Speech by Dr. Michael Frenzel, CEO of TUI AG Annual Press Conference 2004

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Ladies and Gentlemen,

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2003 was a difficult year. You all know this by now. Nevertheless, our Group has coped well with the challenges in this uniquely difficult environment. We stand solid as a rock, not least in comparison to the competition in our markets. This is also illustrated by the results we achieved in 2003: earnings by divisions (EBTA) totalled 913 million euros. This is an extremely good performance for our Group.

When we analyse the performance of our divisions individually, we can identify positive and negative developments:

Earnings in tourism did not achieve the previous year's level again. In the first quarter, not a single source market in Europe remained unaffected by the war in Iraq, SARS and the general weakness of the economy. In the second half of the year, a rally started throughout our markets. As a result, at 208 million euros, overall earnings in tourism have even exceeded our expectations following the poor first half of the year. This was a good performance by industry standards. Our strategy of regional diversification has proven its worth.

Earnings of the Central Europe sector were most severely affected of all our Group's tourism activities. At minus 17 million euros, they were considerably below the previous year's level. In Germany, the overall good business in the peak season could not compensate for the losses suffered in the first half of the year. At 79 million euros, the Northern Europe sector generated clearly positive earnings which, however, were lower than in the previous year. This was mainly due to currency translation affected by the weak British Pound. The UK reported a satisfactory operative performance for the year. The Western Europe sector generated earnings of 42 million euros. The inclusion of the French Nouvelles Frontières Group in consolidation had a positive impact on earnings. At 105 million euros, the destinations sector generated excellent earnings again. Our hotel companies contributed an essential part of the profit.

Logistics, our second division which is led by Hapag-Lloyd, contributed just one fifth of our turnover but nevertheless proved to be a top performer in terms of earnings. Earnings in logistics rose by 57 per cent to 314 million euros. This is the best result ever achieved by the division. Container shipping made the largest contribution. This reflected the increase in transport volumes and the improvement in freight rates.

When comparing the performance of the two divisions it is obvious that logistics managed to offset the expected decline in earnings in tourism in 2003.

Apart from the development of the divisions, the gains on disposal from the divestment of our energy sector have contributed significantly to the Group's good overall earnings.

I am pleased to report also a substantial increase in our Group's profit for the year from 41 million euros last year to 315 million euros, not least against this background.

Ladies and Gentlemen, we are making use of the overall favourable situation due to our earnings by the divisions and our exceptional income to set up future-oriented provisions in our balance sheet. Our aim is to minimize potential risks for our future earnings. Overall, we reduced our goodwill by more than one billion euros this year.

We are one of the first companies in Germany to apply the new IAS standards in our annual financial statements. Our aim is to offer the highest level of transparency and calculability. Mr Feuerhake will give details to you following my presentation.

The earnings we have generated allow us to propose to our shareholders a dividend payment of 77 euro cents again, even despite the extremely unfavourable economic conditions affecting in particular our core business tourism. It is our goal to offer our shareholders a sound and attractive dividend, even in difficult times.

In connection with the calculability I have just mentioned, I would like to point out that we have also made substantial progress again in reducing our net debt. At the balance sheet date, our net debt totalled 3.8 billion euros; this was 1.6 billion euros down on the previous year's level. Debt reduction is an important issue for us. As you can see, here we are also on track.

Unlike last year, it is a lot easier for me this time to share the prospects for the current year with you: the development of business to date has signalled a significant recovery of both turnover and earnings. Following two difficult years, everything is pointing towards growth in the tourism business again. This has in particular been confirmed by bookings received over the past few weeks: in Germany and the UK we are pleased to record constant double-digit growth rates. Throughout the Group, turnover has been 17 per cent up on the same period last year over the past few weeks. The terrorist attack in Madrid has not affected the business trend in our tourism division.

As far as the current winter business is concerned, the TUI Group records an increase of 6.2 per cent in booked turnover in Europe. Following a somewhat slow start, the trend for the summer is now also encouraging and currently shows a 2.4 per cent growth.

For the overall tourism year, we are currently recording a 4.2 per cent increase in booked turnover at Group level and an almost parallel development of the number of guests.

Some of you attended the press conference we held in Berlin two and a half weeks ago. Since then, our business has grown by another full percentage point. Overall our business is developing to expectations. However, we are confident to increase our operating earnings in 2004, in particular in tourism.

Thank you very much for your attention.