passed in 2006 shall be cancelled, to the extent that it has not been exercised, as of the date on which the new authorisation takes effect. The new authorisation proposed here shall be subject to an authorisation scope that corresponds to the authorisation scope of € 1,000,000,000.00 passed in 2006. In order to ensure that this authorisation scope can be fully exploited even in the event of subsequent adjustments to conversion or warrant exercise prices, the conditional capital for serving the fulfilment of conversion rights or warrants shall be € 100,000,000.00; in the event of an exclusion of subscription rights pursuant to section 186(3) sentence 4 AktG, however, the shares to be issued to service conversion rights or warrants or conversion obligations must not exceed 10% of the share capital – neither as per the date on which this author­isation takes effect nor as per the date on which the same authorisation is exercised, if this value is lower.

The Executive Board and Supervisory Board recommend that the following resolution be passed:

a) The authorisation passed at the Annual General Meeting of 10 May 2006 to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments), insofar as this authorisation has not been used, shall be cancelled for the period following the taking effect of the subsequent new authorisation.

b) Authorisation to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments).

aa) Par value, authorisation period, number of shares, term

The Executive Board is authorised, with the consent of the Supervisory Board, to issue bearer or registered convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) (hereinafter referred to as “bonds”) until 6 May 2013 once or several times with or without a limit on the term with the total par value of up to € 1,000,000,000.00 and to grant the holders of such bonds conversion rights or warrants on company shares representing a pro-rata amount of the share capital of no more than € 100,000,000.00 as described in more detail in the respective bond terms. The bonds may also be issued in return for non-cash contributions.

Besides euros, the bonds may also be issued in the legal tender of any OECD country – limited to the corresponding euro equivalent value. Further, issue may only be made by Group companies; in this case the Executive Board is authorised, with the consent of the Supervisory Board, to assume for the company the guarantee for the bonds and to grant to the holders of such bonds conversion rights or warrants on shares of the company.

bb) Granting or excluding subscription rights

Shareholders are, in principle, entitled to a subscription right on the bonds. The bonds may be acquired by one or several banks with the obligation that the shares are offered to shareholders for subscription. However, the Executive Board should be authorised, with the consent of the Supervisory Board, to exclude subscription rights for the bonds:

• due to fractions;
  
  
• insofar as is necessary to grant a subscription right to the holders of previously issued conversion rights and/or warrants on shares of the company or of bonds with conversion obligations to the extent that they would be entitled as shareholders to such subscription right after exercising these rights or fulfilling the conversion obligations;
  
  
• to the extent that bonds with conversion rights or warrants or conversion obligations are issued in return for cash payment and the issue price is not substan­tially lower than the theoretical market value of the bonds determined using generally accepted financial calculation principles; this only applies insofar as the shares to be issued to service the conversion rights and/or warrants or conversion obligations on which they are based do not exceed a total of 10% of the share capital, neither as per the date on which this authorisation takes effect nor as per the date on which the authorisation is exercised, if this value is lower. The sale of own shares should be taken into account when calculating this limit provided that such sale takes place during the term of this authorisation up to the time of its being exercised under exclusion of the subscription right pursuant to section 186(3) sentence 4 AktG. Further, such shares as are issued out of authorised capital with exclusion of the sub­scription right pursuant to section 186(3) sentence 4 AktG during the term of this authorisation should be taken into account when calculating this limit until such time as the authorisation has been exercised;
  
  
• Insofar as they are issued in return for non-cash contributions, where the value of such non-cash contributions is in reasonable proportion to the market value of the bond ascertained as per the preceding bullet point.
  
  

• 100% of the reference price if the arithmetic average of the closing prices of the shares of the company in Xetra trading on the Frankfurt Stock Exchange (or a comparable successor system) is lower than or equal to the reference price on the twenty stock exchange trading days ending with the third trading day before the day of conversion;
  
  
• 125% of the reference price if the arithmetic average of the closing prices of the shares of the company in Xetra trading on the Frankfurt Stock Exchange (or a comparable successor system) is greater than or equal to 125% of the reference price on the twenty stock exchange trading days ending with the third trading day before the day of conversion;
  
  
• The arithmetic average of the closing prices of the company shares in Xetra trading on the Frankfurt Stock Exchange (or a comparable successor system) on the twenty stock exchange trading days ending with the third trading day before the day of conversion, if this value is greater than the reference price and lower than 125% of the reference price;
  
  
• The above provisions notwithstanding, 125% of the reference price if the bondholders exercise an existing conversion right before the conversion obligation comes into effect;
  
  
• The above provisions notwithstanding, 100% of the reference price if the Executive Board, with the consent of the Supervisory Board and in compliance with the bond terms, effects early conversion to avert immediate severe damage to the company or to avoid substantial reduction of a public credit rating of the company by a recognised rating agency.
  
  

10. Resolution on the new authorisation to acquire and use own shares in accordance with section 71 (1) no. 8 AktG and to exclude subscription rights

In order to acquire own shares, the company requires a special authorisation from the Annual General Meeting, insofar as this is not expressly permitted by law. Because the authorisation agreed by the Annual General Meeting on 16 May 2007 will lapse on 15 November 2008, it should be proposed to the Annual General Meeting that it once again grant the company an authorisation to acquire own shares.

The Executive Board and Supervisory Board thus recommend that the following decision be taken:

a) The Executive Board should be authorised to acquire own shares representing up to a maximum of 10% of the share capital. The shares acquired, together with the other own shares held by the company or attributable to the company according to sections 71 a ff. AktG, must at no time exceed 10% of the share capital. The authorisation must not be used for purposes of trading in own shares.

b) The authorisation may be used in whole or in part, once or several times, and in the pursuit of one or several goals, by the company or by third parties for the account of the company. The authorisation remains valid until 6 November 2009 (inclusive). This authorisation replaces the authorisation to acquire own shares agreed upon by the Annual General Meeting of TUI AG on 16 May 2007, which shall be cancelled once the new authorisation comes into effect.

c) The acquisition will be effected, depending on the preference of the Executive Board, either via the stock exchange or via a public offer to buy or a public solicitation to shareholders to submit an offer to sell.

• If the shares are acquired via the stock exchange, the equivalent value paid by the company per share (not including incidental acquisition costs) must not exceed or fall below the market value determined on the respective stock exchange trading day during the opening auction on the Xetra trading system (or a comparable successor system) of Deutsche Börse AG by more than 5%.
  
  
• If the acquisition is effected via a public offer to buy or a public solicitation to shareholders to submit an offer to sell, the purchase price offered or the upper and lower limits of the purchase price range per share (not including incidental acquisition costs) must not exceed or fall below the average closing price in the Xetra trading system (or a comparable successor system) of Deutsche Börse AG on the three stock exchange trading days prior to the day of the public announcement of the offer or the public solicitation to submit an offer to sell by more than 10%. If, following the announcement of a public offer to buy or a public solicitation to submit an offer to sell, there are significant variations in the relevant price, the offer or the solicitation to submit an offer to sell can be adjusted. In this case, the average price during the three stock exchange trading days prior to the public announcement of any such adjustment is used. The offer to buy or the solicitation to submit an offer to sell may contain further conditions. If the offer to buy is oversubscribed or if, in the case of a solicitation to submit an offer to sell, several offers are received not all of which can be accepted, acquisition must take place on a pro rata basis. Preference may be given to accepting small quantities of up to 100 shares offered for sale per shareholder. Any further tender rights of share­holders are excluded.
  
  

• The shares may be redeemed, with the consent of the Supervisory Board, without such redemption or its execution requiring any further resolution of the General Meeting. They may also be redeemed in a simplified process without capital reduction by adjust­ing the portion of the company's share capital represented by the remaining shares. The redemption may also be restricted to only a portion of the shares acquired. If redemption takes place in accordance with the simplified process, the Executive Board is authoris­ed to modify the number of shares stated in the Charter.
  
  
• With the consent of the Supervisory Board, the shares may also be sold by means other than via the stock exchange or via an offer to shareholders, if the shares are sold for cash at a price that, at the time of the sale, does not significantly fall below the market price for shares of the company issued on the same terms. In this case, the total number of shares that are to be sold, together with new shares issued on the basis of authorisations to increase capital exercised during the term of this authorisation, under exclusion of subscription rights in accordance with section 186(3) sentence 4 AktG, or on the basis of conditional capital according to section 221(4) and section 186(3) sentence 4 AktG for bonds with conversion rights, warrants or conversion obligations issued during the term of this authorisation up until the time of its exercise must not exceed the limit of 10% of the lower of the share capital existing at the time of this authorisation or the share capital existing at the time of exercise of this authorisation.
  
  
• With the consent of the Supervisory Board, the shares may be sold for non-cash contributions, in particular also in connection with the acquisition of companies, parts of companies, shareholdings or other assets, and in the context of mergers.
  
  
• The shares may also be used to fulfil conversion rights, warrants and conversion obligations under convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) which were issued by the company or by Group companies and provide for conversion rights, warrants or conversion obligations.
  
  

Announcement of further items to be resolved by TUI AG’s Annual General Meeting on 7 May 2008

By means of publication in the electronic Federal Gazette of 27 March 2008, the Executive Board has published its invitation to the Annual General Meeting of TUI AG to be held at the Hannover Congress Centrum (Niedersachsenhalle/Eilenriedehalle/Glashalle), Theodor-Heuss-Platz 1-3, D-30175 Hanover, on 7 May 2008, 10:30 a.m.

Upon request by Geveran Trading Co. Ltd., Limassol, Cyprus (represented by Mr Tor Olav Troim) pursuant to section 122 (2) of the German Stock Corporation Act (AktG), we announce the following additional items on the agenda, complementing the agenda announced in our invitation of 27 March 2008:

11. Dismissal of the Supervisory Board members Dr Jürgen Krumnow and Dr Franz Vranitzky, elected by the Annual General Meeting

TUI AG’s Supervisory Board speaks out against the dismissal of the Supervisory Board members Dr Jürgen Krumnow and Dr Franz Vranitzky, elected by the Annual General Meeting in May 2006, since they have always acted in the interest of the Company as representatives of all shareholders and enjoy the full confidence of the Supervisory Board.

The Supervisory Board proposes that any motion to vote Dr Krumnow and Dr Vranitzky out of office proposed at the Annual General Meeting be rejected.

12. Election of new Supervisory Board members for the remaining term of office of the dismissed Supervisory Board members

The Executive Board and the Supervisory Board point out that a resolution on item 12 can only be taken if the Annual General Meeting resolves the dismissal under item 11 of the agenda.

Pursuant to section 11 of TUI AG’s Articles of Association in combination with sections 96 (1), 101 (1) of the German Stock Corporation Act and section 7 (1) of the German Act on Co-Determination of Employees of 4 May 1976, the Supervisory Board comprises twenty Supervisory Board members, ten each representing the shareholders and the employees. The shareholders’ representatives on the Supervisory Board are to be elected by the Annual General Meeting. The election is planned to be carried out on an individual basis in accordance with section 5.4.3 of the German Corporate Governance Code (in the version of 14 June 2007). In electing the shareholders’ representatives, the Annual General Meeting is not bound by election proposals.

Berlin/Hanover, April 2008

TUI AG
The Executive Board

Report of the Executive Board to the Annual General Meeting on the exclusion of subscription rights in accordance with sections 186(4) sentence 2, 203(2) sentence 2, 221(4) sentence 2 and section 71(1) no. 8 sentence 5 AktG, as per items 8, 9 and 10 of the agenda.

The authorisations recommended in items 8, 9 and 10 of the agenda allow, respectively, under utilisation of the regulations of section 186(3) sentence 4 AktG, the possibility of increasing the share capital of TUI AG, issuing bonds and selling acquired own shares, and thereby excluding shareholders’ subscription rights, insofar as the relevant legal limit of 10% of share capital – in total – is not exceeded.

The Executive Board will, with the consent of the Supervisory Board, only exercise any such authorisation to the extent that, overall, the limit of 10% of the share capital as per the date of the resolution by the Annual General Meeting regarding the authorisations (i.e. 7 May 2008), as specified in section 186(3) sen­tence 4 AktG, is adhered to throughout the term of the respective authorisation until such time as it is exercised. If the share capital at the time at which the respective authorisation is exercised is less than on 7 May 2008, the lower share capital value shall apply. Irrespective of whether the authorisations providing the possibility of excluding subscription rights are exercised individually or cumulatively, the limit of 10% of share capital should not be exceeded in respect of the exclusion of subscription rights in accordance with the provisions of section 186(3) sentence 4 AktG. The various proposed authorisations offering the possibility of excluding subscription rights in accordance with section 186(3) sentence 4 AktG have the sole purpose of enabling the Executive Board to select the most suitable instrument in a specific situation – taking into consideration the interests of the shareholders and the company – but not, however, to make multiple use of the various possibilities for excluding shareholders' subscription rights under the authorisations, thereby exceeding the limit of 10% of share capital specified in section 186(3) sentence 4 AktG.

Re Item 8 of the agenda (creation of authorised capital in the amount of € 64,000,000.00)

The Executive Board has, with the consent of the Supervisory Board, exercised the authorisation to issue bonds pursuant to the resolution under agenda item 10 of the Annual General Meeting on 10 May 2006 by issuing a convertible bond for € 694,000,000.00 on 1 June 2007 under exclusion of subscription rights. Therefore, because the limit of 10% of share capital as per section 186(3) sentence 4 AktG has been reached, the authorised capital created pursuant to the resolution under agenda item 9 of the Annual General Meeting on 10 May 2006 can no longer be used for a capital increase under exclusion of subscription rights. For this reason, new authorised capital in the amount of € 64,000,000.00 is proposed.

When this authorised capital is utilised, it should be possible for subscription rights to be excluded with the consent of the Supervisory Board if the new shares are issued with cash capital increases in accord­ance with section 186(3) sentence 4 AktG for an amount that is not significantly lower than the market price. This authorisation puts the company in a position to use market opportunities in its various areas of business quickly and flexibly and, if necessary, to meet resulting capital requirements even at very short notice. The exclusion of subscription rights makes it possible not only to act quickly, but also to place the shares at a price close to the market price, in other words with­out the fairly large discount that is generally necessary in the case of rights issues. This generates greater issue proceeds, to the benefit of the company. In addition, a placement of this kind can be used to secure new groups of shareholders. If the authorisation is exercised, the Executive Board will ensure that the discount applied is as low as possible, taking into account the market conditions prevailing at the time of the placement. The discount on the market price at the time of utilisation of this authorised capital will however in no case represent more than 5% of the market price. The shares issued under exclusion of subscription rights in accordance with section 186(3) sentence 4 AktG must in total not exceed 10% of share capital, either as per the date of the resolution on this authorisation, or as per the date on which it is exercised. If the share capital as per the date on which the authorisation is exercised is less than on 7 May 2008, then the lower share capital value shall apply. The sale of own shares should be taken into account when calculating this limit, provided that it takes place after 7 May 2008 and before the authorisation is exercised under exclusion of subscription rights in accord­ance with section 186(3) sentence 4 AktG. Such shares as are issued or to be issued for servicing bonds with conversion rights or warrants or conversion obligations should also be taken into account when calculating this limit, provided that the bonds are issued after 7 May 2008 and before the authorisation is exercised under exclusion of subscription rights in accordance with section 186(3) sentence 4 AktG.

This specification also accommodates the need to protect shareholders’ equity holdings against dilution, in accordance with the applicable legal regulations. Due to the limitation placed on the degree of capital increase under exclusion of subscription rights, each shareholder always has the option to acquire the shares necessary in order to maintain his or her percentage share via the stock exchange at approximately the same terms. Thus, in compliance with the statutory valuation in section 186(3) sentence 4 AktG, it is ensured that relevant interests relating to shareholding and voting rights remain appropriately protected when this authorised capital is utilised under exclusion of subscription rights, and at the same time further scope for action is opened up for the company, which is in the interests of all shareholders.

The possibility provided for the Executive Board, with the consent of the Supervisory Board, of excluding subscription rights with regard to share fractions facilitates the processing of rights issues where fractions occur as a result of the issue volume, or due to the need for a practicable subscription ratio.

Re Item 9 of the agenda (Cancellation of the authorisation granted by resolution of the Annual General Meeting on 10 May 2006 relating to the issue of bonds and granting of new authorisation to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments))

In issuing a convertible bond in June 2007, the Executive Board, with the consent of the Supervisory Board, made use of the authorisation of the Annual General Meeting from 10 May 2006 to issue bonds once or several times up to 9 May 2011. In order to ensure flexibility for the company in terms of raising capital in the future, a new authorisation for the issue of bonds up to a total par value of € 1,000,000,000.00 and new conditional capital for these bonds to the value of € 100,000,000.00, corresponding to 39,116,600 reg­ister­ed shares in TUI AG, is proposed; a resolution to cancel the authorisation of the Annual General Meeting from 10 May 2006, insofar as this has not already been exercised, as of the date on which the new authorisation comes into effect is also proposed.

The ability to issue convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) (hereinafter collectively referred to as “bonds”) enables TUI AG, in addition to the classical possibilities for raising debt and equity capital, to take advantage of attractive financing alternatives on the equity market, depending on the respective market situation, and thereby create favourable conditions for future business devel­opment. The granting of conversion rights or warrants opens up for the company the additional possibility that it will be able to retain in part the funds that it raises through the issue of bonds as equity.

The issue of bonds additionally allows debt capital to be raised on attractive terms which, depending on the bond terms, can be categorised, both for rating purposes and for balance sheet purposes, as equity or as similar to equity. The conversion/option premiums obtained and the categorisation as equity benefit the company’s equity base and thus allow the company to take advantage of favourable financing opportunities. Further opportunities, in addition to the granting of conversion rights and/or warrants, to establish conversion obligations or to combine convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds, extend the possibilities available in terms of the structure of these financing instruments. In view of the fact that, in the field of so-called hybrid financing instruments, forms of financing with an un­­limited term are now also common, the authorisation does not place a limit on the term for issuing bonds with conversion rights or warrants. The authorisation additionally gives the company the flexibility to place the bonds either itself or via direct or indirect investment companies. Besides euros, bonds may also be issued in the legal tender of any OECD country.

In order to allow the range of possible capital market instruments with conversion rights or warrants to be used accordingly, it appears appropriate to again set the permissible issue volume in the new authorisation at € 1,000,000,000.00, as in the authorisation resolved in 2006, and to again set the conditional capital that serves to fulfil the conversion rights and warrants at € 100,000,000.00. This ensures that full use can be made of the respective authorisation scope. The number of shares necessary for fulfilment of conversion rights and warrants from a bond with a specific issue volume generally depends on the market price of the TUI share at the time the bond is issued. If conditional capital is available in sufficient quantity, the possibility of making full use of the authorisation scope for the issue of convertible bonds or bonds with warrants is assured.

Shareholders should, in principle, be granted subscription rights when convertible bonds and bonds with warrants, profit-sharing rights and income bonds are issued.

If convertible bonds and/or bonds with warrants (or profit-sharing rights or income bonds) with conversion rights, warrants or conversion obligations are to be issued, the Executive Board should be authorised, in accordance with section 186(3) sentence 4 AktG, to exclude the subscription rights with the consent of the Supervisory Board, if the issue price of the bonds is not significantly lower than their market price. This can be advantageous in terms of reacting quickly to favourable stock market situations, and quickly and flexibly placing a bond on the market on attractive terms. The stock and money markets have recently become considerably more volatile. In order to achieve the best possible issue result, it is thus becoming ever more important to be in a position to react quickly to market developments. It is generally only possible to define favourable conditions that are as close to the market as possible if the company is not tied to them for an excessively long offering period. In the case of rights issues, a significant haircut is generally necessary in order to ensure the attractiveness of the terms and thus the chances of success of the issue throughout the offering period. Section 186(2) AktG does permit publication of the subscription price (and thus, in the case of bonds with conversion rights or warrants, the terms of the bond) up until the third-last day of the subscription period. However, the volatility of the stock and money markets means that a market risk nonetheless exists for a period of several days, result­ing in forced haircuts when the bond terms are being defined, which in turn causes the terms to deviate considerably from the market. Furthermore, where subscription rights are granted, alternative placement with third parties is made more difficult and/or costly due to the uncertainty associated with the exercise of such rights (subscription behaviour). Ultimately, where subscription rights are granted, the length of the subscription period means that the company is not able to react quickly to changes in the market conditions, which can lead to an unfavourable situation for the company in terms of raising capital.

The interests of shareholders are protected by the fact that the bonds are not issued significantly below their market value. The market value should be determined according to generally accepted financial calculation principles. In determining prices, the Executive Board will keep the discount from the market value as low as possible, while taking into account the current situation on the capital market. Thus the computed value of a subscription right will be practically zero, meaning that shareholders can suffer no significant financial disadvantage as a result of exclusion of subscription rights. Insofar as the Executive Board deems necessary in view of the respective situation, the Executive Board will obtain specialist advice in this respect, and will also draw on expert support, which may be provided by the underwriters of the issue or an independent investment bank or auditing firm. Irrespective of this assessment, it is guaranteed that the terms will be determined such that they correspond to the market situation, thus preventing a significant dilution of value if book building is performed. Book building means that the bonds are offered at a fixed issue price but that the individual conditions (e.g. the interest rate) are only defined on the basis of orders submitted by investors, and the total value of the bonds is thus set close to the market value. All of this ensures that significant dilution of the value of the company’s shares as a result of the exclusion of subscription rights is prevented. Shareholders also have the possibility of maintaining their proportion of the company's share capital on almost the same terms by means of purchase via the stock exchange. In this way, their interests connected to their shareholdings are adequately assured.

The authorisation to exclude subscription rights in accordance with section 186(3) sentence 4 AktG applies only for bonds with rights to shares corresponding to no more than 10% of the share capital in total, neither as per the date on which this authorisation comes into effect, nor – if this value is lower – as per the date on which it is exercised. The sale of own shares should be credited against this limit, provided that it takes place during the term of the authorisation and before it is exercised under exclusion of subscription rights in accordance with section 186(3) sentence 4 AktG. Furthermore, such shares as are issued or are to be issued from authorised capital under exclusion of subscription rights in accordance with section 186(3) sentence 4 AktG during the term of this author­isation and before it is exercised should also be taken into account when calculating this limit. This inclusion is in the interests of shareholders, as it serves to minimise the dilution of their shareholding.

Insofar as profit-sharing rights or income bonds without conversion rights, warrants or conversion obligations are to be issued, the Executive Board is authorised, with the consent of the Supervisory Board, to fully exclude the subscription rights of shareholders if these profit-sharing rights or income bonds have the charac­teristics of a debenture, i.e. if they do not represent any membership rights in the company, guarantee any share in liquidation proceeds, and the interest payable is not calculated on the basis of the amount of net profit for the year, the profit available for distribution or the dividend. Further, the interest structure and issue amount of the profit-sharing rights or income bonds must reflect the current market conditions for comparable financing instruments at the time of issue. If the specified conditions are met, the exclusion of subscription rights will not result in any disadvantage for shareholders because the profit-sharing rights or income bonds do not represent any membership rights, nor do they guarantee any share in the liquidation proceeds or in company profits. It can, however, be specified that interest should be conditional upon the existence of net profit for the year, profit available for distribution or a dividend. But it would not be per­missible to provide for interest to increase with a higher net annual profit, a higher amount of profit available for distribution or a higher dividend. Thus, the issue of profit-sharing rights or income bonds does not change or dilute shareholders' voting rights, nor their share in the company or its profit. Furthermore, the close-to-market issue terms that are mandatory for this kind of exclusion of subscription rights means that there is no material subscription value.

The above possibilities for exclusion of subscription rights give the company the flexibility to take advant­age of favourable capital market situations quickly, and put it in a position to respond flexibly and at short notice to secure a low level of interest and/or a favourable demand situation for an issue. If bonds that guarantee a conversion right or warrant are issued under exclusion of subscription rights, the conversion or option price for a share will be 130% of the volume-weighted average price of TUI shares in the Xetra trading system on the Frankfurt Stock Exchange (or a comparable successor system) in the period between the start of institutional placement (book building) and determination of the issue amount of the bonds. If bonds are issued with subscription rights, the conversion or option price for one share is calculated on the basis of the volume-weighted average price of the company’s shares in the Xetra trading system on the Frankfurt Stock Exchange (or a comparable successor system) during the period from the start of the subscription period to the day before announcement of the final terms in accordance with section 186(2) sentence 2 AktG (inclusive). (The volume-weighted average price of the shares during this reference period is hereinafter referred to as the “reference price” i. a.). If a conversion obligation is applicable, the conversion price will be between 100% and 125% of the volume-weighted average price determined as set out above on the basis of the arithmetic mean of the closing prices of the shares on the twenty stock exchange trading days ending with the third trading day before the day of conversion, 125% of the reference price if the bondholders exercise an existing conversion right before the conversion obligation comes into effect, and 100% of the reference price if the Executive Board, with the consent of the Supervisory Board and in compliance with the terms of the bonds, effects early conversion to avert immediate severe damage to the company or to avoid substantial reduction of a public credit rating of the company by a recognised rating agency.

In contrast to bonds issued with subscription rights, there are in this case significant advantages to be gained as a result of the absence of the lead-up time associated with subscription rights, both in terms of financing costs and in view of the placement risk. In the case of a placement without subscription rights, the haircut, the placement risk and the cost of financ­ing can all be reduced, to the benefit of the company and its shareholders.

The Executive Board is further authorised, with the consent of the Supervisory Board, to exclude fractions from shareholders’ subscription rights. Fractions of this kind can arise as a result of the issue volume, and in connection with the need for a practicable subscription ratio. In this case, the exclusion of subscription rights facilitates processing of the corporate action.

Furthermore, the Executive Board should be given the opportunity to exclude shareholders’ subscription rights, with the consent of the Supervisory Board, in order to grant subscription rights to the holders of conversion rights or warrants or of bonds with conversion obligations to the extent to which they would be entitled to such subscription rights after having exercised their conversion rights or warrants or having fulfilled a conversion obligation. This allows for the possibility of granting subscription rights to holders of conversion rights or warrants existing at that time as protection against dilution, instead of offering a reduction in the conversion or option price. This is in line with the standard market practice of equipping bonds with anti-dilution protection.

Bonds can also be issued against non-cash contributions, insofar as this is in the interests of the company. In such cases, the Executive Board is authorised, with the consent of the Supervisory Board, to exclude shareholders’ subscription rights, insofar as the value of the non-cash contributions is in adequate proportion to the theoretical market value of the bond, which should be determined according to generally accepted financial calculation principles. This opens up the possibility of using bonds as acquisition currency in relevant situations, for example for the acquisition of companies, parts of companies, shareholdings or other assets (e.g. hotels, ships or aircraft). In negotiations, it is quite possible that the need will arise to provide consideration not in cash but in another form. The possibility of offering bonds as consideration thus creates a competitive advantage for the company in terms of attractive potential acquisitions, and also creates scope for the company to take advantage of opportunities in terms of acquiring companies, parts of companies, shareholdings or other assets while protecting liquidity. This can also make sense from the point of view of ensuring an optimum financing structure. The Executive Board will in each case check carefully whether to make use of its authorisation to issue convertible bonds or bonds with warrants (or profit-sharing rights or income bonds with conversion rights, warrants and/or conversion obligations) against non-cash contributions, under exclusion of subscription rights. It will only do this if this would be in the interests of the company and thus of its shareholders.

The conditional capital is to be used to service the conversion rights or warrants issued with the convertible bonds or bonds with warrants, profit-sharing rights or income bonds, or to meet conversion obligations on company shares, insofar as the bonds were issued for cash. Other alternative means can also be used to service the bonds.

Conversion rights or warrants under bonds that were issued for non-cash contributions can, however, not be serviced from the conditional capital. Here, either recourse to own shares or a capital increase through non-cash contributions is necessary. Authorised capital from 10 May 2006 is available to facilitate a capital increase through non-cash contributions. The claim from the bond should be presented as the non-cash contribution, although the impairment test should include assessment of whether the value of the claim is sound and whether the non-cash contribution submitted as its basis corresponded to the issue price.

Re Item 10 of the agenda (Authorisation to acquire and use own shares)

The proposal in agenda item 10 concerns an authoris­ation, restricted to a period of 18 months, to acquire own shares representing up to 10% of the share capital, as per section 71(1) no. 8 AktG.

In the Annual General Meeting of 16 May 2007, TUI AG passed an authorisation resolution for the acquisition of own shares, limited to a term ending on 15 November 2008. Because this authorisation will lapse in the current financial year, this authorisation resolution should be cancelled once the new authorisation that is to be resolved at this Annual General Meeting comes into effect.

In addition to an acquisition via the stock exchange, the company should also have the possibility of acquir­ing own shares by means of a public offer to buy addressed to the shareholders of the company or by means of a public solicitation to shareholders to submit an offer to sell shares. The principle of equal treatment, as specified in German stock corporation law, must be observed irrespective of the manner in which the acquisition is effected. In the case of a public solicitation to submit an offer, the recipients can decide how many shares they would like to offer to the company and – where a price range is specified – at what price. If a public offer to buy is oversubscribed or if, in case of a solicitation to submit an offer to sell shares, several equal offers are received not all of which can be accepted, acquisition must take place on a pro rata basis. However, it should be possible for preference to be given to small offers or small parts of offers up to a maximum of 100 shares. This possibility allows small residual amounts to be avoided and fractions that would otherwise result from the determination of the quotas to be acquired, and thus facilitates technical processing. Any further tender rights of shareholders are excluded. The purchase price offered or the upper and lower limits of the purchase price range offered per share (not including incidental acquisition costs) must not exceed or fall below the average of the closing prices in the Xetra trading system (or a comparable successor system) of Deutsche Börse AG on the three stock exchange trading days prior to the day of the public announcement of the offer or the public solicitation to submit an offer to sell by more than 10%. If, following the public announcement of an offer to buy or a public solicitation to submit an offer to sell, there are significant variations in the relevant price, the public announcement of an offer to buy or a public solicitation to submit an offer to sell may be adjusted and based on the average price on the three stock exchange trading days prior to the public announcement of the adjustment. The offer to buy or the solicitation to submit an offer to sell can involve further conditions.

The own shares acquired may be used for all legally permissible purposes, and in particular the following:

The proposed resolution includes an authorisation of the Executive Board to sell the acquired own shares off-exchange for cash, with the consent of the Supervisory Board, under exclusion of the shareholders’ subscription rights. For this to take place, the shares must be sold at a price that, at the time of sale, is not significantly lower than the market price for shares of the company that are issued on the same terms. Through this authorisation, use is made of the possibility for simplified exclusion of subscription rights in section 71(1) no. 8 sentence 5 AktG, applying section 186(3) sentence 4 AktG by analogy. Account is taken of the need to protect shareholders against dilution by the fact that the shares may only be sold at a price that does not significantly fall below the relevant market price. The final selling price for the own shares is determined shortly before the sale takes place. The Executive Board will set any discount from the market price as low as possible, taking into account the market conditions at the time of placement. The discount from the market price at the time of exercising this authorisation will in no case be more than 5% of the current market value. The authorisation is valid provided that the shares issued under exclusion of subscription rights according to section 186(3) sentence 4 AktG do not in aggregate exceed 10% of the share capital either at the time the resolution on this authorisation is passed or at the time at which this authorisation is exercised. If the share capital, at the time the authorisation is exercised, is less than on 7 May 2008, the lower share capital shall apply. This authorisation should only be exercised to the extent that the limit of 10% of the share capital defined in section 186(3) sentence 4 AktG is adhered to in aggregate – i.e. including any exercise of the authorisations to be newly listed under section 4 sub-sections 9 and 5 of the Charter. Shareholders always have the possibility of maintain­ing their stake through the purchase of TUI shares via the stock exchange. This authorisation is in the interests of the company because it provides greater flexibility. In particular, it allows shares to be issued in a targeted way to cooperation partners.

Own shares may also be sold, with the consent of the Supervisory Board, for non-cash contributions, under exclusion of shareholders’ subscription rights. This puts the company in a position to offer own shares directly or indirectly as consideration in mergers or in connection with the acquisition of companies, parts of companies, shareholdings in companies or other assets (e.g. hotels, ships or aircraft). The current global situation in terms of international competition and globalisation means that, not infrequently, consideration in the form of shares is required in transactions of this kind. The authorisation proposed here should create the scope for action that the company needs to allow it to take advantage of opportunities in terms of acquiring companies, parts of companies, sharehold­ings in companies or other assets quickly and flexibly, both locally and on international markets. For this to be possible, the proposed exclusion of subscription rights is essential. When defining the valuation ratios, the Executive Board will ensure that the interests of shareholders are suitably accommodated. When assess­ing the value of the shares granted as consider­ation, the Executive Board will base its decision-making on the market price of the TUI share. In this context, no schematic link to a market price is intended, largely in order to prevent the results of negotiations from being put in question by variations in the market price.

The authorisation furthermore allows the own shares to be used under exclusion of shareholders’ subscription rights for satisfying the conversion or subscription rights of holders of convertible bonds, bonds with warrants, profit-sharing rights and/or income bonds (or combinations of these instruments) which were issued by the company or other Group companies and provide for conversion rights, warrants or conversion obligations. In order to fulfill conversion rights, it can make sense to use, either solely or partially, own shares instead of new shares from a capital increase. The above possibilities can be used not only in respect of shares that were acquired on the basis of this authorisation resolution. The authorisation also covers shares acquired in accordance with section 71 d sentence 5 AktG. Using these own shares in the same way as the shares acquired on the basis of the authorisation resolution is advantageous and can create additional flexibility.

The own shares acquired on the basis of this authorisation resolution may be redeemed by the company with the consent of the Supervisory Board with no need for a new resolution from the Annual General Meeting. According to section 237(3) no. 3 AktG, the company’s Annual General Meeting may decide to redeem its fully paid no-par value shares, with no need for a reduction in the company’s share capital. The proposed authorisation expressly includes this alternative, in addition to redemption with a capital reduction. If own shares are redeemed without a capital reduction, the portion of the company's share capital represented by the remaining no-par value shares automatically increases. The Executive Board should thus also be authorised to make the necessary change to the Charter to take account of the change in the number of no-par value shares resulting from a redemption.

If this authorisation is exercised, the Executive Board will notify the next Annual General Meeting accordingly.

Report of the Executive Board to the Annual General Meeting on the exclusion of subscription rights according to sections 203(2) sentence 2 and 186(4) sentence 2 AktG, as per item 7 of the agenda.

The authorised capital, which is limited to € 10,000,000.00 should allow the Executive Board to issue shares to employees of the company and its Group companies in one or more stages until 6 May 2013, with the total amount issued being limited to the above sum. In this context, it will be necessary to exclude shareholders’ subscription rights. Subscription rights may only be excluded with the consent of the Supervisory Board.