TUI AG

Thank you very much, and good morning, everybody. And welcome to our Q3 Results Announcement.

I will be opening the floor and I will be followed by Sebastian and then we will be taking questions. So, let me turn to Page 4, and summarize the major developments.

I think the first good news is that we added 1.5 million summer bookings since H1 update. So in the last three months net earnings 1.5 and we have right now 4.2 summer bookings in the system.

The second good news is that you saw a rebound of working capital €320 million free cash flow for financing. So it’s the first quarter since the pandemic that we don’t – didn’t burn cash, but that we had a positive cash flow.

And then you look at our liquidity position and then our headroom increased to €3.1 billion and if you recall our headroom, just three months ago was €1.7. Sebastian will talk about it later, but we added €700 million customer, mainly customer prepayments €200 million via the upsizing of our convertible bonds, and €540 million via our selling of the real estate portfolio joint venture with RIU 19 real estate, €541 million.

So altogether €1.4. So, our liquidity position is quite strong and its building as we speak.

But at the same time and you will see that our free cash flow is now mainly built on prepayments. And you will see that in a later slide.

It has not yet based – mainly based on revenues, because we are talking Q3. So off the 4.2 million, only less than 900,000 customers have been on the vacation in Q3, so the revenues after the remodel of the startup costs are high, so the route for our free cash flow is prepayment as we speak in Q3.

One major point, last quarter was actually the extension of the RCF maturity by 24 months. So the maturity right now is 2024.

So, we have a good cash position. We’ve got all 24 – all the 20 banks plus WSF to agree to our prolongation of our of our RCF maturity.

So, we have now some time to think a little bit better in more detail about the balance sheet and to get to a lower debt profile. But I think it’s important that we have more certainty we have the liquidity, business is building.

Two other things I want to mention in the summary. Global realignment, so the saving program is on track.

We promised more than €500 million savings, more than half have been delivered a celebration of different strategy maybe the most important or one of the most impressive things is now two thirds of our customers are using, active users of our app. In line is that, by the way is that the get weak over weak over weak already record highs for example, selling or excursion through the app.

Even with low customers and destinations yet, we see record levels of sales of excursions. Now let’s go – let’s turn to Page 6, some major drivers 283 hotels open in Q3.

Of course, now more and we have 354 so more than 80% open in Q3. And also occupancy levels, very good to see you in my later slides.

At the same time in Q3 it was only 876 of, course, much better than 159, but 876,000 pax. So of the 4.2 million, much to come, so this is actually the missing revenue when I said you know the revenue in Q4 will be of course, much better and then the picture will be not so much influenced by the prepayment, but more by the revenue that also has resulting effects in profitability and as you can imagine.

We have eight of our 15 ships operating. And excursions, of course, have increased assets as well.

Now, on digitalization Page number 17, bookings have been coming in much more online in Q3. And Germany being usually the least online is even Germany is now up 17 percentage points to 39.

It has been 22. Before so almost a doubling of online sales in Germany with respective positive effects in the UK, we are now talking about three quarters of sales being online, and Belgium, Netherlands alike.

Now in the thing I mentioned was 68% to plus 21 percentage points, package departure penetration of our app. And you know that actually you have your document and everything you get the cross-selling one-to-one on express activity, each and every customer, and we see the large effects not only in customer care, but also in the satisfaction with our app.

And the ratings of our app very, very high, but also in terms of cost savings. Now, vaccination.

Next Vaccination progress has been significantly – and you see the vaccination rates and source markets you see there in destinations. So there has been going up.

Still, incidence rates are in some countries higher. In some countries, they are lower in the UK, for example, they are now here on that charge 274.

That has been 400, by the way. And the interesting thing here is actually the hospitalization and here doesn’t – it doesn’t come as a surprise.

But it’s important to note that the hospitalization rates are very low. In the UK, just one fifth of peak hospitalization in January, right?

So you don’t have overloads in the health system and therefore, we expect that we will have no restrictions on vaccinated in some countries is more restrictions for people who are not vaccinated but who didn’t have to vaccinate – or shouldn’t vaccinate our children. So, we expect a standard outcome for Q4.

So a lot of the bookings not turning into revenue, that is the message here, which I want to make. Now that said, still there are differences.

And this is actually the next the next page where you will see the government messaging and restrictions. And here you will see below the ticks and that that actually you more or less don’t have any procedure, the yellow ticks that you have PCR test and then, red ticks and red crosses that the even more harsh restrictions until the red cross is normal progression.

But the major difference, which actually is driving right now, net bookings and to some extent also cost bookings is the yellow ticks in the UK, more or less everybody treats vaccinated as you know, without any restriction, but the UK there you need to have PCR tests on return. Sometimes, even two.

And that is, of course, additional efforts. But this is also additional cost that actually has some elasticity.

And when you look in the next slide, you’ll see actually the net bookings almost everywhere we see – we see everywhere we see very positive net bookings or catch-up effects. But in the UK, in the UK, we have been losing net.

We have been losing customers until the last week. In the last week, you’ll see first days actually now positive, and the trajectory is quite good.

But at least here you didn’t see the very positive net bookings, like you had in all other countries. And that actually led us to the decision that we thought in on risk capacity, they would actually do some are 60 instead of 75.

And you know that is the explanation. Now, it will come up in the UK and it has come up, but it’s needs to turn positive over the next over weeks.

Maybe then you look at capacity then it’s even more clear what I mean. Capacity, you’ll see here on the left side April, May and June and in June, for example, we saw a capacity of around about 350,000.

Yes? In July, you already saw a capacity of 700,000, right?

So, the capacity is building nicely. And when you look, for example, right now of UK, it has been quadrupling from June, but it is still only half the level of what it is in Germany, and usually it should be let’s say 38% above Germany, right.

So, that’s actually what I mean, the dynamic is there it is getting there, but it’s getting there later than we originally expected. And that’s the reason why we actually are no more targeting 60% of summer than 75% of the summer 2019.

Now, load factors anyhow are very good, in rugged, in very stable environments between 83% and 89%. On the right side, 71% UK is actually related to this whole bit up from June to July, when you have this strong buildup of program, you have this intellect challenge, you know, you’ll fly much more customers into destination than you get back.

And that actually makes it 71%. Otherwise, it would be also higher than 80%.

But I think interesting year is still 71% it’s not a bad load factor when you’re compared to competitors. So, we are internalizing demand.

We are getting good load factors into aircraft. And therefore, I think you’ll see the results in revenues and EBIT also in Q4.

And also, internalization is working well in the hotels, I mean, even with this, this July pattern, which is our around 45%, let’s say of program, we achieve in all our destinations, more than average index average occupancy in our hotels. And I could have – I did Germany and Greece and Turkey and I could have done in Spain, I mean, Majorca or on the Canaries are equally booked.

And you even have scarcity of supply. Now the next page actually shows the numbers.

Our net bookings up from 2.6 million for summer 21 million to 4.2 million. Summer next year is 120% higher than we would expect and capacity planning as I said, we reduced slightly from 75% to 60% cents.

Summer 2022 by the way, this is not fixed. We actually pushed out here our dates to really fix the capacity.

So something in February and March, and saw that we have enough time to react. Maybe one last point before, I hand over to Sebastian, our positioning on vaccination.

I think the vaccinations levels are very good. I think there’s sentiment building in the EU and outside in UK that whoever’s vaccinated should have the flu, get the freedom rights back and travel.

So, I think this is very good. And for us it is the cornerstone for Q4 and future this year and future seasons to believe that the program will be much more standard than the last year that we had on and off developments based on incidents.

Prior to the contract, we believe incidence is less and less important than hospitalization is important. Now, there are two camps in different countries.

The one camp says that the non-vaccinated if they don’t want to protect themselves that the society shouldn’t protect them. But it is their own rights to determine.

And there are others to say we should push them to vaccinate themselves. I think good arguments from both sides.

I believe the only thing we are lobbying for is of course that people particularly chosen, the recommendation is not to vaccinate, they should not suffer any restrictions, and like, for example, on the UK is now part of the family and travel there shouldn’t be traveling without quarantine requirements. And I think that’s important, with that I would like stop for a moment and would like to hand it over to Sebastian.

Sebastian?

Many thanks, Fritz, and a very warm welcome also from my side. Let me guide you on the following pages through the Q3 results of the financial year 2021.

I would like to start with our achievements during the last quarter. Post the completion of the third support package in Q2, including a €500 million capital increase, we managed to successfully further enhance our financing structure and liquidity position with the following instruments.

We use the favorable capital markets environment to issue convertible bonds in the total volume of €590 million. This includes the upsizing of our bonds with a tap issue of around €190 million in June.

Post balance sheet date, we successfully agreed with our 19 banks and KFW the prolongation of our maturity profile with the extension of our €4.7 billion RCF. We achieved an extension by 24 months, the new maturity now being July 2024.

Based on our current rating, the margin will be 4.5% per annum. As you will all remember part of our state support package was the agreement of covenant waivers for September 2020 and March 2021.

Reflecting the continued disruption and limitation on our operations, as a result of travel restriction, in May, we again agreed with our banks and KFW A further covenant testing waiver until the end of March 2022. So, covenant testing will resume in September 2022, with higher ratio limits set for testing in September 2022 and March 2023.

For these dates, net leverage was agreed at 4.5 multiple and interest cover at 2.25. Normalized limits have been agreed to resume from September 2023.

Here the ratios are for net leverage 3 and for interest cover 2.5. And finally, we made further progress with our asset-right strategy by disposing of a real estate portfolio of 21 properties to the RIU family.

The transaction with an equity value of around €1.5 billion implies an equity value EBITDA multiple of close to 12, closed earlier than expected on 30th of July, and we received cash proceeds of €541 million, there is an additional earn out of €130 million payable upon RIU hotel delivering its full year 2022 and full year 2023 operating budget. And we furthermore expect a considerable booking of around €200 million, which will benefit our adjustment line in the P&L in the fourth quarter.

Strategically allow me to mention once again, that the 21 hotels will still be operated under our RIUSA II, and, the and thus remain exclusively available to our customers. Only the ownership structure of the 21 RIU real properties is changing from owned and RIU Hoteles to a managed structure under RIU II all in all we have achieved important steps regarding our refinancing this quarter.

And operationally, we are very pleased that with the rebound of customer deposits, and the inflow in working capital, Q3 is the first quarter to deliver a positive cash flow since the start of the pandemic, reflecting the strong pent up demand for travel. So with the current liquidity position of €3.1 billion, we have fully financed through the winter.

And let me confirm again that we will work hard to return to solid and healthy balance sheet and the gross leverage of less than €3 billion. Let me now come to our Q3 results.

The ongoing effects of the coronavirus crisis are still putting considerable pressure on our business performance overall. However, clear signs of recovery started to emerge in the third quarter, and we expect to see further improvements in the fourth quarter.

Before I start to take you through the detailed analysis of our income statement, cash flow and balance sheet where I will focus on the quarter – on quarter development, meaning Q2 versus the ramp up quarter Q3 allow me a quick view on the year-on-year comparison. Compared to last year’s Q3, where our operations were in standstill, we saw a significant improvement on performance to benefited from market recovery with increasing customer numbers, relaxation of travel restriction, international air traffic and the pent-up demand drove both demand and activity.

This leads to an increase in revenue year-on-year by more than eight times to €650 million of EBITDA and EBIT improved significantly by 28% and 43% respectively. Now, I will continue with the income statement and our Q3 versus Q2 commentary.

As already mentioned Q3 group revenue of €650 million reflects the restart of traveling across our markets and reopening of destinations ahead of the key some appeared. This is an increase of €400 million compared to Q2, and was driven by 876,000 markets and airline passengers departing in the quarter compared to 159,000 in Q2.

But after this mixed start into the summer season, you’re constantly changing governmental advice. We recently see an improvement booking trend for the remainder of the season.

Q3 underlying EBIT loss of minus €670 million demonstrated our continued cost discipline on fixed costs, but also higher operational ramped up costs, ahead of peak summer period, with a limited opportunity to recover these due to the change in restrictions. This was particularly true for the UK.

And I will give you some more color on the following chart. But let me continue first with my comments on the income statement.

Adjustments this quarter were predominantly related to the group realignment program, overall for full year 2021 we now assume a positive adjustment range of between plus €50 million and plus €70 million, taking the expected real estate portfolio booking for around €200 million in Q4 into account. Lower Q3 net interest cost versus Q2 reflect the non repeat of the bond modification costs in Q2, and lower RCF drawings in the period.

For full year 2021 we can reconfirm expected net interest charges of between €400 million to €450. The increase in the tax expense was mainly attributable to a future tax rate increase from 19% to 25% in the United Kingdom, which affects the valuation of deferred tax balances.

However, this has no effect on cash taxes. As such with the following chart, I would like to give some more color on the ramp up cost, which occurred in the third – in the quarter to prepare for the peak summer period, as well as in context of limited opportunities to cover these due to constant and late changes in governmental advice.

The first bucket of ramp costs is airline related and reflects the start-up of our airlines from minimum operations to the peak season. This seasonal staff coming to the business as well as necessary engineering, maintenance and additional airport flying and landing parking changes.

And of course, when you start the operation, you have a lower factor – load factor and especially the return flight you hardly have any customers. The second bucket is in the amount of €50 million refers to the impact of changing restrictions.

And example which you probably all remember is the change of governmental advice in the UK regarding Portugal. The third bucket is the distribution cost which includes expenses for online distribution and also for the reopening of ours stores.

As Fred said, we have an increase of our online booking share, and the cost of sale for online bookings has – had to be recognized immediately as costs. The fourth bucket consists of cost for getting our hotels ready for operations ahead the summer season.

The following bucket is related to our cruise segment in connection with additional ships returning to the fleet during the quarter. And last but not least, the sixth bucket is TUI Musement facing €5 million in ramp-up costs, as we prepared our cost base for receiving our summer customers.

So overall, in total €125 million. This brings me to our underlying EBITDA bridge as in the prior quarters we contingent to focus on cost discipline, as we quite successfully do since the beginning of the corona crisis.

And we’re also trying to capture margins where possible. Nevertheless, we achieved a lower result in Q3compared to Q2 as a result of permanent changing travel advice during the period of ramp up of operations.

And I explained the cost in detail on my previous slide. When we look on the performance of the segment, we saw improved contribution from hotels due to the increase in levels of operations.

Similarly, for Continental Europe, we saw increased passenger numbers, which also led to an improvement of results. The remaining businesses however, were impacted by operational ramp up costs, which could not be recovered in an environment of constantly changing travel advice restrictions.

Looking now, at the development of the single segments, I will start with hotels and resorts. Within hotels and resorts 283 hotels, almost 80% of group portfolio will open at the end of the third quarter across destinations such as Balearics, Canaries, North Africa, Greek Islands, Mexico, Turkey and Cuba.

This delivered – these hotels delivered an average occupancy rate of 48% and average revenue per bed of €70 years. Underlying EBIT loss improved by €28 million versus prior quarter as a result.

During Q3, TUI Cruises it’s increased its operation from May, from three ships to four, offering itineraries to the Canaries, Spanish Coast Guard, Greek islands and Baltic Sea. Average daily rate of the operator fleet was under €20 reflecting shorter average duration of itineraries offered.

Occupancy of the operator fleet was 41%. For Hapag-Lloyd Cruises, in addition to Europa 2, which was already in operation, expedition class ship Hanseatic nature and Hanseatic inspiration resumed sailings, with short cruises from Hamburg and to the Baltic Sea.

Average daily rate of the operator fleet was €443, reflecting the pricing of shorter and more local itineraries. Occupancy of the operator fleet was 42%.

Our UK cruise brand, Marella, resumed sailing with Explorer, with the ship Explorer, at the end of June, which with a domestic program from Southampton, its first since the government imposed suspension of cruise operations in March 2020. Average daily rate and occupancy of the operator fleet was £127 and £48 respectively with occupancy capped at 50% as required by UK government restrictions.

The segment underlying EBIT loss declined by €26 million versus prior quarter reflecting the ramp up operations in preparing our fleet and returning our crew on board ahead of our peak summer period. On TUI Musement, as Fritz already mentioned, TUI Musement sold 212,000 excursions and activities in the quarter, reflecting the increased departures and reopening of destinations.

Online says participation were 39%, underlying EBIT loss declined by €5 million including ramp up cost as we prepare staff to return to destinations ahead of peak summer period. Our Markets & Airlines business restarted operations in April firstly from our German source markets.

In Q3, we took 876,000 customers on their summer holidays, mostly from our Central and Western markets. The Greek Islands, the Balearics and Canaries were the most popular destinations during the quarter.

Underlying loss increased by €69 million versus prior quarter reflecting the ramp up costs of operations, as we prepared for airline fleet retained crew and increase the number of retail staff and stores ahead of peak summer period. A quick look at the different source markets.

In northern region, 50,000 customers departed in third quarter reflecting the limited list destination – screen list destinations made available by the UK government. Underlying loss increased by €94 million versus prior quarter as a result of ramp up cost in preparation for peak, quarter four and two related costs from stop/start nature of permitting destinations under UK travel restrictions.

In Central Region 510,000 customers departed in the third quarter, reflecting the more consistent travel advice given by our Central Region governments enabling customers to depart with more certainty to destinations such as Greece, the Balearics, Canaries, and Turkey. Underlying loss improved by €18 million versus prior quarter, reflecting the contribution from more substantial departures and operations.

In Western Region 317,000 customers department in the period reflecting the reopening of destinations partway through the quarter. Underlying loss improved by €7 million versus prior quarter as a result.

All other segments and other one-off costs contributed with €13 million to the development of the quarter, an improvement in other segments reflecting ongoing cost saving measures across head office and other entities as part of our global realignment program. Net one-offs quarter-on-quarter were €5 million mainly comprising the impact from net hedging ineffectiveness and impairments.

Moving over to our cash flow Slide on – of Q3, we are very pleased to generated a positive free cash flow for the first time since the start of the pandemic. This positive development was driven as expected by the inflow of working capital.

The Q3 inflow of around €790 million is mainly reflecting the increase in customers’ deposits for summer 2021 and underlines the high level of short term bookings we are currently seeing. The other main driver was the increase in supplier payables from the operational ramp up.

Our assumption for full year 2021 is that we expect the working capital position to further recover during Q4 due to the late summer business. Coming to various other cash items, the Q3 improvement was driven by lower non-cash effect of a positive P&L impact from derivatives compared to Q2 as well as some reduced cash interest due to the lower RCF drawings and the repayment of the senior notes.

In line with our initiatives to support liquidity, net investment is an inflow of €14 million. While we managed to reduce Q3 CapEx further proceeds from divestments were lower in Q2.

The inflow comprises net positive pre-delivery payments, and the sale of two smaller hotel assets, the Castelfalfi and the Lena Mary. As already mentioned, we have successfully executed our asset rights strategy and we are pleased to update our assumptions for the development of net investments for financial year 2021.

Including the disposal proceeds for RIU properties, we now expect overall net investments to show an inflow of €600 million to €650 million for full year 2021. That brings me to a positive free cash flow €320 million and the total cash flow post financing activities of €120 million.

Overall total cash flow is in line with Q2 as the cash flow from financing is reflecting our reduction in RCF price. We managed to improve our cash and available facilities position per 9th of August to €3.1 billion, which is an increase of €1.4 billion compared to our Q4 – Q2 [ph] update.

This position includes the proceeds from the convertible bond tab as well as from the RIU disposal. But even more importantly, it demonstrates that we were able to generate positive €700 million in cash from our operations in the month of May, June, July, and the early days of August.

As mentioned several times already. This year, we are managing the business with a strong focus on cash.

Coming to the left hand side of the chart, with many of our key Continental European markets reopening for travel and confirmation of guarantee an exemption and lesser restriction for those fully vaccinated. We have seen an increase in customers confident and subsequently new bookings momentum from Central and Western Regional markets.

Q3 as a result, so our first cash breakeven for quarter since the start of the pandemic, delivering an average positive €40 million of cash per month in the quarter. Net fixed cost of €225 million per month were better than our assumption range of €250 million to €300 million per month due to our strict cash discipline.

Our assumption for Q3 full year 2021 is for short-term bookings to drive working capital and revenue, giving the preventing uncertainty of fixed capacity over Q4 as a result, we target towards net cash neutral, excluding special items such as RIU real estate disposal proceeds. To conclude, I would like to reiterate that we are fully financed through the winter with €3.1 billion available liquidity and I also wanted to remind here that we are also expected to see a lower liquidity swing this winter due to lower volumes this summer compares to a normal year.

This brings me to my next slide the balance sheet and the movement in net debt. The net financial position improved by €460 million quarter-on-quarter and stood at €6.4 billion at 30 of June 2021.

The improvement in net predominantly reflects the positive cash flow driven by the positive working capital development and the increase in equity by drawing the Silent Participation II info. For more details please find also on this chart our comments regarding drawings of the Silent Participation as well as under the RCF as at 30 of June, and post balance sheet date on 10th of August.

As last time, on the right hand side of the slide, we have included for our convenience – for your convenience, the split of our financial liabilities with a full detail on lease liabilities and liabilities to banks. As a reminder, and as our commitment, I would like to finalize my section again with the ongoing priorities I have on my agenda as the CFO of TUI: manage liquidity, driving operating effectiveness and optimize financing.

We are and remain committed to return to a gross leverage ratio of less than three times and the whole of TUI is working hard on achieving this target. We have made very good progress over the quarter.

And I want to use the opportunity here to once thank you to all the teams who go through these challenging times with us. The Corona pandemic has been the biggest challenge for the industry and our company.

But as a team, we exit quickly and manage the situation taking important and necessary actions at the right time. We can see the light at the end of the tunnel and we are preparing TUI to be even stronger and more resilient in the future.

With this, let me hand over to Fritz again for his closing remarks.

Thank you, Sebastian. So before you get to questions, I think three things are worth mentioning.

First of all, the pandemic has been pushing the past button for our industry, but there’s no reason to assume that travel is not a mega trend in the future. Tourism has been growing about GDP in the last 15 years, and we’ll be calling about GDP we have aging populations, more time more money more healthy.

I think one major contribution the other one experience new luxury it’s more important what people want to experience and what they own and tourism as a force for good in destinations. I mean, you see it everywhere.

So travel will be a megatrend. Travel will be a great business.

Our business model, I think is fit for purpose, then you then you look at our brand positioning leaving markets position, the integrated model, which helps us right now to steer up the demand and steer the demand into our hotels, get good occupancy levels, load factors our aircraft. So good hygiene concepts and high quality in destination, I think it's important.

And last, yes, we understand that we know that we have to transform more digital, less cost, better quality at the same time. And that is digitalization, and yet we stay committed to the balance sheet, target free gross leverage ratio less than three times.

So the crisis will be gone. And we are now in front of I think the full back to normality, then to TUI will be in a better position than before.

And with that, I would like to open for your questions. Thanks a lot.

Morning, everyone. It's Jamie Rollo from Morgan Stanley.

I've got three questions, please. First of statement, talks about having sufficient liquidity to get over the winter season.

So just got a question about that liquidity number of €3.1 billion, what's the customer deposit number behind that? On that 9 of August date, I can see it's about €2.8 billion June including both elements.

But it's probably gone up since then. So it looks like company cash is actually still quite small.

And although you're expecting cash neutrality in the fourth quarter, but you're not expecting an outflow in your fiscal first quarter. Secondly, first I saw Reuters interview this morning, where you're talking about raising, you might raise more capital at some point.

What does that sort of mean? Is that equity?

Also, could you talk a bit about what the German government's view on the silent participation is particularly the convertible one? It looks like Lufthansa is trying to repay theirs as soon as possible.

I'm just wondering whether that's your plan, or what do you think they might convert that. And then just finally, just on some trading numbers, the 120% increase in volumes for next summer sounds great.

But what percent of summer 2022 is sold at this stage. And also, you've not mentioned winter, much that was mentioned in the last update, but what percent of the winter season is also sold?

Both compared to 2019? Thank you.

Do you want to start Sebastian?

If you like

Sure.

The customer payments, if we compare the situation to 2019, we should have had in a normal year, roughly €5 billion, and we would not see a significant reduction from the base we have now, if there would be a normal winter. So €500 billion to 1 billion, so that shows very clearly that we are well financed.

And what we can see that the strong short-term intake improves the liquidity situation in general. So that's why we will have significant cash above any threshold.

Capital measures, as we said in the past, we are looking at all the options and if there are opportunities, we will take them. We are screening the market and we will always take decisions on the latest development.

On the bookings for summer, the overall magnitude increases on a base of 20%. So this is a reasonable high a number which shows that there is pent-up demand, especially compared to the booking pattern we have seen before the winter has seen a slow start, it's very difficult to judge, as we see, actually very strong momentum on short-term bookings for always the next two to three, four months.

So that's why it's very difficult for us to predict how much increase we can achieve at the moment we are roughly at 50%. And with taking into account the short term bookings, there will be a significantly higher number to be achieved.

One thing to add Jamie. When you look operationally today, we just had the last week before departure between 13% and 15% load factor in our aircraft.

I mean this is absolutely unprecedented. And therefore, winter will be okay.

In summer, by the way, we pushed out the time when we really have to fix our capacity to some time, let's say mid-end February. So therefore, that is something that I think is important in times where it's not 100% here, - so the risk capacity will be finally fixed on the end of February 2022, for summer 2022.

Thanks. So I can't just follow up on the first two questions.

Is there any company cash turn, always there is all that liquidity essentially, customer deposits? And also on the second question, what's the view on the German government's approach to their sort of participation?

One, in particular?

I think on the maybe – maybe the cash position is something Sebastian and the team can offer to answer. I think we're in constant discussions and – with the German state.

I think that the likelihood that they will convert is very high right and therefore, they will convert. If that was the question, that's what we assume at least?

And we want to repay, of course, we want to get out of government, that as soon as possible, but as soon as reasonably possible, right. And when you think about, our current cash position right now, which is still building so €3.1 billion liquidity is still building as we speak, I think the position is not so bad, particularly when we think about, maybe, M&A or maybe an equity race that might be coming.

Okay, so just to clarify, you think it's a very high likelihood to get the state converts. So the discussion about raising equity is not to repay the silent participation, one that's just to support other company liquidity needs, and deleverage.

So we have no leverage – what the government wants to do.

[indiscernible].

All Right. Okay, thank you very much.

Yes, good morning, thank you so much for taking the questions. I just got a couple.

Looking at 2022. I didn't quite get that you gave to Jamie, on how much of 2022 is booked?

And therefore, within that, can you tell us if there are sort of coupons tokens that have been rolled over, that can be taken from early part of this summer? The second question is on restricted cash.

That's a bit higher now than it was sort of pre-COVID. I think there was some changes to CIA restricted cash requirements.

And obviously, you've had customer deposit inflows. But could you just tell us what restricted cash might look like sort of in a normal world post COVID with a normal customer deposit levels?

And then the third question, and again, I think Jamie was looking for it, and maybe I just didn't interpret it correctly, but in terms of [indiscernible] works through the winter. What would you anticipate customer deposits will look like?

Let's say that's the end of Q1 and or at the end of Q2 versus where we currently are? Thank you so much.

Okay, on the restricted cash, which is around 500 million in the medium term, we believe that we can reduce this number again, on the customer deposits at the end of Q2, I think there we because we anticipate a significant intake of bookings in end of December, January, this should be up to the level we have the cash outflow in the queue, one is not easy to calculate, as that we said, we have strong short-term bookings, but we have no real knowledge today on what the long-term bookings will be. If you look at the base where we are today, the odd flow should be something between 500 million and maybe 700 million, 800 million maximum 1 billion.

So, that really depends on the momentum of short term bookings. As we have seen at the moment, we always have underestimated the intake and we assume, why the situation gets more stable that we will see this trend also in future.

And the 2022 summer bookings asset 20% of overall and there is only a small, very, very small portion of bookings rolled over.

Thanks so much.

Hi. Good morning, thanks for taking my questions.

And just first one on price at the half year results, you talked about price for some are up 22%. Today, you said 9%.

If I kind of refer to the calculation looks like the incremental bookings have come at a price about 10%. Below, maybe pre-pandemic levels, Is that about right?

And, with the remaining capacity, you've got left to sell threats and summer? Should we be thinking about that kind of pricing level, sort of running forward?

I know there's a mix in there as well, but maybe help with that. And then just the RIU sale, we made about €100 million have EBIT from RIU in Q4 sort of 2018, 2019.

What would be the impact from the disposals you've done in RIU on that sort of normalized level when we kind of recover back from there? And then just last one, just want to understand the leverage this sort of covenant calculation.

So could you give us what gross debt is today? Because I know it often differs from the accounting numbers or where are we on gross debt today?

And that's sort of backward looking. So at September 2023, and I guess, March, sort of 2024 you’ll need to make EBIT, EBITDA that’s about a third of that gross debt is that the way right way to think about it?

Maybe on pricing, I mean, I'm saying it's very clear, the pricing is a mix, as you said, between more holidays, but at the same time, the short-term booking is of course, putting some pressure and at the end of the day, if we get you know, to load factors of let's say about 80%, 85% in aircraft, also 10% discount is producing very, very good margins, and the high pricing period starts to happen right now. So the biggest margins we are making in summer soon.

So you can assume that the prices will be lower, because it is absolutely the right thing to do in order to marginally fill our aircrafts. On the RIU and cost level, maybe I'll let Sebastian take these?

So let’s now handle to

So the average EBIT of the participation in within RIU one was over the years 35 million, the cash dividend and average of €15 million, we expect a book gain of €200 million that shows that this is very valuable or creative to realize the sale here. Financial liabilities stand end of June at €7.88 – 7 billion.

So almost €7.9 billion. This not includes yet the proceeds from a RIU with a 450 million.

And out of these €7.9 million, the lease liabilities are 3.3 billion.

And does that match your gross leverage? The gross leverage number you use for the covenant calculation?

Because I know sometimes the lease liability number is different between the two definitions?

No.

Okay, what's that?

What I haven't, what you also have to take into account of the pension obligations, which we're at the end of June €839 million.

Yes. But the lease liabilities are part or not part of the 3.3 multiple that's your question, right?

Yes. They are.

It's the same number. It’s the same calculation.

Okay. That’s very helpful.

Thank you.

Yes, good morning. Few for me as well just to get it circling back on summer 2022.

I know it's been a couple of different ways. But last year at this time, you told us you had 1.5 million holidays booked for summer 2021.

What is that number? No for summer 22 question on online distribution.

It was rising 1% to 2% per annum prior to the pandemic. That's not really changed which given what we've seen elsewhere in terms of online migration.

Seems a little bit disappointing. Is there anything structurally different that is not accelerating that moving forward.

Okay.

And okay, and can you just clarify how many passengers in the summer season travel with children?

Okay, let me tackle on that. I mean, when you're look at the page with online migration, you'll see a normal uplift from 10 percentage points to 17 percentage points, right.

So 17 is actually a Germany, it goes up from 22 to 39. That's the average is going up and fire.

So below or single upgrade is a mixed effect, because in Germany, you have the highest migration, this lowest absolute level, right? So the 5% is just a mix, when you want to have the trends, you need to look into the countries.

And this is an enormous online shift. I mean, even more, so I think interesting is the shift, which we see after booking, and this is actually the ex-shift.

So the 68% and this is 2021 percentage point up. And this is, related also to our after sales, which we have here chances.

And, even though the customers and destinations are relatively low in Q3, and also today, only picking up we saw week over, week-over-week, the highest in app sales, which we have seen ever, and particularly also excursions week over week over week, the BC, new record high for excursion sales and accessory sales. So I think that is something, which is remarkable and which is there to stick, on the summer bookings 2022.

I think 1.2, 1.3. And it's not a bad number, how much it is relative, it's determined by the - but of course, the capacity which we will fix on the end of February.

But the interesting thing, I think, and that is the difference between last year and this year, is there's no vaccination numbers. It's about 60%.

And that's, of course, something that actually makes the predictability of our governments much better. Just remember last time this year, all the bookings are more or less in the UK.

Yes. €1.5 million and then that actually decreased to something below 750,000 as a base, because we couldn't fulfill the travel demands to Portugal on, off, and so on and so on.

And that is something which I believe is an enormous difference between a year ago and this year, is the third question. I'm not 100% sure that I remember it maybe Sebastian, can you answer that when you remembered?

That was how many passengers travel with children?

Okay, in all fairness, I would be wrong. If I had, I think.

I would be, of course different than in seasonality. But I would be wrong.

If I just pick a number. I'm not sure that I can answer that question.

I have an idea, but it's better not to speculator give you that later. The real number.

Yes.

Okay, thank you very much. That's great.

Thanks.

Yes, morning, everybody. Thank you for taking my questions from me as well, please.

Just coming back to Q4, you said you expect to be cash neutral after the working capital benefits. So I assume that for your suggestion, you will be no better than breakeven in the fourth quarter.

Just confirm that please. And secondly, when you talk about that really strong online growth, which is encouraging.

Do you think there's potential to restructure or close more of your shop network and how much savings do you think you could make from that? And then third, following the RIU disposal, are there more assets meaningful assets that you can sell them what sort of potential asset realization could we be thinking about?

Thank you.

I mean, let me I think the online migration is something which is around to stick and therefore we closed in the UK. Almost half the retail outlets in Germany we are talking about, targeting 70, 80, 90 or 100.

I mean, we need to be careful that we over do this because you know, customers want to buy retail. We don't have retail, like, for example, in Germany, if you should be careful.

But that said, we are taking the advantage and each and every shop needs to be profitable. Right.

So, and it's baked into our realignment program. It's a big part of it.

Now, on Q4, maybe, Sebastian, I think that's a fair assessment. That's what I heard.

And more – and then – as it stands, I mean, yes, maybe you want to take that?

We have a list of assets, we look at we announced in some of the earlier meetings that we are looking for a good harbor for our Marella assets, which would be TUI Cruises. This is something which we have on the agenda.

And we also have some assets, which we would like to discuss. For us, it's very much important that we don't have a minimum impact on the P&L.

Good example always is we have two Robinson clubs on the Maldives, I think with one less, we would probably have the same profitability, but again, in the cash. So we do that very carefully.

But there is still a significant amount to become the Q4 assessment. Our conclusion you made is a good one.

It's very difficult to predict. We are quite surprised by the very strong intake we see in the last days.

But we have also seen some limitations which suddenly came from government. We don't expect that anymore.

But that's why we are more careful, the short-term bookings are encouraging. But we would support the conclusions you have made.

Okay, great. Thank you.

Hi there. Couple of questions please.

The first is on the winter cash burn, excluding working capital. And what did you give us an idea of what the monthly operating cash burn, excluding working capital might be?

Through Q1 and Q2, you previously delivered I think €225 million of net fixed costs in the third quarter. And then secondly, earlier you just talking about restricted cash of 500 million.

The first question I have is, can you just outline exactly what, why that is restricted as in what proportion relates to ring fencing of customer cash? And what portion may relate to any older requirements?

And then a follow up to that is exactly how do you expect to reduce that restricted cash number in the future? Given the ring fencing of UK customer cash pressure that may come from the ATOL review by the CAA at the moment?

Thank you.

I mean - take the first one.

Yes.

Okay. I mean, in the nature of our business, yes, we have a seasonal swing with our working capital.

And therefore our liquidity will be less. And the cash flow point, as is end of December.

That's a seasonal thing will be less, right. Not because we wanted to be less but because the summer business was less strong than normally, right?

So the seasonal swing of liquidity and that's what Sebastian talks about might be 500 million, might be 700 million might be a billion, but that's maybe the order of magnitude. Yes, but of course we will be able not to operationally we need to lower cost, I mean if that answers your question, right?

So cash flow liquidity wise we will see a swing but cost wise – need to come across and the second one, maybe on?

On a restricted cash the 500 million of asset, it is our target and as the situation eases to reduce this in the next fiscal year, the majority are offered customer deposits. So on the other hand, there are items where we work on.

So that's why we predicted this number could go down in the future not immediately now, but in a timeframe of 12 months.

Can I – just following up on both of those. On the second one, you don't see any pressure on that minimum liquidity requirement, given the ATOL review at the moment.

The on the first one, is there any way you could provide a rough monthly operating cost given through the winter, given you've pulled out a lot of cost already with your global realignment program?

I mean, we told you what the costs are, if we are in a hibernation mode to 250 to 300, which we now were able to reduce significant below 250 in 2019, we had a loss of 100 million in the first quarter 200 in the second quarter. I mean, probably the ambitious goal to offset less revenues by less cost we, we have so and if you then take into account in from end of middle of December onwards, we should be on the working capital, significantly positive.

And we're not talking about 100 million, but the several 100 million, then you see how well we are financed through the winter.

Thank you. And on the minimum liquidity.

You mean the covenant the 500 million?

Yes, exactly. I just wonder where why you have such conviction that might come down in the future with the CIA review of the ATOL scheme at the moment and ring fencing customer cash.

Because we work on like, have seen with all the other cash matters, we work there very much to come to very good solutions, you may have seen that there were significant discussions in Germany, we have now found a good solution with the state authorities, we are in the same process. The market, the sector is in the same process with the UK, as it's normally only for packages and not for flight only our eco only, you know that payments with the credit card, which has a very high share is normally also treated differently.

And that's why the numbers and you know that we have restricted cash already. So that's why the situation is not as sometimes it is described in public.

Thank you.

Hi, thank you. This is Cristian Nedelcu from UBS.

Could I please ask you? I think every year in between January and March we used to get between €1 billion and €1.5 billion of cash inflows from advance payments.

And I think we can argue with the CAA reviewing there, we can argue with the fact that people are seem to be booking closer to the departure date. And also you can argue there's more uncertainty than normal to COVID maybe some of this cash will not come in.

So I guess my question is, what do you think is the minimum liquidity that you need in the business, when in a sort of in a prudent way? What is the minimum liquidity the business needs throughout the winter?

The second question, can you give us a bit of color in terms of your profitability expectations? once things come back to normal, then I mean, I was looking in your free statements, that the margin levels that you give in the goodwill impairment tests.

If I use those margins levels, I get more or less to the old EBIT that you're generating, on 2019 revenues. Is this the right way to think about it, you think you can, the business can generate the same level of EBIT as in 2019.

And I guess the third one just may be coming back again to the restricted cash. May I ask you, it was my impression that some of the cash restricted in relation to the CAA is a link to your volumes.

Is that correct? Because that would say if there's further recovering volumes to cash restrict I would go up, but is that correct or not?

Thank you.

Maybe on the working capital, you are right, if the bookings come later this has an impact. On the other hand, the good thing is as the base now is so low and the intake is so on short term that this could offset the delay, which we may see in general and March and that's why the impact is low.

And on the capital minimum liquidity needed, it's the 500 million. And on the CAA, as I said, we are – we have managed this, this very well, for all the other markets, we will manage that also in the UK market very well.

And that's why we anticipate that the number we have today is a number which is not only defendable, but which we hopefully can also improve future and maybe. Fred wants to say something about the profitability expectations we have, I just would add that the €400 million of the realignment of the program is available and has lowered our cost base and the future, it's a permanent reduction.

Yes, I would say that's absolutely right. And, nothing to add here.

I also would like to emphasize one thing, this is just cost, if you take into account commercial positioning and pricing as well, lower risk capacity and we have taken alternate percent of aircrafts, lower risk capacity, but also normally, and should also normally generate higher yields. So higher prices, and particularly when you're in the risk capacity business, that's what you'll see.

But just said this is difficult to predict, because you might see over capacities in the airline industry and more competition. So I think it's a safe bet to say the 400 million cost services also turn into profits.

That's what we should be seeing definitely.

Thank you. Just a short follow up on the minimum liquidity requirements.

So now you have that 3.1 liquidity in there. But just what would be the minimum level you would be you're still comfortable with for the next quarters, is it 2.5 billion is it 2 billion?

I think I'm trying to understand how much of the German government that would you be willing to pay from your current cash position? Thank you.

Again, it's 500 million. But of course, our expectation with what the cash we have today is significantly higher.

I mean, I've fully understand the assessment on the biggest risk that we are really happy that we have 3.1 billion we see an increase at the moment day by day we see the short term bookings, yes, we will have a 500 to a billion lower working capital due to the seasoned there will be a counter effect because the bookings comes short term. Normally, the October bookings would have been paid.

Now as they come in September, we will have that is an incremental, that's we have lowered the cost base significantly. So that's why and we are sure that the level we will have is very reasonable.

We don't want to give it a number, but we feel safe and comfortable. But this doesn't take away any pressure in the company to improve the situation.

Significant asset we have manage the company for cash, and that we will do also in future and that we have seen a lot of leavers to do so. And we're still.

Yes. Maybe Sebastian, to add one thing.

I mean before we saw the crisis, before corona, yes, usually, we targeted our targeted our RCF. So excluding the state that the RCF that our minimum liquidity headroom was between €500 million and €1 billion in the winter low.

That's how we managed our business. But, of course, I mean, we could give back potentially, we could start to hand back some of the state money but we obviously, we need to be careful to be reasonable.

I mean, that is still a lot of volatility out, once we have given back the money, I mean, it's difficult to answer, every black swan would come around and so on. I mean, therefore, being careful is, is something which we will be doing.

And let's say, a couple of other quarters, three, four quarters to understand. Exactly, you know how the pandemic turns into an endemic, and we live with this at all.

But then, of course, I mean, 3.1 is a good number, and it shows, it is a lot of liquidity, short term, it's giving the safety net for our company, but long-term, it's a potential to pay out the state. And that is, of course, something we want to do.

And we will do, because that is a plan. That's the prime goal to actually pay back the state money.

Thank you very much for your answers.

Yeah

Yes, thank you very much. I think you have seen a good starting point of the recovery, I mean, cash inflows and net cash flows of €320 liquidity position as they are now as a quarter than we have, and we want to turn the prepayments into real revenues.

And I think we had a good starting point, you saw the summer capacity in July, how it builds from 350,000 capacity to several 100,000 capacity, all those even bigger. And I think this is where we need the eyes on the ball.

Cost saving remains the main target. And then of course taking care of the balance sheet.

And the question how we get the state out, again, is something which is a priority to get a good balance sheet, solid balance sheet and solid leverage ratio. Thank you very much for dialing in and have a great day.