TUI AG

Good morning, ladies and gentlemen. A very warm welcome to our second quarter results presentation here at the TUI campus and Hannover.

My name is Nicola and I'm Group Director Investor Relations. And I'm delighted to be joined for the presentation by our CEO, Sebastian Ebel; as well as our CFO, Mathias Kiep.

We are pleased to present a strong set of half year results as well as Q2 results, highlighting the strong progress we have made on the transformation whilst absorbing the impact of the Iran war and the Jamaican hurricane. We will also share our ambitions for the outlook of this financial year, which remains to be a challenging market environment.

Following the presentation, as always, we will open the floor for Q&A. And with that, I have the pleasure to hand over to Sebastian.

Thank you. Nicola, I couldn't have done the summary better than you.

A very warm welcome from rainy Hannover. Rain should mean good bookings.

So we hope and pray for similar weather for the coming weeks. The agenda will be very similar to what you are used to it.

I will do a summary of the operational and strategic highlights. Mathias will go into the financial details and then trading and outlook in a short summary.

We had a strong Q2 and a wonderful H1, and it would have been even better if we wouldn't have had the impact of the Iran war and the Jamaica hurricane, I always say, as someone took away the cream on the cake but that's how it is. Why we were able to see this development.

The transformation is gaining momentum. The vertical integration is even doing better.

The diff products are loved by the customers. And maybe that is the biggest change to before AI is disruptive and it helps us a lot in creating efficiency, streamlining processes, getting better processes, but also changing the distribution landscape, very, very exciting.

And having said that, unfortunately, the second half year, like March, March, as said, [ EUR 50 million ] to EUR 50 million because of the Middle East impact. This will also impact -- or has been impacted and will impact our second half year results.

Therefore, we had to change the guidance in April, and we want to reconfirm it. You could rightly ask why is the range from EUR 1.1 billion and EUR 1.4 billion, a significant one because the visibility is not as much as we are used to it from the beginning.

If you look some highlights on the achievements, we further streamlined the organization. We now have beneath me a COO function, who makes sure not only to get all the cost and efficiency synergies but also make sure that the sales organization, make sure that the very, very good load factors, occupancies of cruise ships of hotels will further be improved.

And on the other hand, the unique hotel products, cruise products, amusement products are very important for the sales organization. On the hotel side, we further expand our business in an asset-right model.

we have now built a very strong River Cruises business, another ship. It helps us to strengthen the TUI ecosystem because a customer who was yesterday traveling to Majorca, tomorrow wants to go to a Christmas cruise in Germany.

So we try to offer TUI-branded products in different segments. The functional-led target operating model is now established and which means that we align processes all over the market, which means higher productivity, but it means also a higher speed if you implement something once like AI, it's there for all the markets.

You don't have to do it market-by-market, less cost but higher capacity. What -- the higher speed.

Therefore, especially in the Markets + Airlines, we operational excellence efficiency is important. Also in this market environment, we looked at capacity, Nordics was a longer term, but overall, we were less -- we were more risk adverse and reducing risk capacity.

The commercialization of the airline, which is a big, big project, and we expect huge benefits are now in the status of being implemented. The first markets where we have implemented is Belgium and the Netherlands, you may recall that this was a market which gave us a headache.

And we do see that with a strong airline team, giving them the commercial responsibility that has led to significant improvements. And this will be rolled out beginning of next -- in next fiscal year.

This model will work in all the markets. So we will have then a commercial responsible airline management, of course, capturing all the synergies.

But over -- beside the benefits of the synergies also to get the benefits from getting direct into the market. We are expanding our business.

The example here in Romania. We also have had a soft launch in Italy.

We will do the one or the other market more in East Europe, but also outside Europe. We have not only now rolled out, and this is now for a year, the one app with more and more functionality, increasing the number of customers.

But what is new, the OneWeb is at the moment, gradually going live. It started with the U.K.

-- with Ireland then U.K., now the Nordic country, Belgium, Holland and Germany will be the last country in January, February '27. And the most disruptive part of the sector of the business of, I would say, in the world at the moment is AI.

And we understand AI not as one additional tool, but a way of how we work. It is not only linked to IT, but it's also linked to how we create better processes.

And better customer experience and what is important, how we get into new, more cost-effective distribution channels, a very exciting topic, which is important for everyone in TUI. A short look about why the March was impacted so much.

We had 2 ships, which we couldn't get out of the region for now 10 weeks. They will be back into commercial service 15th and 17th of May.

This was a significant cost for the second quarter, but also for the third quarter. We had to bring customers home from the Gulf region, but what was even more costly from the long-haul Eastern countries, which went through the UAA, hub, the Maldives, Thailand and so on.

And we also had impact on our hotel business in the Middle East, but also in the far east. We are really proud not only that the 2 ships left safely the Gulf, but that we had own repatriation flights to the Dubai-Saudi border to bring customers home safely, very quickly.

And that really boost the brand not only awareness, but trust and loyalty. I never got so many positive letters from -- or e-mails from customers, but it was a significant cost, and it will take until the end of the year.

I assume until the Middle East and the Far East were back to normal situation. So the impact was EUR 40 million plus in the Q2.

And in Cruise, we see because back to commercial business middle of May, another EUR 20 million. And what has changed in Market and Airlines is customer sentiment, first from East to Western Med.

The long-haul East, Middle East is almost 0, so very, very low bookings. And what we also see, and maybe this is related to the discussion on kerosene that people book very late.

So if you see later on that we still need to book a significant amount to get back to the last year's numbers. We see, for example, that May is on the same level as last year.

And this is a clear trend of the last-minute bookings. If you go into the details, the hotel business, despite Jamaica and despite the impact in the Middle East with our own hotels almost on the same level as last year.

Without the Jamaica, the occupancy would be on the same level or slightly above, and the rates would have been gone up. The problem was with Jamaica, as the hotels had to close for minimum 2-month, maximum till for 6 months for renovation or restructuring even when we were able to open the one or the other, we had to do it with lower yield.

That will normalize in the summer. Cruise, outstandingly strong.

If we would haven't had the impact of EUR 20 million in the second quarter, we would have seen even a stronger quarter than last year despite the same capacity, and the half year was outstanding. And we haven't seen any slowdown even in the last days.

The demand is huge. And what I found really amazing is as we didn't expect to get the ships out when we got them out, we had canceled the cruise until the end of May.

So then we were able to open bookings again earlier for the cruise from 15th and 17th of May onwards. And they are almost as booked as before.

So there was a rush on this capacity. TUI Musement doing well.

What is also nice to see is despite a stable passenger numbers, they are able to sell more to existing, but what is even nicer to gain more new customers. And this is important for our TUI ecosystem.

So a good development on a very good on HEX. If we look for Markets and Airlines, actually, it's -- the first time for a longer time when we do see a significant improvement of the result, less losses in winter.

And we wouldn't -- if we wouldn't have had the impact of Iran, then the results would have improved even stronger. So we are a little bit frustrated about this.

The benefit came in all markets, especially in the Northern region and in the Western region. Germany is influenced by some one-offs last year.

And this is, on a stable passenger number, dynamic is growing. The differentiated product sales are growing.

App sales are growing, and we were even able to increase the load factor of our airline. So a good development and this is a result of the transformation.

What is also important that we're talking about AI, not only as a tool to streamline processes to improve processes. But like in TUI Musement, that is, of course, for me, an eye-opening project within a couple of week the axel-based transfer planning was newly made through an AI agent 3, 4 weeks.

And it's so much reducing the cost of the number of people who have to work there, but also the load factor of our buses have gone up by 5%. So this is a quite significant example what we do see in a lot of areas of the company.

When it comes to products, we have now implemented also in the U.K., that was the last market or the last major market, TUI Tours. So this is where the customer individually can do his trip, his round trip and that we do by -- powered by Google and Google content and which had, of course, on a small basis, but a good start in all the markets.

We are also proud that we are now also on ChatGPT. We do see that Gemini probably is the most advanced LMM, at least that's what I would say as a user.

And you will find a TUI there, and we are convinced through the great collaboration. I was with Google last week that you will have the TUI booking way to be integrated there in the LMM.

So if you would ask for a nice hotel in Majorca with this and this benefit, you would not only see like today. This is offered by TUI, but then you could, in a seamless process book this package or this hotel of ours and further LMM integrations are underway.

We want to play a leading role there. And it will help us and bring us forward a lot.

We have also introduced our reward program. We started in Finland 6, 7 weeks ago.

It went very well. The other Nordic markets followed and we will have all the major markets on the system on this reward scheme until the end of the year.

It's not a system like we have -- some airlines have it, you collect points and then you get 100 points, a rebate of EUR 1. It's about value recognition status treats.

So we want to recognize with our own enhancement, customer -- loyal customers which can mean the free coffee on the aircraft or a longer stay in late checkout in the hotel. So not only on the booking process but also when it comes to benefits in the -- during the travel.

And the good thing is these are things which doesn't cost us a lot of money but gives a lot of recognition to the customer. Mathias?

After a lot of pros, the numbers.

Thank you, Sebastian. And I can only reconfirm the numbers that you showed.

So a very good morning from my side, and I'll have the bridges, the summary and then P&L, cash flow and balance sheet as in every quarter. So allow me a brief summary before I go into these details.

And first of all, the numbers that we present today, they're in line with our preliminary numbers that we showed end of April. And this reconfirms the very strong quarter and Sebastian already showed you some of the details.

This is effectively the strongest H1 we've had. And now this is also the 14th consecutive quarter of underlying EBIT growth, which shows all initiatives and measures that we've implemented, how they translate into earnings and that's something which is -- we are really proud of when we look at this picture.

So revenue in line with the last year, slightly up on a constant currency basis that is particularly true coming from the euro to pound conversion rates, the underlying EBIT up significantly, and this is post the impact of the Iran war, I think this is very important because we were on road show with some of you talked to some of you when the war outbroke and I think we always said it's important for us that we can consume these costs directly in a quarter, and that doesn't change kind of the shape of earnings that we have. And I think that's a very good proof of, one, we had it in the first quarter with Jamaica, now second quarter, a bit of Jamaica, but in particular, the lost revenues and cost of bringing home customers from the Iran war.

So all of these direct impacts have been really consumed in a good way. And then net debt is in line with prior year.

That we will come to that in a second ,is driven by the working capital of the missing bookings for the summer in comparison to the year before. So that's not structural, but it's, of course, reflecting what's the intake as of now.

Now let me come to the bridges and then go to these details. I think Sebastian, mentioned already in Holiday Experiences, more or less flat.

And if you then look into the details, Cruises flat despite the fact that 2 ships were blocked and the cost of bringing customers home are also sitting there. That's a fantastic result in hotels.

We still have a bit of a Jamaica impact and then a very strong performance in Markets and Airlines. And as indicated here, the plus EUR 30 million would have been plus EUR 50 million, if we did not have these costs for bringing customers home and a bit of valuation impact directly linked to the Middle East scenario.

A similar picture then for H1. So Holiday Experiences in line broadly with prior year and then a strong improvement in markets.

And I think if you take this picture and we'll come to that later, this already also explains in terms of why we had to adjust our guidance going forward because that what we were expecting that there's an even stronger push from Holiday Experiences this year. There's challenges.

Q1, we talked about Jamaica. We talked about Mexico in particular, for RIU and our midnight operations in the Caribbean cruises a strong benefit, but some of the benefits consumed by the lost revenues in Middle East.

That's something we'll also see in the third quarter. So overall, despite all the trajectory we have.

This is effectively only almost flat, a bit up and then a strong performance in markets, but we have summer bookings, which are not on the level that we were expecting when we set the guidance, that's why we needed to adjust it and we'll come to that later. Now P&L, cash flow and balance sheet, what is there to highlight?

I think it's very good to see that the improvement in operational result, our EBIT is up this EUR 40 million. But you also see that the group result after minorities has improved by EUR 70 million.

So the discipline in all the other elements of the P&L continues, and we have an even bigger improvement of our seasonal loss in the winter compared to the operational improvement. And with that benefits on the interest side, we also expect now that we come out for the full year at the lower end of our interest cost towards the EUR 325 million, that's a positive adjustment based on the results of winter.

Same on cash flow. I think structural, this follows what you've seen in the first quarter.

So more investment, but offset by less payment for pension and less payments for lease amortization, that's exactly the structural changes that we've implemented in 2025. And interest, I already mentioned, we're going also there towards the lower element.

So cash flow follows P&L. And the same is on the investments, because we have some optimizations on the lease, on the delivery portfolio with Boeing, and that help us to slightly reduce what we see there, and that's why we'll go towards the lower end.

What is impacting cash flow then on a net basis, if you take this all together, then it's the working capital and that is solely coming from less customer prepayments compared to 1 year ago. And that is effectively the summer bookings position translating into less customer deposits as of today.

So I think albeit this is, of course, a picture we would not like to see, and it has an impact on our balance sheet. At the same time, it's not structural, and that's the positive thing about it.

So whenever the market normalizes again, I think the crisis is now for much longer than a lot of people expected, then this should come back. And in particular, for the winter, where it's really important for us that this come backs, I think there is enough time to recover.

And that's what you also see then if you look at the developments, the -- let's say, flat net debt compared to prior year, and we did have a better position as of Q1. It's solely coming on a net basis from this cash and bank deposits line, which is then less liquidity compared to 1 year ago, which is the less working capital position coming from customer payments.

There is a bit of movements from lease liabilities but this is in line with what we've planned for. This is effectively the Boeing delivery portfolio coming on balance sheet over time.

So that's also something we'll see it in the guidance later. These impacts together, we expect that despite a slight improvement, our net debt will slightly go up because we need to reflect the working capital effect in our plannings this could still change depending on how the recovery in the summer is, Sebastian just talked about it.

But at the same time, as of today, that's what we expect. And again, the good thing is this is, from my point of view, not structural.

And with that, I think outlook, Sebastian, maybe trading, and then we come to some of the details.

Thank you. As we said before, we do see, in general, a shift from East Med to West Med that we see a softer Mexico, and we very much see a very strong late booking pattern.

That impacts all the different activities, maybe with the exception of -- not maybe, definitely with the exception of cruise. We have a slightly higher capacity on hotels and resorts.

We have a very good development on daily rate, but we are still behind when it comes to occupancy. Again, here, it's not short-term, it's medium and longer-term.

And we do see that this will get smaller. On Cruise, all parameters are very good.

The occupancy is still 2% less, but that is just because the ships came back into service earlier and there is some catch-up effect. So I wouldn't be surprised if we manage to come there on the same level as last year.

By the way, it's not only TUI Cruise is performing extremely well, but also Marella is performing extremely well. TUI Musement, I said, what is good that the experience is sold, we do see a mid-single-digit growth, which means we sell more to existing customers, and we sell more to new customers, which are important to bring into the TUI ecosystem.

When we look into the Markets and Airline, we do see at the moment that booked revenue is 7% lower, that is roughly also the pax number. If we look, for example, into the next month in May, we are on last year's level, which means that the short-term bookings make up a lot of the shortage and therefore, it's the interesting and important question, will we do see that throughout the year.

Nevertheless, we were very cautious. We reduced risk capacity between 4% and 5% to be on the safe side and mainly with third-party assets, so the impact on our own is less.

We are, again, very much focusing on further cost reduction efficiency through the transformation. And we also are benefiting on one hand, from a very good hedging position the summer closer to 90%, still winter above 60%.

But of course, the remaining 10%, 15% means an incremental cost, which we have to offset by other cost measures. So not an easy situation, but why we are confident, not because we have seen a short-term booking pattern, not why we can still have great utilization of our own hotel assets -- hotels or cruise or aircraft.

But if we compare the holiday intention with a year ago, it's on the same level. So what -- the difference is that the impact on Middle East leads to people booking later and a shift from Eastern to Western Mediterranean.

So if the market intelligence is right, we should see the volumes -- the still missing volumes coming back in summer. We also asked maybe that was my fear while people go less on flight holidays, but more stay in the country for overland travel.

But also that is what we don't see, and we will not see, especially when the weather stays as it is. So there's a lot of good reasons to fight for every customer, and there are a lot of good reasons to be cautious, and that's why we reduced capacity.

And when the question I got quite often is what does it mean on pricing and so on. We do see a very stable Western Mediterranean market with strong and good prices.

And then the interesting question will be when will the offers from the Eastern countries will kick in so that they are also attractive offers for very price-conscious customers. So by having said that, we changed and we confirmed the guidance of April for the range between EUR 1.1 billion to EUR 1.4 billion the range.

I know it's still high, but it's very, very difficult to foresee the future. We are happy to see a good May, but the question is what will be the trend?

And if things come down or will stay as they are. Would you do that?

And indeed, I think as another step on top of the April as Sebastian just said, reconfirmation of the guidance when we go through our segments. I think the -- what we can provide you and what we are working with is, of course, the building blocks that we still have and that can help to narrow down your expectations.

So on the hotel side, I think given the Jamaica impact and given the difficulties we had with the Mexican market and the important winter business, in particular for RIU, we only expect guidance now slightly below prior year. And that is a change and that is one element that has left us with the decision to adjust our full year guidance.

On Cruises, we still expect the business to grow. We've seen the strong benefits operational and from the capacity increase in the first quarter.

Marella continues also to perform strong every quarter. But we had from Marella, as you may recall, a very positive one-off in Q4 last year.

That's something which is then, of course, offsetting all the benefits that we still see there. In addition, as Sebastian mentioned it, we will see the new capacity coming and also the kind of the one now that the ship are operating again in the German business that's according to our expectations or a bit more.

So the slight growth despite the Middle East impact we will still continue to see. In Musement, there's not a lot of change, it was just mentioned what we see in maybe a bit less bookings for the summer.

I mean, please bear in mind that that's for the overall portfolio. So what is steered then towards Musement is also likely less, and there has been a quite strong cost management over the first 6 months.

There are some elements where we can delay projects in order to make sure that the growth from the EUR 67 million going forward in 2026 can prevail. And then the question is on Markets & Airlines.

There, we had a very strong first 6 months. I think the benefits of the transformation is they are really clear.

At the same time, with that environment for the summer and the impact of Iran has on consumer confidence, and that is something now we are in the middle of May. May is, I think, stable, as you said, Sebastian, so that is okay.

But at the same time, of course, it's not great environment. And so we need to adjust our expectations for markets despite all the progress that has been made there.

So we expect that the result for markets will be below prior year. And I think if you take these components together, that's how we look at our guidance, then you can have your own kind of -- you can narrow your own expectations and view on the range that we have provided for the full year.

And then on the next page, we've just summarized what are the impacts on the modeling assumptions. I've covered them all.

And on that basis, I would hand back to you, Sebastian,for the summary.

The summary. So besides having a great first half, we do see the challenge in the second half.

We think we are extremely well prepared especially the transformation in Market and the Airlines will help us during this more challenging times and will definitely improve our situation in the coming months and years. We have a strong hotel pipeline, some more capacity in cruises and a lot of great projects in -- with AI, so by saying that and building very much on AI accelerating and the strategic building pillars, we feel very much well prepared for all the challenges will come.

And as soon as the market is smoothened, we will also not only be able to compensate the negatives but benefit from all the changes. So we look forward to the impact of what we are transforming and changing and doing.

Thank you, Sebastian. Thank you, Mathias.

Josef, we are now available for Q&A. May I hand over to you?

What I'd love to ask the story behind you getting the 2 ships out of the Strait of Hormuz. But sadly, I think I'm limited to some more boring questions.

First on Markets and Airline, the 7% decline in booked summer revenues, that's obviously the same as it was in the update last month. Other companies have seen a better trading in recent weeks.

I'm wondering whether you've seen any sign of things getting a little bit better or whether it's been consistently sort of down 7% throughout the more recent period? And also, you hinted at pricing being better.

So what's the volume and pricing breakdown within the minus 7%? Second question is still on Markets and Airline.

Obviously, a very good second quarter margin performance. I think it's 150 basis points better excluding the Iran hit.

But actually, your direct distribution and online mix were no better. In fact, I think a bit worse in the second quarter and dynamic packages only 100,000 extra passengers.

So is that all operating efficiencies driving that performance? And can we sort of assume those continue into the second half of the year?

And then finally, just on the full year guidance, what assumptions sit behind the bottom and top of the EUR 1.1 billion to EUR 1.4 billion range? I assume that's pretty well all in Markets and Airline, given that's where the sort of operating leverage sits?

And also what's behind the net debt target for flat in terms of the working capital position at September?

First, Jamie, your questions are never boring. That is a general remark.

Second to your questions, we took capacity out, especially capacity, fixed capacity, which we had, for example, leased in when it came to planes, hotel allotments to be prepared if the market gets or stays challenging so that we don't have to discount just to get things filled. And that is the reason why we are in the situation where we are.

For us, it has been important that we are able to fill capacity for the foreseeable future and to take some time to keep volumes open when we know how the customer sentiment will be. And at the moment, this works well.

And therefore, volume and prices are very much in line. And we see for the first time that price increases we still have in the Western Mediterranean are offset by the other destinations.

So the inflation effect, which we had in recent years is not there anymore. On the direct distribution online, we are increasing the share of app.

If you look month-by-month, there is a positive momentum. And yes, we are working hard to get especially the app share higher.

So on direct, the app share is now at 25%, which is almost 5% higher than the year before. And this means a significant reduction in distribution cost.

So that's what we do. And the last question at the moment has vanished from my screen, who can help me with the third question?

I think there were 2 questions on guidance, the upper and lower end, what are the drivers from our side and net debt. And if you want, I can just cover.

Yes.

I think on the upper and lower end for the guidance, I think if you look at the components, and that's what I guided you through, indeed, markets is one of the key elements to move. On the opportunity side, there are also some elements in the hotel side.

There are some new hotels coming live to the -- and if they perform better than expectation, I think there's probably some upsides, the same. I think we have quite a footprint in Turkiye.

So if the market recovers nicely over the summer, we should see benefits there. So I think there -- I would say, in general, there is ability to get to the upper end.

There's also some risk if this crisis prolongs for longer. And those things what we saw that people still have a high intention to book that doesn't materialize.

We are prepared for this. At the same time, this is the way we build that.

And on net debt, if you take the midpoint from the guidance, just exemplary, then naturally, we have lower earnings than we had last year. At the same time, we currently have a negative working capital development that will recover over the summer naturally.

But at the same time, there could be an impact or not. And then you have a bit of impact from the lease portfolio coming from the Boeing deliveries.

And all this together would result in the slight increase of net debt compared to what we saw last year.

Okay. So just back on the second question on the margins then.

So that margin improvement is all coming through the distribution line as your GP1 margins are holding flat but it's really below that line, you're seeing that benefit?

I mean the margin overall is improving. And there's a mixture.

There is not 1 big or 2 big things. It's all the measures here and their, efficiency, cost reduction, less HR cost, less IT cost.

So it's a mixture of all, but also we have seen for the first time the distribution costs are lowering in the recent months. And that's what I mean that the transformation is not a single thing.

It's working on a lot of areas. And as we were low on margin that helps us now to bring the margin in a better direction.

There is a lot to be achieved in the future.

Can I ask some obvious question. Can you talk about the difference in the booked revenue between the U.K., which I think was down 10% in Germany that was down 3%.

What's driving that? Second question would be on Cruise.

And I appreciate it's early days, but are you seeing any impact on Hantavirus impacting consumer attitudes?

Okay. As you may know, our fleet in the U.K.

is significantly bigger than in Germany. So in Germany, more than half is on dynamic flights with third party.

In the U.K., it's very different. And by taking out risk capacity, the impact naturally was significantly bigger in the U.K.

You could argue it's a very cautious approach. It is.

On the other hand, due to our dynamic capabilities, if the market is as strong as the market intelligence say, we are very much able to bring a good TUI product with the TUI hotel to the customer. Second, we have seen no impact.

I called yesterday the management of our 2 cruise companies, people feel safe. People also are able to get a good judgment.

You may know that the highest risk to die in a hospital is by the bacterias, the hotel bacterias. So cruise is a very safe place.

But of course, the media interest has been high, but this has not impacted, although it was all over, probably not only in the U.K. but as well in Germany and other countries.

Our business, the last days were extremely strong in bookings and people are very resilient to these news.

Can I just come back on that U.K. versus Germany?

So you're saying it's because the U.K. took out a lot of chartered air capacity.

Is that right?

One of the main driver is less risk capacity, yes, to protect price.

I've got 2 questions on your strategic update that you shared in the release. The first 1 is on the TUI loyalty program.

Just given the phased out -- phased rollout through 2027, just wondering what sort of customer enrollment and engagement targets you've set for the first, I would say, 12 to 18 months, maybe. And at what scale does the program actually become accretive to margins through reduced acquisition costs and higher direct bookings shares?

That's the first one. The second one, just on the TUI Tours and the Gemini partnership.

Now again, that's given that the AI-powered in destination planning service with Google is now live, what is the early evidence or is there any early evidence of uplift in ancillary spend or increased experiences per customer? Is that something that you can share with us as well?

That's it for my end.

The loyalty program now was quicker than we had planned due to the acceptance by the customer rolled out in all 4 Nordic countries, and it will be rolled out to all other major countries in this year. As I said, it's a program which recognize loyalty status, and it's not based on getting selecting points to reduce price.

The first numbers in the Nordic countries have been very strong, but it's too early to give a very clear indication. But we were positively surprised.

Second, of course, the main reason is it should increase loyalty, and customers coming back and staying in the TUI network to create an even better TUI ecosystem to buy less new customers. And this would have a huge impact.

If we would have 10% less -- and this is probably a very good number. If we would have 10% less customers to be bought in 2 or 3 years and that would have a -- you know about our distribution cost would make a significant difference.

And by the way, also to do more up sales -- upgrade sales would also be good. But it's a little bit early to give an honest feedback.

What we wanted to avoid is that we add up cost to it just by giving rebates and these things all about recognition and recognition, which has a significant value for the customer, but limited cost for us as the free coffee on an airplane or the late checkout in a hotel.

Understood. And on the other one, sorry, the TUI Tours as well.

Yes. Sorry.

The tourist business is a huge business all over the world. We haven't been in there or we have been tiny, tiny, tiny.

And this has been now introduced. I could say we are growing by a couple of hundred percent from EUR 1 million to EUR 3 million to EUR 6 million.

So it's still a longer way until it's really EUR 500 million, EUR 800 million business, which is clearly the target. So again, there, the first start was good.

Of course, the system still needs more content, more functionality, but it's great. It's built on -- globally on the same IT technology.

So we are not like in the past doing something here in to this country and something else in another country. So -- and of course, there are markets where the tourist business is more important than another market.

So we are very confident that we have a great product and that we have a lot of customers who are interested in. And what we also did when you look at the organizational changes we did in TUI, one to have a COO role to get the vertical integration, but also getting cost synergies.

In the past, we had 2 tours people responsible for it in Markets and Airlines and in the destination because many of these tours are produced in the destinations. So we have now brought it together to not only to lower cost, but to accelerate product development and functionality.

With River cruise, it's easier to just add one ship and then you know you have the revenue and the profit of one ship.

I'm standing in for Kate this morning. Three questions, if that's okay.

You mentioned ASP partially mitigating higher costs on Slide 21. I was just wondering how much are your ASPs up at the moment?

And what has customer feedback been? Second question, would you be able to comment on the mix implications on margins from shifting from East to West in the Med.

Is it right to assume the East has stronger margins? Could you perhaps quantify the impact and expectations moving forward?

And finally, just expanding on the reduced U.K. bookings linked to the chartered capacity.

Is this a reflection of a weakening U.K. consumer?

And how do you view U.K. demand for the rest of the year?

Okay. If you -- and I would like to almost answer the question in one.

You are right that Eastern margins are higher than Western historically. What you do see is at the moment as the demand for the Western European is strong, they are very stable and sometimes even better margins.

On the effect on the Eastern Med is -- and one of the question could be why do you have less or anticipate less results or may anticipate. It's the missing volume from, for example, from Turkiye.

And it's not so much that we lose margin there because it's with only very limited on flying. We do a lot with SunExpress with Corendon.

So we are very dynamic there. So it's not in the -- and now also the hoteliers are giving more and more attractive offers.

So not that we lose margin. It's about the volumes.

And there, it's the exciting question, will the volumes come? And if you see where TUI has its strength -- it's in -- we are overproportionately strong in Turkiye, the U.K.

and that is also the reason why we took more capacity out and why we do see still a weaker booking pattern at Cypress. For German, Cypress is -- I've never been there for vacation.

The U.K., it's extremely strong in the decline in Cyprus or for Cypress was huge, and it has slightly recovered, but it's still slow. So margins are stable, but it's just the volume shift or the not yet volume.

And this, in a way, brought us to, with a very different mix of passengers and prices on average, going very much similar.

First one is about airlines and cruise lines. You secured and covered kerosene and oil for the ships.

But could you quantify the potential negative impact you could have from higher oil price in the second part of the year and next year? Secondly, do you have a quantification also of the elasticity of the demand regarding the prices improvement we could have on airlines, especially.

And regarding still airlines, could you give us some more color about your capability to rebalance the capacity from East to West, because I guess that you do not have an unlimited slots in all destinations such as Spain, Canary Island and so on. So how far can you go on this rebalancing?

And last question, if I may, about the general environment, considering that the actual environment is tough and putting pressure on all players, do you expect a shift from small tour operators clients to bigger players as you?

Yes, do you want to talk about hedging maybe? And I do the rest?

Yes, of course. Thank you.

I think we -- what we can share as today is the hedge volume. And to give you a bit more transparency.

So when we look at these numbers that was in the presentation, the 63%, That is the average for the group. And some of our Airline business are fully hedged for the summer.

So it is 85%. And then there's some share in our business, which is dynamic and which is not hedged and does not need to hedge in that level.

So that brings down the average. So I would say for the summer, we are generally fine.

We've talked about the capacity cuts. But naturally, if we were to get a hit for the last, let's say, 5% to 10% and we don't want to cancel it because it impacts the full value chain, and we have to consume at these prices that would bring us -- would have an impact on profitability, but that's why we have a range in our guidance.

Going forward, we have some 62% that we published for the winter. You have the same ranges there.

So some airlines are much higher than the more dynamic regions. And I think that's a bit too early to see what could be the impact because capacity plans, pricing discussions, and there are also a lot of other effects on this that we need to look at and would want to look at.

And maybe I'll start with the third question about rebalancing. As I said, Turkiye, we almost fly with third party airline.

So when we have less customers, it's not our risk. The only destination where we had to and we did rebalance or the 2 ones were Cypress and Egypt.

Egypt has been growing unbelievably strong. This has now normalized.

So it's not like in Turkiye, where we're well below last year when it comes to booking there, it's more that the strong growth is now limited. So the main shift was from Cyprus, a few in Greece and a few in Egypt to Spain and that we have done.

So we don't need any other shift anymore. By the way, we also had to secure beds, which we manage, which was not easy.

It's always difficult to talk about our competitors, and I don't want to do that. For us, it's important to be strong, to get stronger, to let the customer know that we are well hedged, that we take care of them even in cases which we didn't foresee like in the Middle East, and I never got so many positive feedback letters like for this event.

So I would assume strong brands always benefit from a crisis, but it's always important that we are as strong as we can be. The second question on price elasticity.

When we talk about airline commercialization, it has to do in optimizing the network. It has to do with optimizing all kind of cost position, but also to act when it comes to pricing or on special -- on products as an airline.

So for example, our seat-only share is very, very small. And compared to other successful airlines, the share is there by far higher.

So the price elasticity on the seat-only doesn't hurt us at the moment. But in general, we didn't benefit from it.

And therefore, what we do see is by commercializing the airline, we will more act as an airline, and we will more also be able at the upper end to get customers on seat only, so to benefit there from the price demand curve, especially in the lates when it comes to seat only because it's different to package. Normally, the lates prices on seat-only are high, and we are, at the moment, not benefiting from that.

But that is an implementation. That's why Holland and Belgium are doing as the first country better, and we would expect for the same for the next year in the U.K.

Two questions, if I may. The first one, anecdotally, we are hearing about some of the U.K.

tour operators or OTAs competing on payment terms. Could you elaborate what you're seeing on your side?

And I'm trying to think, would you consider adjusting the payment terms at all? And how could that impact the working capital at the end of the year?

And secondly, just on the CapEx plan. I think you flagged at the lower end of the guidance for this year.

How much flexibility is there to reduce that even further for this year? And to what extent could you give us some color around the CapEx plans for next year?

Is that similar in size with what we're seeing this year? Or lower?

Or any color there would help?

If we would change something, but we're probably not the forum to talk here about this. I would -- I mean, for me, it's the last escape if you start for us to do something on payment terms, and I would do my utmost to not agree to that, if that maybe gives an answer to you.

What we -- I mean, we have built our own payment platform, which we now rolled out also to other markets. We have now direct debiting in the system.

What is the other pay as you -- [ pay now later. ] So these are things we are implementing.

So I would be very hesitating and I would do the utmost to avoid anything because if you start to manage a company for cash, then it's difficult to get, we say, in Germany to get the ghost into the bottle again. I don't know if that makes sense in English.

Does it?

And then maybe on the CapEx plans for next year, I mean, naturally, we're giving guidance at the end of the year with a view then towards 2027. What are the elements that we already know today and that is 2 components: one, a lot of the hotel projects, and that's something we discussed already with the view to '26, they're online and they will be kind of executed the same on the Boeing delivery portfolio and the attached CapEx to that.

And the rest, we will naturally go through in very much detail. And with a view of where do we see a direct benefit and which are elements that provide opportunity, and we will have that discussion internally.

Yes. So we will be very careful about investments next year.

But you should also have in mind we had and still have a significant disadvantage in our fleet. We have now 60 in the summer out of 100, 737 MAX, which is a by far better aircraft.

And we don't have the MAX 10 yet. So we don't have a cost competitive product to the A321neo.

So we need this competitive disadvantage to put into an advantage and that's why we are rolling over the fleet with seeing great benefits, but still another year to go.

It's very helpful. Can I add a very short 1 on cruises.

Just reading for the press release today, I think you mentioned excluding the changes in itinerary with the vessels that were trapped in Hormuz. I think the bookings are up 1%, if I understood well.

While I think you mentioned capacity going forwards is up 6%. Am I reading this correctly, it feels a bit that bookings should -- if capacity grows by 6%, bookings should also grow in a more meaningful way, but I'm not sure if I'm comparing apples to apples?

No, no. I mean at the moment, we are almost on last year's level, minus 2% was 3 weeks ago.

We sell everything. And the occupancy cannot go up further.

We had in summer last year, 108%. So maybe we even had too many kids on board.

So this is -- the demand is still significantly higher than the capacity we have. We just had the issue that we had to fill 2 ships in May on very, very short notice, and that worked surprisingly well.

So also, if we look at the bookings for next year, they are not lower than the year before than even better compared and even with a higher capacity. So it's very solid and also in the luxury area where we probably had the biggest -- I mean, not in absolute term, it's a smaller business, but where we still had a few points of occupancy left to sell.

We have seen now in the last couple of months that we also sell there the capacity we have. So a very amazing market.

But just on the numbers to make sure that it's clear. I mean, if you mathematically have empty ships, then your occupancy goes down because there's 0 for the rest of the portfolio.

If you exclude them, then as Sebastian said, the occupancy actually goes up 1% for the summer despite the fact and that is our H2, despite the fact that new capacity comes in, it's going to be crystallised in June, right.

20th of June.

Yes. So I think that shows how strong the business is.

Cruise is really absolutely the strongest performing unit that we have.

So first, thank you for your questions and for the good discussion. We had a very good first half year.

Transformation is the main reason behind it. Unfortunately, we have the Middle East impact in -- not only in March for the second half, but for the remaining part of this year.

And we are very happy that we have a successful transformation because then it would hit us very much more. We have made some adjustment on the strategy because of AI to getting even leaner with a lot of things we can change, getting better distribution by implementing, bringing our own AI agents into LMMs and social media.

And thirdly, we very much believe in differentiated product, of course, differentiation, which are recognized by the customer and he pays for it. And by having these main cornerstones, we feel very well positioned for the coming periods.

Short-term, the business will be challenging. We hope that we are so good that we manage the short-term bookings in a way that we can fill our capacity.

We have been more risk adverse than we would have been thought before, but I think it's important to be careful, cautious. And if the market is better, what market intelligence implies, then we will be able to react with dynamic products.

So have been really hard weeks, but I think it's worth working hard.

Thank you.