TUI AG

So thank you very much. Good morning, everybody.

I hope you are well and healthy. This is important in these times.

Thank you very much for joining in the Q1 – Q2 results call and I'm not a 100% sure that I understand who turns the pages. Are we turning the pages?

Okay. Good.

So we will be actually now turning to Page number 4 please. Undoubtedly, COVID-19 is the greatest crisis for tourism and TUI, which has ever happened.

And we were just in Q1 in full steam ahead. As you know we in January was the best booking month in the year, up 14% customers; 17% revenues for summer bookings.

And then suddenly, mid-end March stop no revenue. I mean this is unprecedented.

And I think no revenue until today it's an interesting experience also for myself to run a company without revenue. We managed to secure liquidity very fast you will see that in the slide and reduce fixed cost.

Also we are thinking about the time after the crisis. We will be a company with more debt and also for – significantly more debt and also a company with a little bit of uncertainty, we believe on next year.

The revenue might be – or the demand might be on the levels of 2019 but it might also not be on the levels depending on the vaccine, depending on the perception, whatnot. We believe in 2022 we will have full demand and strong growth.

We see traffic on our web pages, we see bookings and I'll come to that in a minute are very slow. So demand is there but the crisis, the pandemic is not overcome.

Now that's the reason why we said, we need to be significantly changing our company. More lean, more agile, less capital, less investment and much more digital.

We said, we want to become a digital platform company anyway. And therefore, we have launched a program to save 30% of overheads.

That will affect 8000 roles. We launched the program in the company.

We announced it this morning and it's now progressing. And it will touch all parts of the business but mainly markets and airlines as 80% of our overheads are actually in this area.

Now people continue to have a passion for holidays and we are a very trusted brand with a long history. Therefore there's no reason to assume that the market will be not there that we will not have a prosperous market environment.

I mean that's very important because without a market everything would be very gloomy. Now this – the market I think it's more a matter of time until we come back.

Definitely safety of our customers, employees are our main priorities. So we are very open to prepare for a responsible restart.

We want to restart. We can see the demand but we only can start and want to start when it is safe.

Now turning to Page number 5. What has happened?

And as I said, when you turn to the – when you watch the dark blue boxes at the bottom, we had an exceptional start in the summer, the strongest January in company history. So after the Thomas Cook collapse as well it seemed to be an enormous record year.

But then the COVID incident happened actually not the COVID itself that is something which started in China last quarter but all borders closed, travel warning and all into all countries no business within a couple of days. Liquidity squeeze by cost running we could save money and we will see that and also prepayments flowing out of the system.

The positive working capital actually going back to customers. At least partly, we find solutions in order to mitigate but at least partly.

That is actually very special in our industry. So we reduced costs and we acquired the liquidity and that is actually the KfW loan you will see that in a minute we talked about it.

And the loan facility in the frame of our current RCF, it's actually a bridge loan of €1.8 billion, which is due in 2022. So Birgit will talk about it in a minute.

And now what we are doing is actually we are preparing for an integrated startup of our summer holidays. We have travel warnings largely in the countries until mid of June.

There are strong indications that at least partly the destinations will open. And also that actually source markets will be sending – allowing us to send customers.

We believe it could be in the order of magnitude late June and early July that we actually can resume business partially into areas which are safe and where we tested. We did the first test of our hotels right now test runs in Majorca they were very successful and travel and leisure travel can be safe.

The second thing as I said is our restructuring, digitalization, realignment, restructuring program which we have launched, which should give us a cost base advantage of 30% overheads. This is in the order of magnitude €300 million, €400 million yearly benefit and that is something which should be achievable.

We have identified the ballparks of our program, I'll come to that in a minute. Now could we have known better?

That's the question. Why is so hectic?

Why is actually – we have the suspension of all travel and suddenly we need money and the RCF is partly not released and then we go to KfW when we have all this turmoil and then we need to be so under time pressure could have been – could we have seen it earlier. And I think the time line here shows it would have been difficult to digest.

I mean the China COVID was end of December we had 13% up in booking. Then we had the financial year 2020 Q1 results 11th of February we were up 14% again revenue was 17% because prices were up 3%.

So there's not an indication. Italy that is actually North of Italy, we saw a little bit 21st of Feb, but it's still 12% up and still 37,000 customers per day net growth.

Even a week later, Tenerife closing this year with the hotel you remember that still 28,000 net growth. By the way this even is seasonality because we have that -- the first week in February is stronger than the second is stronger than the third.

So we saw standard stuff. And then we see the more or less the 13th to the 16th that actually it all collapsed and that's actually the ports closed.

The borders closed within three days. That was the Friday and Saturday and Sunday, we came together as a team and actually said, okay that's it.

Let's see to it how we secure liquidity. And you see that this is actually a very, very immediate situation.

And I think also unprecedented in the timing of the events. Now how do we see the situation and the suspensions and below.

On the next slide I have put the stuff on. Largely until mid-June, we see those suspensions.

Now at least in Germany, I can say and I'm talking to the officials here, a lot there's an enormous pressure of opening borders. I mean people don't accept that Europe is closed.

And you have that in the neighboring countries to France and to Switzerland and to Austria, but also to Denmark up in the north there was even a legal case, which was won by customers who said, I want to travel to Denmark. And the court said, you cannot suspend it as it's not reasonable.

It needs to be adequate and reasonable. And we I think can prove now that we have actually prepared our travels in a way that it is safe.

Now we also don't start from zero. For the summer season 2020, we still have a booking level of 35%.

Normal would be 59%. Now 59% is much better than 35%, but 35% is much better than nothing.

So if we can reinvigorate the travel and if we said for example, just Majorca how much possible we would actually start rebooking customers from other places to Majorca fill our planes and fly As I said, we have done good testing and certification of our hotels in Majorca. So for example, that shouldn't be a problem.

The same holds true for Greece, for Cyprus, for Croatia, for Bulgaria, for the Canaries. I mean all of them have one thing in common they don't have COVID infections.

So that's not a -- it's not a good reason to assume that travel to there shouldn't be possible or shouldn't be safe. For winter, we opened the first and winter was actually in the U.K.

We have now 8% up in volume and the average sales price on last year's level. So also last year was good in terms of the winter bookings.

So no reason to assume it will be weak. And summer is the most promising thing.

I mean what's interesting and promising I think we have double -- more than double the volume we would expect. So more than double the volume of last year for this year.

So it's small volumes, it's a couple of hundred thousands, but it shows that there will be catch-up effect. And at least from now we cannot see that actually volumes will not be there.

Prices are a little bit weaker than this year, but that's again very early days and it's also related to partly discounts we give in order for early bookings in order to fill next year, but I would say a very healthy situation for the future. And that indicates to me as soon as travel will be possible customers will want to go.

That said, we need to be making sure that actually we can provide safe and non-risk travel that will be top of mind of our customers as well and I come to that in a moment how we do it what we do. But before that I hand over for a session of Birgit to actually take you through the financial impact as well as what we did in terms of cost and also the KfW facility.

Thank you, Fritz and a warm welcome also from my side and I hope you are all healthy and safe. So on the first slide that I'm going to present on the COVID-19 financial impact.

As you know, our business is seasonal with a corresponding very seasonal liquidity stream. And COVID-19 led to an immediate cease of global travel operations, which led to an immediate liquidity need due to the customer refunds and the coverage of fixed costs as you all well know.

And as you can see from this illustrative graph on the left-hand side at the end of March, we usually have quite high customer deposits on our balance sheet with a further steep increase during Q3. And it is -- and you know that we call that a typical seasonal tourism swing.

And the suspension of all operations as of March 16 led to the fact that the positive seasonal swing, did not materialize and moreover customers could request cash refunds for canceled holidays. So at the end of March we had €3.4 billion of customer deposits on our balance sheet and this situation led to an immediate liquidity need due to the typical working capital pattern as well as a fixed cost coverage against a standstill on our revenue.

And to address the liquidity needs due to this working capital pattern, we took immediate action and secured the KfW bridge loan in a record time and we also initiated other mitigating actions. Apart from of course, the drastic cost reductions we -- there were other mitigating actions like incentivizing customers to rebook to a later date.

We opened for summer season 2021 much earlier than we usually do. And we worked with various European governments on a voucher refund mechanism to save liquidity in this crisis situation.

And the current trend is that between 50% and 40% of customers are seeking a partial credit or decides for a rebooking which we consider a success and demonstrate that people are willing to go on travel with TUI as a trusted brand. Based on the current scenario we estimate customer refunds per month to be estimated at a low to mid-single-digit €100 million.

And when travel resumes and that is what we tried to illustratively show because we do not have a date yet, we expect to see a recovery of working capital and that is represented by these light blue dotted lines and their value and this is a data point obviously that we do not have at the moment. So then moving to the next slide please.

Thank you. So during the suspension of all operations we undertook significant pricing measured to limit cash outflows through an extreme reduction of costs and expenditures to an absolute minimum.

From capital expenditures to marketing, selling cost, accommodation, rental and lease costs, all expenditures have been cut before reflecting a strict cost discipline required during these very exceptional circumstances. So this has been a top priority for the business as a whole so everybody was focused on that.

And the overall six monthly cash cost base has been substantially reduced by around 70% on how we calculate fixed cost. And let me explain that so advanced contracting to secure committed capacity for the seasons ahead is the base of our business and thus we typically see a high level of operational leverage.

And in a normal year 63% of our cash costs across the business are deemed to be fixed. So this translates in a normal year into a cash outflow in a range between €700 million to €1.4 billion per month and of course the latter during the peak season.

We reduced this range substantially during the COVID-19 crisis and we managed to reduce costs to an absolute minimum and expect our cash fixed cost base to be reduced to a minimum range of between €250 million to €300 million per month as long as our operations are suspended. Please note that this number excludes cost of payment obligations below EBIT for which an average run rate of €50 million per month can be assumed.

The largest cost base for the group is accommodation where we invoked the force majeure on hotel contracts. Incremental aircraft leases have been renegotiated with our lessors as has -- payments with landlords in our hotels and resorts business.

Cruise shifts have been laid off leaving around 60% of monthly cost and we took the difficult, but necessary decision to reduce staff costs worldwide from April onwards. So a short time work take a furlough, unpaid leave or other staff cost saving measures were applied across the group, whereas our business was and of course still is at a general pause.

We have participated in government job retention schemes where available. And these substantial measures across the business has helped to deliver a 50% cost saving in salary costs in May with 90% of our employees participating in the above measure.

So let's go to the next slide. TUI was the first company to and Fritz already said it to successfully obtain a KfW bridge loan as we applied immediately after the announcement of the program by the German state.

And we received the approval for €1.8 billion KfW bride loan facility just 10 days post application. And we were able to apply rigid level of speed as we had our financial scenarios proactively ready and could present a comprehensive liquidity picture during the weekend of 14th and 15th of March which now seems a long time ago.

We presented an exhaustive scenario analysis of the situation and the financial requirements including a solid repayment plan under the agreed scenario. During the whole process, we were supported by our existing banking consortium and I would like to thank all parties involved for this extraordinary and joint achievement.

The €1.8 billion support is an extension to the existing €1.75 billion revolving credit facility and you can see the details of both facilities on the right-hand side here of the slide. As already announced in our ad-hoc statements under the terms of the loan, the annual dividend will be suspended during the course of this credit line.

And both covenants net leverage ratio and interest cover relating to the existing and also increased RCF will be suspended for the next 18 months. So covenant testing will resume in September 2021.

And finally at this point in time, we have cash and available facilities of €2.1 billion and this is a reduction of €1 billion since our last announcement which we did on the 27th of March as we needed to cover cash out for fixed costs a certain amount of customer returns under these payments as scheduled for financial maturities in the amount of €450 million. So then moving to the next slide, as I mentioned earlier, we worked on liquidity enhancing measures such as the earlier discussed fixed cost reduction and also the mix of voucher refund credit mechanism that we easily worked on other levers and that's what you see here.

So we immediately suspended investments and reduced our CapEx cash out. And we already discussed earlier that TUI would be more rigorous with CapEx going forward and we are taking it very serious, you know that also from all of our last conversations.

So we will reduce our investment with 50% to a level of maximum €450 million this year from our earlier guidance range of €750 million to €900 million prior to the Hapag-Lloyd transaction. We expect some tax relief due to acceleration of refunds and deferral of payments and here also the partners are actually very supporting.

The Hapag-Lloyd Cruises transaction will lead to a cash inflow of approximately €600 million as you know and we will reduce the capital intensity of the business including the sale and leaseback of assets. When the business restarts, we will see a significant working capital inflow and that is very important to note throughout this cycle.

And all these measures will contribute to the improvement of our financial profile going forward and with cash and available facilities as well as the liquidity enhancing measures, TUI has sufficient funds to cover the coming months. But of course we remain proactive.

As you have seen from the KfW bridge loan application and our fastest wins, we are equally proactive at this very moment. And we are currently evaluating a variety of options with the aim to best position TUI's balance sheet and liquidity through an extended period of disruption and post crisis.

One thing is sure, we are strongly focused on rebuilding our solid balance sheet profile post crisis. And as I also said earlier, a prominent driver is the restart of our operations with a recovery in bookings resulting in an immediate and substantial working capital inflow.

So let me with this hand back over to Fritz now.

So, Birgit thank you very much. You see, we have secured liquidity.

We have a solid situation in terms of cost things are in control. We are managing also liquidity outflow to customers on a daily basis.

Now is the question what do we do next, right? And the one thing we are doing is, of course, we are trying to find ways in order to allow revenue again, because on a dominant basis loans and bridge loans and debt, doesn't replace revenues.

And therefore, this is the utmost important. And we have, as I said, have good booking status.

Still we have good forward bookings in next season. The question is when can we start?

And here, we have worked on a 10-point plan together with actually all partners, who have similar low COVID-19 infection levels or even lower and I talk about Canaries, Balearics, Greece Cyprus, Croatia and others. I think travel to these countries would be possible if allowed.

I think demand would be high. I think we have a program in place I'll come to that on the next page, which actually allows for safe travels.

It's important to our customers. Equally, it's important for customers to travel.

In the public, I see pressure building, because there's not a good reason to close borders. And as I said, even the first court has ruled that closing borders is not appropriate.

So, in the destination also it's very important, customers wanted destinations, wanted destinations in many cases. Tourism is the most important economic sector.

In Greece, for example, 20% of GDP or 18% of GDP, of course, in summer double, because it's only half year season. So, I'm not missing that summer is a huge issue for Europe as well.

And I hear, and I see that actually that is taking ground. And therefore, I'm quite hopeful that in June or beginning of July, we will be able to resume business.

And we are prepared. That's what we say.

As you see on the next page, the level of detail we have, this is actually the -- at holiday 2020 secure safe travel during COVID-19. It is actually touching all touch points, addressing all touch points of our customer flight in destination hotels cruises.

It's exactly what we do. And we are even designing holidays for safe travel.

For example, we have put our ships to -- cruise ships to actually northern Germany as soon as possible. We're offering three to five days cruises.

So, the North Sea is anyway very popular. There's 1,000 guests.

1,000 guests are the limit which the German government has anyway agreed that 1,000 in a certain destination, is possible. So we are even preparing designed holidays in order to be attractive.

So it's not in our hand to open the holidays, but it is in our hand to be prepared. And together with our partners in destinations, we have now the program and we are now negotiating thoroughly.

Now, this is actually number one priority, because it resolves a lot of problems. It resolves the problem of revenue particularly it also resolves the problem of liquidity, because as soon as we open our business again, there will be liquidity inflow for positive working capital.

By the way, even having closed summer and only for winter and next year summer, we have €50 million inflows already today per month. So, it's something as soon as the markets open, liquidity, I would assume, is not the issue.

Now anyway what will remain an issue is debt, because we will have debt and the first thing that remains to be seen how much of the credit facilities we will be using. But debt will be an issue.

And it needs to be repaid that is very clear. And therefore, we have now put this three-pronged plan for the future of TUI.

The first one is actually reducing costs. And how we do that is, we accelerate the transformation project we have been planning anyway.

We are more ruthless in merging tasks and organizations across the group, and consolidate global IT structures. So, it's not just taking off people and assuming it will be working.

It is the challenge of reducing people and increasing quality. And one of the things, just to give you an illustrative example, we have 25 call centers in the world with €100 million of cost.

So, it's not a good reason to assume that this is optimal. But to the contrary, if we wanted to outsource it to a third party, we could save tens of millions per year immediately.

But of course, it's close to the customer and we need to be careful. But it shows what kind of potentials, are still untapped.

And I have launched the program together with the colleagues this morning, 30% cost reduction in the order of magnitude €300 million to €400 million yearly cost benefits will affect 8,000 people. So this is, I would say, bread and butter.

I mean this is nothing to discuss about it's just execute. I mean it's not a risk that it will not happen or whatever.

I mean this is relatively easy. So let me get into the middle column.

In the middle column, we have historically or historically in the last phase of transformation became product-centric. We invested more into cruise ships, into aircraft, into renewal of aircraft into hotels.

This is over. This is over.

And for two reasons -- actually for three reasons, if you like. The first one is that we have debt and the money is not easily available.

The second is we have an oversupply, and we will have an oversupply foreseeable in the next year. And when you have oversupply of assets, investment into assets is not very good.

So if you had undersupply, then you have good yields. If you oversupply, you have better trade.

So we will be more asset light, and we will be using many means off balance sheet structures selling and leasing back or managing back hotel assets looking at the structure of our airline size as well as ownership structures in terms of aviation. And also, we will actually look at the clear fixing and divestment of non-profitable businesses.

So this is a little bit more. I mean in the past, it could be, we have been maybe not as strict as we could have been, but I'll tell you now, it will be either you fix it immediately or it will be a difficult time.

So this is a little bit more, how do you say, it is more a strategic move. I want to finish -- I want to say one thing.

This doesn't mean, we will not content -- be content centric, right? We just will not do bricks-and-mortars right?

So content centric means, control of product, control of brand, control of distribution, control of customers. This will stick.

Differentiation this will stick. What will not stick is actually investment into bricks, because if you have oversupply in bricks, earning money from bricks will be not that easy.

We stay asset-light because selectively we might be wanting to own bricks still. Cape Verde is a typical example.

When you have 100% of five star hotels or what I mean then it's difficult not to own the bricks. But other than that, we will be seeing that we actually get assets that are more asset-light, much more asset-light than we are today.

And I could do the same thing with ships. We talked about Majorca anyway.

We showed what we did with Hapag-Lloyd Cruises a deal, which we'll be closing in June by the way. So I mean it is what we will do.

The third reason. The first reason was debt.

The second reason was actually overcapacity, because of uncertain demand. The third reason is on the right side, when you want to become a digital platform company that's what we said particularly before assets don't fit, and so as we accelerate our journey now to become more digital, we actually -- will actually -- we can -- directly we can invest less.

What does it mean more digital and online strategy? People have been using online purchase means in the crisis when they had to stay home.

Will they shift back? Maybe not.

People are okay with using online services in destinations. We see that we have actually accelerated our online strategy there, so all touch points across the value chain.

And the last thing, which actually is the first bullet on this right column is that we increase accommodation only -- flight-only and dynamic packaging. When you have an oversupply this kind of pre-available goods, which are also shorter booking cycles will be important.

We have good experience in our GDN, so we have very good experience in our overland business in Germany where we have one million customers. So we will actually accelerate our economy.

Flight-only we have also good experience with third-party flying offering our flights to third-party customers. We have good experience as well.

We will have another P&L fostering it and we will actually also think about the future of package and this future of package needs to be more flexible, more dynamic, more customer friendly and all of that is the digital backbone of our systems as we have announced them anyway. The difference is we execute faster and more euro for legacy IT structure.

And that is actually 100% focused to the future, zero focus for legacy. That is the difference.

With that said, I would actually come through the half year results and you see that on the page 5 months we're still okay, not only okay it was good plus 6% revenue, plus 21% EBIT. And then more or less everything stopped in March and that's what you see.

And maybe when we go to the bridge next slide, you see a lot of moving parts back and forth. The only big thing, which I want to highlight are the minus €470 million on the right side, and the blue box explains what it is.

The minus €470 million is mainly loss of contribution €242 million. This is actually the missing business.

There is no business no contribution, okay. You should be seeing this repeating over the next months, a little bit less because we have been saving costs.

At the same time, volumes are a little bit bigger. So we always said, our costs are around about of €250 million or whatever and this is the €250 million, right.

So that is the missing contribution. This is actually what we'll be repeating.

Then you see a second -- so but why do we not see the €470 million for the next month is because you see for example hedging ineffectiveness. That is actually we bought, of course, for the travel we sold, we bought fuel, so hedges for our fuel, for $60 per barrel.

And now it's $30 and of course this needs to be accounted for and that's what you see here. The €146 million are actually taking care of the ineffective hedges until June.

And, therefore, it will not repeat. And also it might even reverse a little bit if the oil price comes up or whatever but the big step -- let's say the big step is done here.

And that's part of the €470 million. And then you see smaller numbers, repatriation costs of course will not repeat.

The celebration impairment so we drive off the ship -- I would say we took the ship out of the water because there will not be any business anymore €19 million. But this, of course, book then you have the max costs are very minor because they don't fly, and will not repeat because particularly when they don't fly there will be zero.

So, therefore, more or less what you can say it's €240 million will repeat in some form or shape €146 million will also repeat in some form or shape. And that's a pretty good indication I think for the future months if you don't take into account the payouts to customers.

Payouts to customers are difficult to judge. In some of the countries, we have the vouchers, in some of the countries we don't have the vouchers.

Even if you don't have the vouchers in some countries you have state guarantees. In some countries you don't have state guarantees.

This makes a huge difference. Also what makes a big difference is if the ministry say, there will be no summer vacation or if they say, there will be summer vacation because if you can redeem the voucher soon everybody accepts a voucher soon.

So Birgit talked about it, it will be something low to mid hundreds millions. But as we said, it's just working capital.

So as soon as the business comes back and even if it comes back -- something comes back now as it didn't come -- or it doesn't come back for summer at all, we still have €50 million inflows. So you can imagine what happens if the business for the summer at some form or shape will be resuming.

Now that said, we have a couple of more slides. This is actually one more slide.

And I thought we had also another waterfall but this is more or less what I explained the €470 million. Now you see a little bit of segmental reports in all fairness.

I will not review -- it's meaningless. I mean, if you have – it’s unlike that we’ll -- who takes care of what or who cares about these numbers.

The numbers are actually distorted as you can see everywhere, because you had months of no operation. And that actually is not very meaningful.

If you have questions we are very willing to answer them in a later stage of the conversation. With that Birgit, I think you would like to -- you will take the people through the P&L right?

Yes. So let's then go through the income statement.

As here, I did -- during the first quarter as well I will focus on the year-on-year comparison with pro forma IAS 17 figures for the first half is because the IFRS 16 numbers for comparability purposes. So here you can see obviously the turnover year-on-year was flat reflecting the loss revenue from the travel suspension in March and the underlying EBIT decreased by €527 million, mainly as a result of lost contribution and costs arising from the COVID-19 travel suspension and Fritz just talked about that.

The adjustments are significantly better year-on-year, as we booked €91 million gain on disposal from the sale of our German specialist businesses Berge & Meer and Boomerang which closed in October 2019. As a result of the positive adjustments reported, EBIT is down by €432 million compared to last year.

And group results after minorities are down by €505 million translating to an underlying EPS of minus €1.31. Referring to the reported figures under IFRS 16 and as flagged during our IFRS 16 call in December last year both depreciation and interest charges are higher as a result of IFRS 16.

Okay. So then we move to the cash flow slide.

And as you know, before the COVID-19 crisis we launched a dedicated program on cash flow with a target to generate positive free cash flows for dividends and we were very well on the way to deliver. And you can still see the impact in the first half of 2020.

Unfortunately, now due to COVID-19 the situation will be different, but at least you will see that we were very well on the way. Managing cash flow and liquidity is our number one priority and you will equally see from this chart how quickly we actively address the cash items in our limit.

So group's underlying EBITDA reflects the impact from the COVID-19 travel suspension and we more than offset the decline in operating cash flow by a reduction in our net investments as we cut all major projects during the current period of travel suspension. This leads to a free cash flow of minus €1.4 billion slightly ahead of prior year.

Please note that the disposal proceeds from the sale of the German specialist businesses during Q1 are equally included. Free cash flow after dividends ended at minus €1.7 billion, up €170 million versus previous year.

And this includes dividend payments for 2019 as the payout was mid-February before the COVID-19 crisis. Please note that the cash flow from financing has increased because we have drawn down from our RCF to help fund our seasonal working capital requirements.

As you can see from the IFRS 16 column of the cash flow statement, the higher operating cash flow is offset by a lower cash flow from financing due to increased payments for finance lease liabilities. So the total cash flow as you can see here is the same under IFRS 16 and pro forma IAS 17.

And one final comment here again. This year's net CapEx and investments will be reduced to circa €440 million, a reduction of at least 50% compared to previous guidance.

Asset and debt financing is expected to amount to around €400 million. Please note that these numbers are clearly the effects from the Hapag-Lloyd Cruises transaction.

Then moving to the next slide the movement in net debt. So the first half closing net debt based of pro forma IAS 17 numbers increased to around €2.65 billion in line with the usual seasonal swing and driven by the discussed development of free cash flow in the first quarter.

Referring to the last line of the table, you can see compared to the previous year that our seasonal swing in net debt has improved by €348 million, which is predominantly due to Hapag-Lloyd Cruises now being reported as a disposal group. Regarding the other elements of the movement in net debt of our company cash flow asset financing increased according to plan with roughly two-thirds related to committed aircraft re-leasing of new Dreamliners and the remainder related to cruise ship financing of around €120 million.

As expected and due to the first-time adoption of IFRS 16 and associated lease liabilities, net debt is higher based on reported IFRS 16 figures. And then lastly, on the next slide, I'd like to remind you of our withdrawn guidance.

And on the 15th of March, we withdrew the group's full year 2020 financial guidance based on the current unpredictable situation. And as you will all understand we also refrain from issuing a new guidance as uncertainties continue to exist.

And as already mentioned, we need to raise dividend payments for the term of the KfW credit line. So with that, I would like to hand over to Fritz.

Thank you, Birgit. Because now the slide is actually the first slide again, right?

In summary, big crisis, short-term liquidity management, reducing fixed cost. It's not too difficult.

That's what we did. And we have now decent liquidity for some time.

And we will relaunch the business hopefully soon. Now as soon as the business will be relaunched, we will actually go from liquidity to P&L and manage P&L.

And that means profitability up, investments down, cost down, agility up, quality up, so cost down and quality up. This will be the digitalization project 30% cost down as support and focused.

And as I said, I mean, we had a very strong January, the strongest in company history, and the reason for that because customers want to go on vacation. There's no reason to assume that will change.

We had a good discussion on business travel. Business travel might be different.

People might be used to online working at home office or what and will not travel, but all indications I see that people want to go on vacation and just viewing a movie of a destination is not good enough. So the market will be there.

Traffic on the website is good. Future bookings are good.

So as soon as we are allowed to do business, we will have good business. But TUI will become leaner less capital-intense and more digital.

And I think that's good. Every crisis there's a chance.

Thank you very much. We are open for your question.

Thank you for taking my question. I hope everyone is well.

Good morning. Three questions please, maybe I'll ask them separately.

First on the liquidity it looks quite tight that €2 billion given you seem to be hinting at maybe €1 billion customer deposit outflow and there could be I guess another €1 billion on the trade payables plus the cash burn each month. So, I'm just wondering you seem to be relying on the markets reopening.

So the question is what happens if markets don't reopen and your operations remain suspended for a bit longer, how many months liquidity do you think you have please?

Yes. I can already sort of reply to that Jamie.

Thanks for your question. And I understand your question, of course, because nobody knows when travel will resume.

But at this point in time as this is -- I mean customers are willing to travel, but it's uncertain as to when that happens. What we can tell you is that as we demonstrated also and it started during the weekend when the COVID-19 crisis have started is that we are on top of things and we were the first to go to KfW, we had a scenario planning ready.

We could never have gone so quickly if we didn't have our scenario planning ready before that because that normally takes a while. So, then we have also the successful execution of course of requesting the KfW bridge loan.

And then TUI is obviously very important also to Germany. So, I would like to point that out as well.

So, this time -- and I'll go quickly through the levers of liquidity. But this time again we are proactive.

We have our scenarios ready. Only when the travel resume that is a big unknown, of course.

But we do have options alternatives and what I can tell you and that is what you have done because I looked at your analysis, but we have a fixed cost run rate which is about €250 million to €300 million a month. Then you can think of customer refunds in the same order of magnitude as what I just mentioned on the fixed cost run rate.

Then we also expect the Hapag-Lloyd positive and not to forget during the month of -- I mean in the next month. And then the bookings for summer 2021, we see them already as really open and then we think of other items like sale and leaseback just to think of that and other items as we mentioned.

So, what I can say is that we are proactive and we do everything that is in our remit and we can currently announce a €2.1 billion liquidity which is probably more than you would have imagined when we talked two months ago. So, with that maybe if you want--

Yes. I mean Jamie it's good.

I would have said you -- and you have three questions. And I think it's an important question.

I mean liquidity is at top of mind and this is not only CFO that talk me every day, me personally, looking what we pay. In the first month, you saw the liquidity drain which is much bigger with -- so the past which is good because we had to resolve some financial instruments.

Operationally, it was much less and the savings only kicked in right now. So, as Birgit said, let's assume for a moment €250 million cash trend from fixed cost, my personal view is we will be on top of things.

We have now 50% repay rate. And my view is as soon as we see a little bit light at the end of tunnel, it will be not a problem because -- and also cash will be flowing in.

And as Birgit said the €650 million from Hapag-Lloyd are to come in June. That doesn't say liquidity will be lasting and it is obvious there we also look at parallel, of course, planned for the worst, hope for the best.

We are looking at our options. We will see the options.

The options will be more probable than in the first round. That's also clear.

Regarding the first round, the banks could have gone away the KfW was not there. So, I'm positively in a positive mood.

But, of course, it is day-to-day management and liquidity is number one, number two, and number three priority.

Okay. Thanks.

And then just on the second question would you touch on other options to increase liquidity. Could you -- on the sale and leaseback idea, could you please quantify the value of the 100% owned assets the company has that are not encumbered by debt already.

So, what is the quantum of assets that you could raise money against please? And as an alternative to that, are you considering equity as an option rather than just simply adding more debt?

Thank you.

Okay. Yes, I mean Jamie first of all we don't disclose.

But of course we have -- liquidity was -- they are not huge but they are significant. I mean -- but we don't disclose yet what is an option -- what is in our hands.

And the other one the equity, I mean today it does -- it's not -- if possible, it's not the right thing to do. I mean because the equity markets for us at the current share price levels are not efficient and very dilutive.

So -- and also not accessible by the way or in the time we need. That said this is our foresight for next half year I would say.

Of course, we are looking at all options, but if possible we will do something else. And I think there are enough other options which I'm absolutely clear are possible.

Okay. And then finally, you mentioned Hapag-Lloyd.

How certain is that deal to go through? Has the joint venture raised the debt and thus so we need to inject more cash into that JV?

No. Certain, no.

No, equity injection. Certain yes.

It's raised the debt, is it already?

Sorry. You know that -- yes.

Three quarters is fine -- three quarters is fine with liquidity.

And it's raised a debt to fund the Hapag-Lloyd acquisition, has it?

Yes.

Yes.

Okay. Thank you, very much.

Hi, good morning everyone.

Good morning, Jaafar.

Three quick questions please. The first one is just on cash burn since April.

So €2.1 billion liquidity today is about €1 billion lower than at end of March and even if we exclude the debt repayment, it still looks like €700 million of cash over six weeks. Could you maybe just break that down for us between operating cash burn, financing and working capital, just so we can see what gets better from here?

And second question on consumer behavior for the rest of 2020, maybe even 2021. What sort of destination mix and product mix do you think you need to deploy?

And did you assume demand will be very much the same? It's just going to be an uncertainty on volumes, or are you adding remixing different destinations, closing our domestic trips shorter trips et cetera?

And then my last question would be on the long-term capital structure. As you said, you may have enough loans and bridge loans and debt for now.

But I guess there's an entirely separate question which is, what is the long-term sustainable capital structure for a business like TUI? So, what sort of level of leverage?

And what sort of debt versus equity mix would you feel comfortable with over the long term when this is repaired?

Birgit, do you want to start?

Yes. I'll start with the last question.

And of course, currently it's a bit early to talk about that because we do not know when travel resumes. And as I said before, we have various scenarios.

Of course, adding substantial debt is -- and depending on when travel resume because this is a really big factor, when travel resumes and we did that modeling as well. The working capital inflow is really very substantial.

But suppose in a worst-case scenario, you would have to add more debt of course, we need to think of solution for a healthy balance sheet that speaks for itself. So -- and there we will -- and we are looking at a variety of options.

And it's really way too early to talk about that. And also, obviously you need more data points -- when those travel resume is already one of them, but I do understand your question.

Then, on the cash burn so far, so we have a portion of let's say around a €350 million to €400 million of commercial paper of land and the laterals are included and the rest of it as we said taking down fixed costs substantially and also with the customer refunds. There you will start seeing the repayment then it dips towards the rate before also for your models that I just mentioned it.

Same order of magnitude as the fixed cost run rate that is what you can take. So, actually demonstrates that we were really very focused on cash.

And as Fritz also said, it's also in our daily cash flow. So, we really have cash power in place where we discussed everything that comes in and out.

So, I think that's the key to the perspective.

Yes. Part of it -- maybe a couple of remarks on my side, I mean the first one, the repayment of customers and also the payment of hotels both are part of the other let's say same order of magnitude.

And I can tell you, we are sticky on this because you know, it's also very clear. The longer -- we actually keep our cash together, the more likely is that it will be kept in the system.

And also for -- with our hotel partners like with all other partners, we are agreeing payment schemes that we pay a part and everything else will be paid once the business is resuming. And everybody needs to suffer a little bit.

If you -- if the revenue is gone then the revenue is gone. And being part of the TUI family has significant advantages for them because we will restart the business together with them.

So we will take an appropriate contribution from their side in order to be part of our family. In terms of traveling, I think what we are preparing for is very clear, we will -- we are preparing for destinations where we can control safety best.

And that as you know areas where COVID infections are low, areas where we have limited connections to the general public if you like islands are good. We will be very careful with excursions and mingling up customers with locals and so on, but that's also accepted from their side.

So coming back it will be also south of Europe, we need to have and we want to have medical service close by. So, we will not eliminate the risk of infection, but we will mitigate the risk of infection right?

So, nobody can eliminate it, but mitigation. So what do we do if things happen?

And we have concepts in place, but that's of course in Europe easier than in places outside Europe. So it will be Euro Scoot, it will be -- as that causes will be limited in terms of load factor.

And maybe even Germany first, so that we are starting from here and do shorter calls and so on. So it will be a little bit more close by.

One thing Jaafar -- and one thing is also clear, we will be opening hotels in Mexico soon for Mexican and American customers. I mean, that's very clear.

So these hotels will also open and the offers will be there. I just believe that the long-haul flying will be something for the summer.

It's not -- maybe not the right thing. Now it is anyway bigger in winter.

So therefore, we are now pushing a lot for local and for European. Hope that helps.

Thank you, very much guys. I guess my question on the cash burn was more backward looking.

I just meant really, it looks like €1 billion lower liquidity over the last six weeks; €300 million is the debt repayment. Could you maybe give us some color on the other €700 million that you've consumed over six weeks please?

Lower liquidity Birgit will take that.

It's a mix. It's actually a mix of things.

So, I would say on the operational cash flow outlet, let's say it's really in the run rate that we just mentioned. So, that is already one thing.

And then the rest also for customer refunds and also some insurance covers et cetera that we had to cover. So, it's actually fully in line with Italian model.

I mean I think if I understand your question correctly, you think, it isn't really as low as we think going forward based on the experience in the past. I mean first of all, when we started the business in those ends the cost structure was not there in losses.

So it was not 250 million it was €300 million. So the first two weeks you see more.

Then you have the commercial papers which actually had to be returned. Then you see a little bit of reserve cash as well.

Yes so cash collaterals for actually travel but there's fall season effect. So it's not repeating.

And that actually brings us to the amounts. We have now a daily projection of actually what the cash payments are and I can assure you I personally sit in the call every day.

And it's not the first time I manage the company for cash. And when you mention a company for cash you don't care so much about the P&L effect.

We are managing the company for cash and we will be doing that for the next two or three months however longer it takes until we have a full restart in the system.

Okay. Thank you, Friedrich

Good morning, everybody. Thanks for taking my question.

Three questions from me as well please. First on your commentary about shifting to more asset-light how are you particularly thinking about the structure of the airline and provision of aircraft fully context to this – fully outsourced?

Second question is could you give us a breakdown of the percentage of customers whose holidays are canceled? What percentage except credit notes or vouchers what percentage we took and what level of discount you're giving today?

Yes. I shall answer.

Third one?

And then the third one is just can you update us on the status of the compensation from Boeing please.

Okay. With Boeing we are in good negotiation.

No further status but I'm pretty sure I'm really hopeful that it will resolve, yes and not in so far future. And the asset of the airlines not having an airline is not an option.

It needs to be more intelligent. The airline is an essential facility but something is also clear.

We need to rightsize the airline. We have – it's having appropriate size and an appropriate structure and so the corporate asset structure.

We have been thinking about that quite a while. Now as we don't fly it maybe a good opportunity to focus a little bit more on that.

And the last one was 50%. 50% risk return rate of not-not.

You also asked what is the incentive for our voucher. This is different in different countries.

I would say on average 15% maybe 10%, 15%. But also please remember 10%, 15% is not through – I mean at the end of the day in U.K.

we give 15% online discount, right? I mean at the end of the day, don't put discounts, on discounts, on the discounts, right?

So it will be a little bit smarter than that. But we are we have face value I think in the U.K.

15% on average and Germany I think is €100 for full paying member of the travel group so in a family is it parents to children. Anyway, we are playing around a little bit and at the end of the day the more important point that the conversion of the redemption of the voucher is good.

Did you say 50% of people take cash demand cash refunds?

Yes, yes.

Okay. Thanks.

Good morning. Thanks for taking my questions.

Three if I may. Just want to – just reflect on your comments of being a leaner organization going forward and cutting 30% of your cost, what would you expect to be the sort of top line ambitions here?

Would you still be looking to transport 21 million customers, or does that number come down sort of roughly in line with that 30% as well? Second question on your comment around disposals and the disposing of non-profitable entities I mean, I guess there's some probably pretty big chunk of your company like the U.K.

and Germany that can go quite close to that how big do those ambitions of disposals be? What are we talking about there?

And then third question just coming back to cash needs again. Obviously, you've got some support from the German government.

Are there any discussions going on with Spain or Turkey or the U.K. in terms of support that they might be able to provide given the importance of tourism to those countries?

Let me try to focus. I mean, lean organization of course top line will be back I mean maybe not next year but the year thereafter.

If there's a vaccine it will be growing fast. I mean yes talking about more lean and digital execution of executive tasks that we'll doing in the higher quality with less cost.

So when we talk about the savings it is savings on existing revenues. Now that said, maybe not next year it will come back.

Therefore we have a little bit more bigger or little bit of flexibility in the system. But long term, it's just value increase or margin increase if you like.

How big is the ambition for this goal? I mean U.K., where did you see the – of non-performing assets and you thought U.K.

that's interesting. No I think we are talking here France and we are talking here other parts of the business.

We have a Spanish business, we have a nice business in destination experience. We have Harbor Handling business and so on.

I mean, we look at a lot of businesses but not the core business, right? And the German government – I mean we have local schemes to support labor.

These are all local. We have local schemes to support working capital.

These are local – there will be European law but the countries have actually implemented very different things. But on the KfW loan, this excludes as to my understanding third country support.

So even if it was available, it's very clear that these kind of facility – it's a global facility by the way. That was one of the big issues that this is supporting our global activity and not only German activity.

And it was one of the big successes of negotiation initially to achieve that. And you can see with other companies, other airlines that this is quite – can be quite a distraction if you don't achieve that because you have one company and how can you make sure that the money flows in the ways and you cannot hurt as – you cannot plant the money.

The money is the money, right? And at the end of the day, it's difficult when you look at prepayments from German customers to a certain hotel how you want to do that if certain money is only granted to secure certain parts of the business.

So the KfW facility is a facility, which is a global facility, but it excludes the like government scheme in other countries. Does that answer your question or…

Yes. That's clear.

Thank you very much.

Yes, hi. Good morning everybody.

Also good to hear that your safe and healthy. So, a couple of questions.

First of all, on your presentation on page 12 actually where you outlined potential destination that might open up anytime soon. I was just wondering that portfolio that you mentioned there would be already sufficient to make you satisfied for the summer season i.e., if Spain, Mainland does not open up Italy or Turkey, is that still enough for you to have a decent business for this year's summer?

My second question is coming back to KfW a little bit. I mean, obviously and in spite of the fact that you are quite confident on Hapag-Lloyd cruises sale, I'm just trying to get my head around why the amount has not been like €3 billion for example since liquidity still obviously appears to be tight?

What are the prerequisites for a higher amount? And can you get additional money if you find out finally it's probably not enough?

And a question on actually sale and leaseback measures that you just announced. I mean, it's probably kind of a chicken and egg problem, isn't it?

Because otherwise if markets do not open up then actually the sale part of the sale and leaseback is probably a bit difficult in terms of pricing that you might get, so any comments on that? And very lastly you obviously got new shareholders since April, I must say, [indiscernible].

I was just wondering and curious to hear your thoughts if you had already some contact through him? Does he have any ideas strategically, or what's the situation there?

Thank you.

May be you can go first.

Yes. I can go first on the amount.

And I understand your question with the information you have today middle of May then you could think, oh, by additional and not €3 billion instead of €1.8 billion, But you need to think in how it works and maybe you remember where you were in middle of March that was a totally different situation. Nobody would have expected we would sit here today like we are sitting around the state of where Fried has emphasized.

And it was a completely different situation and at that time we were accounting with an assumption of travel as of the beginning of June. And everybody thought even there yes, well that's kind of -- that's where we travel.

So that is in light of that as you need to see this development of the COVID crisis. And I think it's for many companies it's same.

You can only act with the information you have on that specific day because nobody knows. And that's I think would be the response for that.

Yes, yes. Absolutely.

I mean that's true. I remember the Sunday where we said I mean Adrian it's also like you -- where you sit down say, okay, guys we need to make sure that we get it right?

Okay, fine. We -- it will have liquidity for the next three days.

Okay. And all that's interesting.

So what can we actually do? And my point is shooting €1.8 billion was €1.8 billion, we could have shot €2.1 billion.

I mean, we could have done whatever. At that point in time it seemed to be €1.8 billion.

We went for the door two weeks later. We were the first one approved government-backed zone and also don't underestimate the €1.8 billion does actually two things.

The first thing it does it locks in the banks -- facility of banks are at the table everything is good. The banks are there KfW is there so that's good.

And also I mean in case we would need more, I think now things are at the table. So I mean nobody knows.

It only comes back 30% in November and -- it may lose or whatever we will be taking care of it. I think the chance right now to secure additional money are better than securing at the Sunday 16th of March.

And I have been in the room Birgit has been in the room many of the team members who have been in the room interesting days, I tell you. So it's -- hindsight is easy and we could have satisfied people have sat knowing that booked Lufthansa need nine maybe new to satisfy.

So anyway, so water under the bridge destinations for summer. I would say, if you open Miyako Canary, if you open Greece, let's say, these three factors is smaller.

But if you open the three, I'm happy, okay. So we are not managing the company for P&L.

We are managing the company for cash remember. If this comes in, cash is not a problem.

Now if it doesn't come in, then we will have discussions, but if it comes in, cash is not a problem, P&L maybe more difficult. But that's something then we rebook customers, we have enough volume to fill these destinations.

And I think customers have enough flexibility just to go on vacation when it's safe. So it's good.

It maybe even better to open half of the destinations and fill everything that have the full destination everything is still stopped. So we take whatever it is, but as soon as we can really start selling summer this year, the liquidity issue will be less of a problem because then immediately you have a flowing in working capital.

And that's I think the most important thing. We take care about cost and P&L when it's appropriate, but now we take about the cash and that to realize important that it is opened.

Seven digits like, of course, I mean, today seven digit figures mounted right, because you have distressed assets everywhere. So, but we are preparing everything in order to be and as soon as we have a little bit air under the wings off we go.

And then we have Aktie [ph], so much as a good friend and long lasting business partner. I know him and his family and he is trusting in the tourism business he's trusting in TUI and he knows us very, very well and the situation very, very well of all kind of aspects for a very long time.

He's one of the longest lasting business partner that he invested 5%, it is maybe not a bad sign. And therefore also I think also for KfW and for other people who have actually loaned if the equity side is not -- if the equity side is also moving usually it's also good for the bond side and for the bank side these loans.

Perfect. Thanks for your words.

Thank you.

Hi. Thank you very much for taking my question.

Firstly on liquidity overall, you said at the summer, what's the comfortable level of liquidity for the business? On build out you did more or less?

Secondly, on the data that you are disclosing, it seems that net debt is going to move to somewhere around €4 billion or it is above €4 billion, but there is the month of June when you're going to restart operations. On the midterm, what's an acceptable level of financial leverage, so that net debt to EBITDA at what level do you think is sustainable than net debt?

And lastly, looking at the recovery overall. I think -- could you tell us a bit more, what's the cash breakeven occupancy for your hotels or for your cruises, or give us a bit of color how we should think about as far as sales and the recovery?

And equally from the working capital point, what happens with all the people that they've already paid the advance payment you referred to us at the beginning, they will be the ones that they will travel. So, effectively, how do you think about the lack of cash from that -- lack of cash coming in, new cash coming in?

Thanks very much.

It's difficult to understand everything.

Yes, it was a very hard. There was a lot of background noise.

But on the additional debt, because that's also a question that I believe you asked. So as I said earlier, because I already talked about that, it depends on the travel opening scenario of course.

And as we indicated, we have a run rate cash out that is for fixed cost for customer refunds, et cetera, and some other small items and we indicated that also in the presentation. And this will lead naturally to an increased debt position, as Fritz already said.

But it depends on the opening of travel. And, of course, then we are so actively managing that and we have a variety of options.

And then, we will address it, in order to make sure that we have a healthy balance sheet going forward. That's about what I -- I mean, that's what I can say about it.

Yes. And the other questions, I would like to answer, but I didn't understand them.

I mean do we have understand --

Apologies about the background noise. But the question was, what's a comfortable liquidity level at the end of the summer for a business like TUI that was...

Yes, yes. Okay.

Clear. No, I think the interesting thing is, usually we have the summer, the positive swing and then winter negative.

When your summer is more or less zero, even though the winter is very positive, right? So as soon as the business starts, even if it doesn't start in summer, it starts in winter, yes, you will have immediately cash inflow.

So the liquidity is really only a problem until you have business, then actually it goes. Now, on -- let me talk a little bit about that.

Yes. And I think that -- I'm not a financial guy.

I'm just the CEO. But, how I see it, of course, we have no additional debt.

Yes. But we also have enforced two years of non-dividends, right?

That's very clear. So calculating €300 million, €350 million or whatever per year is €700 million.

If you then say that Marella wanted to put any way into -- if possible, into the Hapag-Lloyd, into TUI Cruises, that will delever. Yes.

When you think about possible rightsizing, assume for a moment, just assume for a moment, we had 15 aeroplanes left. Yes.

It would immediately not only save cost, also delever the company significantly, right? I mean, therefore, I would not be too worried.

It's not that we have done less business. But, we will have oversupply of aeroplanes everywhere, because definitely business travel will not happen.

So I would -- we will have excess to supply even if we rightsize the airline. So my personal view is, if we look at our assets, if we don't invest into hotels like we have in the past, because there's enough volume offer anyway, my view is our business is big enough to generate enough cash.

I mean, we just did a lot of investment in the last year because the business was growing so fast that investment was a good policy. But I think for the next two years or three years, we will not invest into hotels, we will invest into IT.

We will not invest into hotels -- we will not invest into ships. And we will, if possible, do as little as possible with aeroplanes.

So you will see much, much, much less investment. You will see no dividends.

You will see adjustment of capital, restructuring of our balance sheet. I'm absolutely -- as I said, I'm not a CFO, but from the CEO it doesn't sound hard.

And what is cash from operations was --

That would be -- let's say around 35% to 40% of the total cash fixed cost burn rate that we indicated. I would say, currently.

That's what we currently see.

Okay. Thank you very much.

Yes. Thanks for having my question.

Actually, I have a couple of questions and mostly basically of all these scenarios, maybe, you had in mind when you asked for the state guarantee. I mean, now we're a month, two months later and I'm just wondering, where do you see yourself in these scenarios you anticipated?

We know in the worst-case scenario for you and the €1.8 billion was basically still -- yes, kind of like taking this into account, or are we now in a situation, which it seems to be, yes, that the business is worse off than anticipated? And then it would be great actually if you could also walk us through maybe how you see working capital in a ramp-up now?

If, for example, if travel resumes then in June, July, how this plays out for the next maybe two or three months? And then, how you see then the winter season looking like?

Okay. So the first question was about liquidity and versus the initial case that we may have with the resumption in June.

There we can clearly state that our liquidity position is better than what we originally planned. And that is -- I mean that is good news.

As to the scenarios, as you can imagine, it's difficult for me to disclose all the scenarios that we do not know, when travel resumes, but we have various cases, of course, which would be, not very sensible, if we wouldn't. So we do have scenarios, but I cannot really, really go into the details of that.

And then your last question was on the working capital inflow. And that is, of course, because it's -- you will see also a very large one-time effect, because, obviously currently we don't have any revenues.

So then – and your payables are let's say 30 to 60 days on average 60 is what we target for. So there you will see a onetime effect.

And then of course, we also have the seasonal pattern as you have seen from that illustrative graph that you can even add to that. So that's why the working capital inflow once travel resumes is pretty significant.

Okay. And then if I may a follow-up actually on the Hapag-Lloyd acquisition.

So just wondering the proceeds you expected are roughly €650 million no?

Sure.

And then on page 21, you actually have a line item that is saying that the disposal group here of Hapag-Lloyd Cruises there is a net debt position of €329 million is this correct?

So this is the leveraging of the company? Yes sure.

Yes...

That is correct, yes.

So, then the EV would be then basically this plus the €650 million and the – my question also is actually would then be the – is there any cash in the Hapag-Lloyd group? Where you kind of have to fall maybe on the current liquidity?

Yeah, maybe you can answer Wolfgang.

The €600 million is the cash inflow clearly debt leaves the group and this is a net position. So it has to add this on top plus the equity we give in.

And if you remember, we've been stating an enterprise way of 1 to 1.2. And if you deduct that you come to the number.

Okay. Understood.

Brilliant. And then my last one actually.

Could you provide maybe a granular overview of the capital structure – sorry, at the moment maybe by line item or so? How much is on the helium and the commercial or other facilities?

And how much basically of this is vehicles – so basically a split of capital structure and liquidity?

Yeah, we will follow-up on that with you. But that's fine we'll do that immediately.

Brilliant. Thank you.

Thank you very much.

Hi. Good morning.

I think that's me Mark Irvine-Fortescue from Stifel. Just two hopefully, one left please.

One on third-party hotels and one on the MAX aircraft. Just on the hotel with the force majeure contract what does that mean for the relationship with those partners?

Have they generally accepted the pain needs to be shared? Does it affect the ability for you to secure inventory with those partners for next season till summer 2021?

Just a little bit about the force majeure that would be helpful. And then the second question is just on the MAX aircraft, in light of your comments about becoming more asset-light faster.

How much flexibility is there on the downside with that framework agreement? Can you get out of it closely now that the world looks so different?

Maybe just an update on the flexibility and on that contract. Thank you.

Okay. MAX aircraft first.

The Boeing we're in discussions, as you know and in good faith. I mean, and they'll resolve it I'm pretty sure.

The motivations on both sides are high. But we have less order book than we had aircraft of the fleet.

So we have flexibility. So we can shrink the fleet, but we don't need to touch the order book.

So I think we have enough flexibility. We need – we will right-size the airlines but the order book might not be or will not be potentially affected.

That's our today's position. Second point hotels.

Yeah, we have payments, which we don't give to hotels. Yes that's true.

And we have payments which we give to hotels. And the negotiation is very clear.

We are an industry without revenue tough luck. You have been benefiting.

Everybody has been benefiting from the great industry and the vertical integration, and so on and so on and now we – everybody has to contribute. But that said, it's a strong bond and we will be able to negotiate mutual beneficial deals.

And these mutual beneficial deals means we pay less now and we actually therefore do commitments for future businesses and work together with the parties. And when we start-up they are considered specifically as core and with some of our partners, we still have the prepayments and we will actually make sure that the prepayments will be up and will be served first and the volume will be going there.

I mean, we are in this industry with most of these hotel partners for tens of years if not 50 years. It is now one of the most unprecedented and maybe the most unprecedented crisis.

And as we are in problems, when we don't have revenues our travel agencies are in problems. So the downstream business the upstream business with our hotels are in problems.

It's not like happy birthday party everybody can have wishes. We are actually into it together.

Of course, we will make sure that our value chain is intact. So we will make sure that the hotels are not disappearing.

So we are interested in a big offer. But at the same time, our first priority needs to be that the cash doesn't flow out just meaningless to hotels or meaningless to customers.

This is each and every euro each and every day and it must be a good reason to pay. And the good reason is actually a past reason, because we have done business, but it's also a future reason, because we have a good agreement or we have a strategic alignment and so on and so on.

And I think here we are just doing a professional job. And by the way, I don't think very different from others as well I mean, so I have a feeling that we are getting along quite well.

That's helpful. Thank you.

Good morning. Thank you for taking my questions.

Just two quick ones. There's a little bit tension in the travel industry on customer deposits and refund.

Do you think this could ultimately in the future we could be looking at the treatment of customer deposits by travel companies changing in some way perhaps, excluding this from working capital? And then my second one is, is hypothetically the travel lockdown does continue through the summer.

Is the communication line with KfW still open that you could turn to that as your primary solution and would you as your primary solution? Thank you.

Okay. Okay.

Probably as one of the options, that's clear, but not -- I mean there will be other options as well. And we need to -- we don't have the luxury not to look at options.

So we will look at options. As I said, capital increases are maybe not the most efficient thing to do.

But anyway, we will look at different options. If you ring fenced customer deposits it would more or less destroy the industry.

I mean, the nature of the benefit of the industry is its positive working capital. And the positive working capital has been the engine of that industry.

Because think about it, customers give money, we invest at -- to -- with the hotels to invest into offers. The offers will generate offers, which in turn will generate demand, at lower prices and an oversupply.

And therefore, it's a self-fuelling engine. And as long as the industry grows, it's beautiful, because it's more and more fresh money.

And as we believe the industry will be growing fast, it has been growing -- outgrowing GDP in the last 15 years. It is a beautiful model.

And if you break it, if you ring-fence it, right? So, therefore, it's in nobody's interest to ring-fence customer deposits.

What we do, we are securing customer deposits. And that's something which is also very special, because there is no other consumer business in the world which is actually secured as a prepayment of a customer, yeah, in terms of the certainty customers have that they can get.

And demand their money back. So I think the nature of the industry is actually the nature of positive working capital.

That's very clear.

Good morning guys. Just one last from me, on capacity plan, your 35%, first, it would be interesting to know, what you've done to capacity, since we last heard from you and then, within the current program that you have….

I think we lost him. No.

What is it? Sorry, Alex I think, I didn't get you.

I think you said the capacity plan was 35% booked. That's understood.

Okay, maybe, he's gone because now we lost him. I think or are we lost?

Operator, can you say if we are lost or if Alex is lost?

Okay.

Hi. Sorry.

I'm not sure, Friedrich if you heard me the first time. Your 35% booked now; could you tell us what your capacity plan has done, since you last spoke to us?

And then, within your capacity plan, how much of it is your own capacity versus capacity that could be taken out with force majeure clauses, that isn't sort of yours, as it were? Thank you very much.

The 35% was largely committed. That's clear.

The wholesale model is largely committed. So of course, we try now and we will get out of capacity as a force majeure and -- but also we will be focusing to serve our capacity or the capacity instead of these first.

But for -- so the utmost important now, because it's again a P&L question, right? The utmost important is liquidity.

So, liquidity doesn't matter. I think in liquidity terms, we would be happy to wherever it opens.

And let's assume for a moment we were average booked in all countries and in all destinations. If now Majorca opened first, we would of course offer to everybody who is not Marjorca to go to Majorca, right?

So, we will actually make sure that we fill as much as possible. We have everything which is possible.

I just want to maybe -- thank you very much for all your questions and I think we need to close. I want to close the meeting with a very positive message I got from the wires.

Obviously, the Minister for Internal in Germany has said, the latest in 15th of June, he will open all borders. So, that's it.

I don't know -- hopefully it's true or not. But I see that as a, DP a ticker I have them all the time, on my phone.

So, if it's meaningful and if it's true and if it's not something which is fake news at the end of the day, that would be a good message as part of our half year results. Thank you very much for being tuned in.

As I said, we take care of liquidity. We look that we don't have cash outflows.

We look at that we get enough liquidity for actually the time that we don't have business. As soon as we have business, liquidity we'll immediately -- focus will go from liquidity to P&L.

And that means, limiting the damage of that. And that's the question of how can we do profitable business.

How can we actually make sure that the profits also in turn become cash again, in order to limit the debt? And we will focus the business save the cost make it's more lean and more digital.

And the company will be a little bit different. And as Birgit said, we will be very, very, very disciplined on investments, because not only we are disciplined, because it's also not a good thing to do for the time when you have an oversupply.

So, it's a self-fulfilling prophecy, if you like as well. Thank you very much for being in the call.

And talk to you soon.