Speech Dr Michael Frenzel Chairman of the Executive Board TUI AG Annual results press briefing 2005 Hanover on 23 March 2005

– Check against delivery –

Ladies and Gentlemen:

May I bid you a warm welcome to our annual press briefing for presenting our annual report for 2004. We are particularly pleased about the interest of the international media – in other words the non-German language press – in our group. We regard this as a sign that TUI AG – as parent company of the group – is being noticed more and more in all the European source markets. Ten days ago at the ITB we were able to report our positive business development over the whole of Europe. The interest by the media appears to be following this trend.

Ladies and Gentlemen: 2004 was an eventful year.
Last summer we had to defend ourselves against hedge fund speculation on our relegation from the DAX. That was one of the greatest financial speculation assaults in Germany ever made against a company. Thanks to the good results in the first half of the year and considerable public relations work in the analyst and bank sector we were able to prevail in the end. For the group this success was extremely crucial at that time.

Another important event was the decision to cancel the announced public offering of Hapag-Lloyd. The climate on the stock market continued to worsen during the past year; the risk of unfavourable reception was too high for us. However, the decisive factor was our justified belief that we should maintain the profitability of the shipping division in the group. That was a fundamental decision that also governs the future: the group stands on two main pillars – tourism and shipping.

In December last year our main shareholder WestLB divested itself of its shares – a move that was not totally unexpected. Some of the shares were bought by Spanish investors with whom we have had business partnerships for many years. Another portion was taken by international investors. This increases the free float of TUI shares. We are convinced that the new shareholder structure will have a positive impact on our position on the capital market.

The group is in a very healthy state. Our integrated tourism model has proven its viability. In all business sectors we are well positioned and future oriented; the group is adding value.
Our results for 2004 also underline this. We doubled our operating profits, in other words, the results from our divisions adjusted for extraordinary items – in fact from 242 million euros in the year before to 490 million euros in 2004. The divisional operating profit (EBTA) amounted to 622 million euros, nominally below the figure for the previous year, although the figure for 2003 included high extraordinary profits stemming in part from the sale of the energy division.

The fact that the profits from the tourism division represented the biggest contribution – at 362 million euros – to the positive operating results is particularly satisfying. With an increase of some 75 percent we have made a considerable jump forwards. After two difficult years the anticipated improvement is now taking shape. Overall some 18.4 million holidaymakers travelled with tour operators in the TUI group – that is 0.9 percent more than in the previous year. At the same time, the 3.6 percent growth in sales in the tourism division was higher than the growth in the number of holidaymakers – indicating improved price levels.

In this context I would like to point out in particular the positive development for the tourism division Central Europe. This also confirms our price quality: despite a slight downturn in the number of guests we were able to increase sales by 2.6 percent to 5.2 billion euros. The good development in Germany – that was based on a restructuring of sales and marketing as well as efficient product and capacity management at TUI Deutschland – also added to the improved results. After a loss in the year before a plus of 82 million euros was booked for 2004.

With 65 million euros the results for Northern Europe are also positive. Overall, the figures remain below those of the year before (minus 14 million euros), but one can already identify that we have implemented proactive measures for the future in the UK. The restructuring in the UK depressed the result by more than 30 million euros. We accepted this as the price to pay for making our selves fit for the future from a position of strength on the British market. As a result of the restructuring measures we are expecting significant yearly improvements from 2006 onwards. For the implementation we expect to incur costs in 2005 which will be mostly covered by the positive restructuring effects.

What is good news, too, is that the business situation in the Nordic countries has stabilised significantly. The turnaround has been achieved; we are making money there again.

The profits for Western Europe– at 41 million euros – were comparable with the previous year's figures.

With 144 million euros the Destinations division again recorded a very good result. This represents a jump of 40 million euros. The good capacity utilisation at the hotels as well as the positive development at the incoming agencies was again crucial to securing this success. The hotel division is one of the strong revenue generating cornerstones of our business.

I am happy to inform you that TUI AG is at the point of forming a joint venture with an Indian partner. India, with its above-average economic growth and a proliferating middle class, not only has potential as a tourism destination, but even more so as a source market.

TUI India will concentrate the tour operator activities of the World of TUI in this up-and-coming destination and create opportunities for participating in India's strongly expansive outgoing business.

Ladies and Gentlemen: I am extremely satisfied with the performance of the tourism division. I will give four reasons:

1. 2004 is the proof that our integrated business model generates good profits.
2. We have optimised the efficiency of our processes and costs.
3. The capacity utilisation of our aircraft and hotels has risen significantly.
4. The price quality was further improved – the yield percentage was reduced.

The overall good development is also reflected in our brand positioning in the quality segment. Over recent weeks we have received multiple awards. In a ranking according to image and brand strength we are clearly the number one over all other holiday and travel brands. In Europe's biggest brand and consumer survey by Reader's Digest the brand TUI was named for the fifth time as the "most trusted brand" of all holiday and travel brands in Europe. Another brand analysis by the marketing magazine Horizont attests to our extraordinary high brand attraction and first class image. In a cross-industry comparative survey we came out better than the car maker Mercedes, the retailing giant Aldi or the fashion brand Boss. All these factors pay dividends.

As mentioned earlier, over the previous year we also took a fundamental strategic step in the Logistics division – by focussing on shipping. We decided to keep Hapag-Lloyd, the container line and the cruise business, fully inside the Group. By doing so we are assuring the generation of revenues in the future from this highly profitable division.

After the sale of the bulk and special logistics division of VTG Lehnkering and the Algeco group these only appear in the consolidated financial statement for a limited period. Pracht Spedition + Logisitik GmbH no longer appears.

In the Shipping division the profits rose by 17 million euros to 279 million euros – thereby even surpassing the good results for the previous year. The high transport volume and improved freight tariffs were crucial factors in achieving this result.

The Trading division benefited from the buoyant steel business climate and – with 116 million euros – booked the historically highest ever profits.

The results for Central Operations were improved by 24 million euros. Mr Feuerhake will shortly be reporting in more detail on the development in this division.

Ladies and Gentlemen: please allow me at this point to sum up and highlight:

In 2004 our profits were no longer based on high revenues from divestments. The operating result was doubled – ample evidence for the success of our strategy and the viability of our integrated tourism business model – which looks even more positive when compared with our competitors in Europe.

Thanks to the good results, especially from our core business tourism, we wish to recommend paying out a dividend of 77 cents per share to our shareholders. This demonstrates dividend continuity at the highest level and makes us – in the ranking of the DAX companies – one of the strongest companies in terms of dividend payments.
We have also moved significantly forwards with respect to reducing our net debt. On the balance sheet date our net debt of 3.25 billion euros was some 600 million lower than for the previous year.

I would now like to ask Mr Feuerhake to go into more detail on the crucial items in the 2004 consolidated financial statement.

Ladies and Gentlemen: as already indicated, I would like to provide you with more updated information on the current business development and an outlook for the year 2005. A few days ago at the ITB in Berlin we informed you that a clear upswing in the travel business is tangible. This is confirmed above all by the bookings received over recent weeks: in particular for countries in the Western Europe division we boast two-figure growth rates.

In the ongoing winter season the TUI group is registering across Europe 4 percent growth in the volume of booking; for the summer season we are even recording growth of 7 percent.

For the whole business year for tourism – from 1 November 2004 to 31 October 2005 – so far we are recording a plus of 5.3 percent in booking volume across the group. The upwards trend in guest numbers of 4.6 percent is also very satisfactory.

Allow me to look at the prospects, for 2005:

In tourism and shipping we are expecting robust growth – which will be reflected in further improvement in the operating profits in tourism and a continuation of good profit levels for shipping in 2005. The trading sector again has potential to generate a good result – although in all likelihood the record levels recorded in 2004 will not be reached.

It is too early at this stage, especially in the tourism sector, to quantify the expected improvements. The booking situation for the summer season – our most important season – must first consolidate itself. Even though the booking figures are grounds for optimism, it is still premature to come to reliable conclusions about the actual development of the summer season.

A double figure percentage growth rate in the results in the tourism division is possible.

In shipping, thanks to our proactive investment policy, we have created the basis for successful business operations and increasing profits over the coming years. According to industry experts the prospects for the trade are consistently regarded as favourable. Also 2006 – for which a downturn in growth was still predicted last year – is now being seen in a different, more positive light.

Ladies and Gentlemen: at the end of the restructuring process TUI commands two highly profitable business sectors that will continue to grow in the future. We will also continue to undertake everything in our power to fully exploit their earnings potential.

Many thanks for your attention.