TUI AG

Thank you, very much, and good morning, everybody. I’m here in Düsseldorf and the team is in Hannover, and we welcome you for our analyst call.

And I may ask that actually we turn the page to Page number 4. So when you look at last financial year, we have been actually bringing 5.4 million guests in vacation.

The main part of that, and you will see that in the consecutive slides, is 3.8 million of which have been in the Q4 of the year. So in the restarted quarter.

Q4 was almost breakeven. So underlying EBIT was slightly negative if you take accounted or reported EBIT slightly positive.

So it’s largely breakeven and particularly Hotels & Resorts, Central & Western Regions delivered positive EBIT, Hotels & Resorts almost on precrisis level when it comes to profitability. Particularly positive, I think, was the free cash flow generation before financing.

So working capital -- driven by working capital, €1.4 billion free cash flow additional in the system. When you look at the Global Realignment Programme, we realized cost savings of €240 million of our envisaged plan to realize €400 million yearly cost savings in ‘23.

And also in digital transformation, we have done significant progress and you will see that in the later slides. Now for next year or for this year, we have a strong pipeline of 4.1 million bookings, which are building.

And these are, of course, for Winter ‘21, ‘22 and summer ‘22. And particularly now, I think the focus on Q1, we are on a level which is close to 70% of precrisis levels, 93% sold and you will see that in the later slides.

So even the Omicron news will not actually harm this quarter significantly because we are so strong. Now summer ‘22, well booked, with average sales price strongly up 23%.

Now when I look at the financial situation of the company, we have achieved last year a lot. I mean, a year ago, the company was in a very different situation.

We achieved refinancing of €2.2 billion, RCF tranches being prolonged, asset-right strategy being executed, and you see the example of the sale of the real estate portfolio to the RIU family. Particularly, I think important credit rating upgrades from both Moody’s and Standard & Poor’s.

And I believe with a liquidity position of €3.5 billion now, so 6th of December, just 3 weeks or 4 weeks before the cash [low] point in our business, I think a very good liquidity position at this point in time. Now turning to the next page.

You see on Page number 7, you see the development over the years. I just want to mention Markets & Airlines departed pax.

I mean Q1 was virtually closed down and Q4 was already 3.8 million customers, 92% of our hotels in operation. So 14 of 16 cruise ships in operations.

So you see that the business actually is coming back. But it’s also clear, not all pockets of the businesses are back and I’ll come to that in due course.

Now as we are now mature on liquidity or certain liquidity important to manage the business again. And that actually means profitability eventually also that.

But profitability is now the next focus of our business. And when you look at Page 8, you see that we have good occupancies and really good load factors in our business.

And you see on Page 8 on the upper table, Hotels & Resorts, on the lower table, Markets & Airlines. Now let’s look at Markets & Airlines first.

I mean you see quite some volumes. The capacity is high Q4 and also October.

By the way, Q4, you will see later that it is around about 50% of a normal year. In October that has been actually improved.

It has been improving and when you look at the total Q1 of this – this financial year, we are, at the time, for the time being at 69% of a normal year. So in that respect, the load factor of 84% in Germany and 82% in Netherlands and Belgium is already very good.

And U.K., of course, in Q4 and October was still influenced by 60 countries on the red list. So this actually now is building as the program builds.

But even in that difficult situation, we had an occupancy, a load factor of 73%. When you look at the Hotels, I mean, the occupancies are really good.

I mean Canaries, 84%, very strong. Mexico, so the Caribbean cluster, 76%, very strong.

And of course, Balearics, Turkey and Greece, has been strong in Q4. But of course, now in October season are a little bit down, but still on a comparative basis, very good and on a competitive basis, also very good.

The reason for that is, of course, the vertical integration. So we steer traffic into our hotels.

Now that said, turning the pages to 9, you see online bookings up. Germany, particularly promising 33%, right now, up 11 percentage points, tui.com strongest sales channel right now in the German market, but also the direct hotel side, so robinson.com, TUI Blue and magiclife.com strong.

The app usage and the app uptake, we reported last time when we talked to you a value between 60% and 70% and now we are at 72%. So again up.

72%, so ¾ of our customers use the app. They get their documents, their advice, COVID advice, bus transfers and so on and so on.

But also, it is the point of sale, which actually is growing strongest in terms of cross-selling. And you see that with the TUI Musement sales in app, which is up by a factor of 3, so up 226%, whereas the total number of sales of excursions and activities actually has been at a level of 60%.

So what actually the level of customers actually reflects the level of excursion sold. But within that, a tripling of the sales in app, which is the strongest growing and potentially will become the most significant sales channel for our activities and excursions.

This said, I’m turning the pages, looking at the booking development. Winter up from 1.46 million to 1.908 million, so almost a doubling of winter bookings since October 3.

Summer also modestly up. Both of the season’s average share price, very promising.

Winter ‘21, ‘22, you see on the table top right, up 15%. Summer up 23%.

Now when you look at the next slide, I think it’s very helpful that we can disaggregate now the quarters in order to give you a flavor of the risk and the flavor of the certainty we have in our plans. Now in Q1, that is the quarter between October and ending December we are down from 19 – 31%.

So our booking is 69% of precrisis levels, right? And we said between 60% and 80% , so we are spot on.

Without Omicron, we would have expected to trend now to the 80%. So to trend up because of the short-term booking cycle.

That is something which is questionable. And the bookings we see last week, it’s only 5, 6 days of Omicron and the respective regulatory actions in the U.K.

So this is actually now a little bit more uncertain, but it is 69% today and 93% sold. So it’s almost everything in the back at 69%.

So nothing severe should be happening, average sales price up 11%. So the Q1 will be very solid.

Q2, it’s 62% sold, so minus €38 million so 62% bookings of precrisis level and 27% sold. So 62% and in the normal year in the normal pattern, we would have expected now to also trend up to the 60% to 80%.

And that is the uncertainties because if Omicron is now hitting severely, then this could be actually also lower. But that said, also average sales price is up 21%.

So for – today’s position is very strong as now. So interestingly enough, the first peak season.

These are all relative numbers. So relative numbers are, of course – have the problem that we don’t see the absolute numbers.

So the absolute numbers of April. So Easter is the first peak season, which we really will see in this year.

And here, we are on a 90% booking level of precrisis and 12% sold, 18% average share price up. So I would say here, we see actually a very strong prebooking for actually the Easter season.

Now that said, as I say, Q1 is now in the bags. You can see what the British government will be doing in 2.5 weeks and how Omicron will actually pan out.

But that is the situation as we see here. Now when I look to the next slide, maybe it is a little bit of a lot of text and anecdotal evidence.

I want to highlight just TUI cruise, Hapag-Lloyd Cruises. So this is actually in the middle of the chart and particularly the third white bullet.

It says incoming H1 2022 slightly behind comparable 2019. So that means it’s slightly behind precrisis levels.

But H2 of ‘22 and ‘23 are at pre-COVID levels at higher rates. And that says something about the future of that business.

Now H1 is not surprising because the ships are not – usually they are in long-haul destinations. That’s what they are not today because long haul was largely not open from – particularly from the U.K., and also from rest of Europe.

So they are largely now in Caribbean and so on. And therefore, in Canaries and so on.

And therefore, H1 is still weaker, but the H2 of ‘22 is very promising. Now with that said, I would like to hand over to Sebastian to guide you throw the numbers a little bit more in detail.

Sebastian? [Technical Difficulty]

Thank you, Fritz, and a very warm welcome everyone who has joined on the webcast today. I look forward to hopefully updating you in person in the next new financial year.

In the meantime, please let me guide you through the quarter 4 results of the financial year 2021 on the following pages. I would like to start with recapping on our financing achievements during the last 12 months, and I'm pleased to say that we have made significant steps towards returning to a gross leverage ratio of around 3x.

Post the completion of the third support package, including a €500 million capital increase in January. We managed to successfully further enhance our financing structure with the following instruments.

We used the favorable capital markets environment at the beginning of the calendar year to issue convertible bonds with a total volume of €590 million. This includes the upsizing of our original €400 million bond in April with a tap issue of around €190 million in June.

We delivered on our asset right strategy by disposing of a real estate portfolio of 21 properties to the RIU family, generating cash proceeds of €541 million. This excludes an earn-out element in the amount of €130 million, which is payable upon RIU's hotels delivering its full year '22 and full year '23 operating budgets.

Strategically, allow me to mention once more that the 21 hotels will be operated under our core entity RIU II and thus remain exclusively available to our customers. Only the ownership structure of the property has changed.

We successfully agreed with our 19 RCF banks and KfW, the extension of our €4.5 billion RCFs to July 2024, and therefore, we have no major maturities until then. Another important fact to remember in this context, covenant testing will only resume in September '22, with higher ratio limits set for testing in September '22 and March '23.

For these testing date, net leverage has been agreed at 4.5x and interest covered at 2.25. Normalized limits have been agreed to resume from September '23 onwards.

To remind all the ratios for net leverage is 3, and interest cover is 2.5. And last but not least, we successfully issued post balance sheet date, €1.1 billion of new equity to further strengthen our balance sheet.

This capital increase enables the reduction in drawings under our RCF facilities and will consequently led to an improvement in our future interest costs. Following the successful transaction, our rating agency, S&P and Moody's upgraded their ratings to B- and B3, respectively, along with a stable outlook.

In total, €2.2 billion of refinancing has been achieved in less than 12 months. I'm sure you will agree, it has been a busy and very efficient year for refinancing for TUI.

In summary, with the current liquidity position of €3.5 billion, we are fully financed through the winter and well prepared to weather any change in the booking environment. We will continue to focus on our financial priorities, and let me confirm here again that we will work hard to return to a solid and healthy balance sheet and our target of a gross leverage of less than 3x.

Let me now come to our quarter 4 results, and I will start with some highlights. We are pleased to report a return to positive EBITDA and the first almost breakeven underlying EBIT since the start of the pandemic.

The ongoing effects of the coronavirus prices are still putting pressure on our business performance overall. However, clear signs of recovery started to emerge in the third quarter.

And as expected, we saw strong improvements in Q4, driven by increased operations, benefits from the global realignment program the non-repeat of one-offs and most importantly, a strong positive free cash flow generation. Q4 group revenue of €3.4 billion was up €2.1 billion versus prior Q4 an improvement of 170%.

The improvements reflects the success of vaccination programs and the wider return to leisure travel, particularly across Continental Europe this summer. As already mentioned, we are very pleased to report a return to positive EBITDA of €160 million and an underlying EBIT of almost breakeven, including €60 million of one-offs in the final quarters.

This positive quarterly development was driven by Hotels & Resorts, Central and Western Regions, demonstrating the swift return of profitable contribution when we are permitted to operate more sustainably. As you may recall, U.K.

opened later at the end of the quarter. Consequently, Q4 free cash flow before financing developed strongly at €1.4 billion being the second consecutive positive free cash flow quarter since the start of the pandemic.

To summarize, Q4, the Markets & Airlines segment took 3.8 million customers on a 2-year holiday and achieved sector-leading load factors of 82%, which underscores the rebound of leisure travel and how well TUI is strategically placed to exploit and lead in the market recovery. With this, I'd like to move to the next chart, the income statement.

As per my prior slide, Q4 revenue was driven by increased levels of operations in our Continental European markets and Hotel & Resorts. Markets & Airlines achieved 2 million additional passengers in the quarter, an increase of over 100% and our Hotels & Resorts sold 4 million more bed nights, an increase of 120%.

Q4 underlying EBIT of minus €97 million, almost breakeven, excluding impairments and net hedging ineffectiveness one-offs amounting to €60 million. Adjustments this quarter include the real estate book gain of €197 million, partly offset by costs relating to the Global Realignment Programme.

As always, at this stage, I would like to share with you our current assumptions for adjustments next year. For full year '22, we expect charges of between €90 million to €110 million, including around €60 million relating to the global realignment program.

I hope you will find this early indication helpful. Q4 net interest expenses saw a slight improvement versus last Q4 due to the reduced KfW RCF drawings, resulting from increased Q4 operations and other financing measures.

Our full year net interest expense developed in line with guidance, which was driven by the full 12-month impact of additional debt facilities versus the prior year. Based on our expectations of a more normalized operations next summer, we also expect lower drawings of our facilities and thus expect a lower net interest charge for full year '22 of between €380 million to €425 million.

I'd like to finalize my comments on the P&L with the group result after minorities which was a loss of €58 million in Q4, a clear improvement of €748 million year-on-year. On my next slide, I want to share with you some segmental highlights, especially on the good performance of our Hotels & Resorts, Central and Western Regions which returned to positive results.

So let me start with Hotels & Resorts. Our diversified and integrated model has been a clear advantage in the current environment, with differing regional restrictions, enabling an earlier reopening of some of our destinations such as Mexico, which was able to host both domestic and U.S.

customers, helping to deliver a good occupancy rate of 76% in Q4. Our integration enabled us to distribute customers to our own content first with key destinations such as the Canary Islands and Greece, also delivering good occupancies of 76% and 75%, respectively, in the final quarter.

These advantages resulted in a €203 million improvement in Q4, returning the segment to positive quarterly underlying EBIT of €160 million since the start of the pandemic. This improvement includes a €18 million non-repeat benefit from impairment charges in Q4 of the prior year.

Overall, Q4 occupancy rate increased by 19% to 66%. Average rate per bed increased by 15% to €73 due to mix and normalization in pricing as volumes recovered.

Moving on to Cruise. I'm pleased to report that Q4 was the first quarter with all 3 cruise brands in operations since the start of the pandemic.

The Cruise segment reported a Q4 underlying EBIT loss of €43 million. The improvement of €82 million year-on-year reflects the fuller return of all 3 cruise brands with both TUI Cruises and Hapag-Lloyd Cruises resuming original itineraries to the Mediterranean in the final quarter and Marella, resuming its operations in Q4 after a near 15-month hit, offering itineraries around the British Islands and to the Mediterranean.

Q4 occupancy rate range between 39 and 53% across our cruise brands with an element of cap occupancy requirements still in place by some destinations. Also the shorter lead time to market itineraries, particularly in the U.K., were limiting the opportunity here.

TUI Musement saw a higher number of customers traveling this summer versus prior year as travel restrictions and social distancing requirements eased with much of the volume driven by our Markets & Airlines business. This helps to deliver a Q4 underlying EBIT loss of €9 million, an €39 million improvement on prior year with more than €1 million excursions sold in the final quarter, reflecting the improved environment for travel and clear benefits of our integrated model.

Moving on to our Markets & Airlines division. As already mentioned, Central and Western region returned to a positive underlying EBIT results, their first positive quarter since the start of the pandemic.

Overall, the segment delivered a €592 million improvement in Q4 versus prior year with €56 million of this improvement from the nonrepeat benefit of impairment charge in Q4 of the prior year as well as benefits delivered by our global realignment program. The earlier easing of travel restrictions by the EU enabled both Central and Western region in Q4 to return to a positive underlying EBIT since the start of the pandemic, generating positive €49 million and €71 million, respectively.

This demonstrates not only the clear demand for leisure travel when permitted with limited restrictions, but the continued appetite for TUI holidays as well as our advantaged position to quickly restart our business due to our integration. A total of 3.8 million customers departed for the holidays during Q4 with 82% departing from our Central and Western region markets.

As I said, the U.K. opened at the end of the quarter.

Overall, volume in the final quarter improved by 103% year-on-year, reflecting the wider lifting of travel restrictions, supported by the successful rollout of vaccination programs. This brings me to our usual underlying EBIT bridge.

As in the prior quarters, and as you have seen in our numbers, we continue to focus on cost discipline as we have successfully done so since the beginning of the Corona-19 crisis as well as capturing margin opportunities where possible. Our almost breakeven result being a demonstration of this and the late opening of the U.K., clearly being the biggest disappointment.

As you can see, all segments contributed to the year-on-year improvement results -- improved results. Holiday experience contributed an improvement of €289 million quarter-on-quarter, while Markets & Airlines delivered €530 million.

I already commented on the main drivers on my prior chart. Additionally, the result benefited €100 million from a reduction in one-off year-on-year comprising the impact from net hedging and impairments.

Moving to our cash flow slide for Q4. We are very pleased to have generated a positive free cash flow for the second time since the start of the pandemic.

The positive development was driven by the better result from operations, positive adjustments and as expected, positive inflow from working capital. But even when excluding working capital, Q4 delivered a positive free cash flow from operations.

Coming back to the working capital. The Q4 working capital inflow of €737 million is mainly reflecting the increase in supplier payments from Q4 operations.

Full year '21, working capital inflow of €823 million represents the first step of a refueling working capital after the depletion in full year '20 induced by the pandemic. Coming to various other cash items.

Q4 was impacted by the reversal of €197 million RIU disposal booking. And as you will remember, prior year reflected the reversal of the Hapag-Lloyd Cruise booking.

The slight increase in cash interest was driven by the full year impact of additional indebtedness. In line with our initiatives to support liquidity, net investments were an inflow of €576 million, while we managed to reduce Q4 CapEx further, the main driver of the positive development was the execution of our asset-right strategy through disposing a real estate portfolio to the RIU family, which generated proceeds of €541 million.

Overall, Full year '21 net investments amounted to an inflow of around €700 million, which is exceeding our net investment assumptions of an inflow of €600 million to €600 million for '21 Also, for the net investment position, I would like to share our current assumption for full year '22. Here, we expect an overall cash outflow of between €120 million to €280 million.

Breaking this down, we expect cash CapEx outflow to be in the range of between €300 million and €350 million. We expect the outflow to be mitigated by positive inflows of between €70 million to €100 million through smaller divestments and positive net predelivery payments for aircraft.

You will find a modeling assumption table included in the appendix of this presentation to save you scribbling these figures down. That brings me to a positive free cash flow before financing of €1.4 billion, which was mainly used for reducing the KfW RCF drawings.

And on to the liquidity position. Let me run through our cash and available facilities as of December 6.

We are pleased to report a strong liquidity position of €3.5 billion, reflecting the lower working capital swing due to the reduced summer '21 volumes as anticipated. The outflow of the month of October and November and up to December 6 were offset by the proceeds from our €1.1 billion capital increase.

With this strong liquidity position, we are well prepared for the remainder of the winter season and to weather any change in the booking environment. And I would like to confirm once more that we will continue with our strict cash discipline and our strong focus on generating free cash flow.

On to our net financial position, which improved by €1.4 billion quarter-on-quarter and stood at €5 billion on September 30. The improvement in net debt predominantly reflects the positive cash flow, which we used to reduce our liabilities to banks.

The positive development was driven, as already mentioned, by improved operations, positive working capital development and the RIU real estate disposal. To assist you, we have provided further details on this chart regarding the drawings of the silent participations as well as under the RCF as of both 30 September and post balance sheet date on December 6.

And the last time on the right-hand side of the slide, we have included for your convenience, the split of our financial liabilities with the full details on lease liabilities and liabilities to banks. On my next slide, I will recap on our pro forma net debt and gross debt position post our successful capital increase in October.

The capital increase improved full year '21 Q4 balance sheet by €1.1 billion on a pro forma basis, which is, of course, pre-seasonal winter swing. Thus, pro forma net debt on September 30 was reduced from €5 billion to €3.9 billion and pro forma gross debt including pension liabilities, which reduced from €7.3 billion to €6.2 billion.

With the issue on balance, we have made major progress towards returning to a gross leverage ratio of around 3. We continued to work hard on achieving our target and the current pandemic environment is underlying once more that it's key for TUI to be always prepared and to utilize available windows of opportunities for refinancing when possible.

As a reminder of our commitment, I would like to finalize my section with the ongoing priorities I have on my agenda, generate cash flow, which means to continue with our strict cash and CapEx discipline manage the working capital flow back and further execute on the asset-right strategy. Driving operating effectiveness with a focus on optimizing fixed capacities on delivering the remainder of our global realignment program as well as driving our digitalization initiatives and growth aspirations through dynamic packaging.

And finally, it will remain of utmost importance to optimize financing by maximizing further deleverage opportunities, including possible capital market options. We will continue debt reduction using both organic cash and any generated proceeds and target further improvements of our credit ratings.

We have made good progress over the last 12 months, but recent pandemic developments underline once more that we need to pursue our target rigorously using all opportunities. To conclude, the corona pandemic has been the biggest challenge for the industry and our company.

But as a team, we acted quickly and managed the situation where we were presented with taking important and necessary actions at the right time, and we will continue to do so. In parallel, we are preparing TUI to be even stronger and more resilient in the future.

With this, I will hand over back to Fritz for his closing remarks.

Thank you, Sebastian. So before we come to your questions, let me convey a couple of messages.

First of all, we believe that leisure travel will see a strong rebound over the next time. And there are 2 major reasons for that.

Travel is and stays a megatrend. Demographic change has actually driven the growth of leisure tourism and leisure travel over the last 15 years to be way above GDP growth in Northern Europe, and this is our core source markets.

And the demographic change, well, does not change, right? So the contrary be available once we will go into retirement.

They will have the time. They will have -- they will have the money to spend.

They will be more healthy. They will live after the retirement 20, 25 years.

So this trend is actually unbroken and will stay intact. And also the new trend, which is the experience is the new luxury.

So experience is more important than ownership coming from the use from the younger people spreading out to the older generation is something which all market research, consumer research in the case. So -- So these are major trends.

And the second point is that we believe, and it's true that tourism is a force for good. Without tourism, in most of our destinations, I could say, in all of our destinations, situations would worsen.

And we saw that less investment, less transfer of wealth, less spending of our customers. And as tourism in most of the countries is the major source of wealth.

There's an enormous interest to move tourism again. And let me spend one word on sustainability as well.

If you don't have economic -- an economic sustainable situation. If your social environment is bad.

So if you are missing economic sustainability and social sustainability, usually the ecologic sustainability is also hit because then people actually start chopping forest and do monocultures. So -- because they -- they don't have anything to eat today and then they don't care about their future.

Therefore, tourism in general is actually a very good basis for ecologic sustainability and destination. And here, TUI has been a pioneer of sustainable tourism and is committed to lead the transformation and sustainable future in destinations as well.

So travel is a megatrend. Tourism is a force for good.

These are the basis. These are the megatrends that actually didn't disappear in the crisis prior to the contrary.

The crisis paused that development, but it didn't change it. Now when I go to the next slide.

Therefore, we assume that actually the tourist travel, the leisure travel rebound by the way, much quicker than the business travel as you see in the projected numbers. And the last slide, and I would like to close why actually TUI should be a beneficiary of the crisis eventually?

Because we have actually use the opportunity, used the crisis to transform our company. We did 4 major activities in order to achieve that.

First of all, we invested into tours and activity, Musement, integration into the app and you saw all of it. Third biggest touristic market, strongest growing touristic marketers, biggest behind flights and hotels, but bigger than cruises.

So highly fragmented, no digitalization, hundreds thousands of providers now through our app to 26 million customers. That's what we did in the crisis.

And you saw the effect in my earlier slide. Second, we grow digitalization.

We started digitalization, and we grow digitalization, lower cost, equal quality. At the same time, mass individualization.

So each and every customer individually addressed through mainly the app because that is how you address each and every customer. Also being available to enter new markets, dynamic packaging, eco only, where actually the pricing mechanisms, the yield mechanisms are very different.

So our new systems are capable of doing that. So we used the crisis in order to transform our company on the IT side in the absence of the customer.

Growth through asset-right financing structures. Sebastian highlighted the major cruise company -- cruise companies are of balance.

Marella will go off balance, everything is prepared as soon as possible. Hotels, selling properties, selling real estate but keeping operations, marketing and sales, hotel fund we talked about it was in the working, will be done in due course.

So asset-right structures in order to grow without direct investment on balance sheet. And of course, cost saving, through Global Realignment cost saving asset without sacrifice on growth, without sacrifice on quality.

€240 Million yearly savings achieved of €400 million. So it is a very ambitious program and more than 60% in the bags now.

So these 4 components, make me believe that we will be a beneficiary and make me confident to promise to you return to a gross leverage ratio of less than 3. That's what we promised since quarters.

And also promised to you and that's a midterm ambition of underlying EBIT to significantly build on financial year '19, driven by top line growth as well as the cost benefits. So we are confident to tell you that our midterm ambition.

So up to 3 years, we will be in the order of magnitude and EBIT which is significantly above financial year '19. With that, I would like to close, and we are available for your questions.

Three questions, please. First, on the change in liquidity suggests €1 billion cash burn in about 2 months.

Could you please break that down between the operating losses and the working capital outflow. Just to give us a feeling for the sort of Q1 loss run rate?

Secondly, there's no sort of big picture guidance on 2022 understandably. But if we take the 2021 reported numbers and compare those to 2019, it suggests that you're seeing about a 20% drop-through.

So a 20% change in profit for a change in revenue. Should we think about that figure for 2022, about a 20% conversion or flow-through rate?

Or could it be better than that? I'm just thinking about the big drop in revenue in the first half of the year that you're talking about.

And then Finally, on just delevering, you mentioned capital market options -- sorry, you said any capital market options and Fritz, I think in your interview this morning, possibly hinting at equity. So is further equity a possibility?

And also, you said Marella is going to happen quite quickly, I think, in disposing that, could you give us a feeling for timing or value, please?

Sebastian, do you want to start and then I add on or the other way around?

Okay. If you -- I mean, we don't want to divide the Q1 into the result and the working capital number, but what you quick can do is you can look at the working capital outflow in '19.

When you look at the amount of business we have that gives you a good indication of where the working capital outflow could be. The number is still the 6th of December.

We assume an underproportional outflow for the next 3 weeks. So that could give you some good indication that the outflow will be lower than what we had in '19.

On the capital market options, maybe the easier question, I think we explained that Marella would be good to have Marella in the joint venture. On the other hand, also TUI Cruises has to resume profitability again.

And we always said, it's a time frame of 18 months we envisaged. This is still valid that -- so that TUI Cruise is able to support that or any other options, which we also look at to realize the best value we can achieve.

Capital market options, for the time being, we focus very much on improving profitability and cash flow. Yes, of course, we also look at the options, but that is not the number one priority for the next coming months, there we clearly focus on the performance of the company.

The second question, I must admit, I haven't fully understand.

Maybe I can take that. I mean add to that, right?

I mean the interesting thing here is that all of our profitability is actually in -- more or less in Q4, right? So before, actually, you just restrict losses.

And therefore, if it's a little bit more business or less business in H1, it is not moving really the needle, right? So therefore, H2 is actually the more important issue.

And here, I have a couple of cornerstones, which I want to highlight. First of all, H2 or Q4 in '21 was in Hotels, in Western region and Central region already okay, right?

It was already, okay. It was not a precrisis level, but it was okay.

And it was profitable despite the fact that we had no vaccinations. We had relatively only a fraction of customers we brought, still much better than the year before, but in fact, not customer.

The biggest influence we had on a negative one was the U.K. And when you see the numbers in the chart of Sebastian, U.K.

was minus €250 million. And even if it had performed like Belgium or Germany, so not precrisis levels, you could have expected that it maybe would have been €400 million better than this, right?

Now the interesting thing here is EBIT-wise. And the interesting thing here is that for next year, the U.K.

is the market, which is more than 30%, I think, almost 35% prebooked at higher prices than precrisis. So therefore, the main profit contributor and the country, which actually the region which has been actually lowest performing in '21 is actually the one which is the most certain.

And also when you look at the cruise booking levels, as said, the absolute numbers of bookings are on the same level as precrisis, plus on higher yields. So therefore, we see quite some certainty on Q4, which is, as I said, all profitability for the year.

Now that said, I want to also mention one thing. We always compare the 90% to 100% to precrisis market levels -- sorry, to precrisis to ['11s], meaning we say 90% to 100% of our EBIT of our business before crisis.

But you should note that, of course, Thomas Cook was in '19 precrisis, still part of the market. And now it's not part of the market.

So in practice, if it was 90% to 100% of market levels, we potentially will see 110% of TUI, right? So there is some moderation of expectation in the 90% to 100%, which we referenced to already.

So therefore, the confidence that we actually hit our numbers in the very important H2 is quite good. I hope that helps.

Yes, that's really helpful. Thank you for clarifying.

It was -- I appreciate you make all the profits in the fourth quarter, but you can still make bigger losses in the first or second quarter. And in H1 '21 your losses were €1 billion higher than in 2019.

I'm sure it's going to be nothing like that this year, but that's the real question really? So I assume you're looking...

But when you look, for example, now, I mean we have shown you the number for the very important October right? October is good volume, it's higher than the 50%, 50% was summer.

We said for Q1 we were booking 69% of precrisis levels. 69%, of course, the absolute volume, the biggest chunk of it is October.

October was very good load factors and very good occupancies. So the October is by far the biggest month in Q1, for example.

And when you look at April, or when you look at the Easter business, it's 90% of '19 levels, right? And of course, we have bigger room, and we had actually -- we have cannibalized [ph] our cost.

We have 20% less aircraft fleet than we had than we had in '19. So this is an enormous cost reduction as well.

Maybe if I could add, we said we would expect 60% to 80% capacity. With today's bookings, it's probably more to the lower end.

That, of course, has impact on the profitability. But of course, we will see a significantly improvement what we had seen before.

Yes. It's moderate.

In the winter, it's really moderate. When you -- in this boundaries, its moderate, the influence is moderate.

Okay. So sort of losses in between the normal 2019 losses and nothing as bad as the losses last year?

Yes, sure.

Could you speak a bit about the March quarter, please? I think last year, you burned €800 million, €900 million of cash on very, very depressed volumes with half of that cash outflow being from the working capital.

So I guess my question is more, do you believe you will have a positive working capital contribution in this March quarter? And if you can comment on that.

Secondly, if I could please ask you, it's very useful you gave us, in the appendix, the forecast for this year for different cost lines and CapEx and so on. So if I add everything together, and I also add the operating leases, I add the cash contribution to the pension, I calculate a cash outflow of more than €1.5 billion.

Just from everything that's under the EBIT line and investments and so on. I guess on top of that, we're going to add the H1 losses that you just commented on.

So could you give us a range of outcomes in terms of cash generation for this full year, having in mind the capacity expectation, the capacity guidance you have in place. And the last one, if I may.

At the end of September, your unrestricted cash is much lower than what it used to be. Pre-COVID, you were always running at €1.8 billion to €2.5 billion of unrestricted cash and then another €1.5 billion of undrawn RCF.

This time around, if my calculations are right, you're running at €800 million, €900 million of unrestricted cash with a much larger portion of RCF. Now my question is, is this sustainable?

Is this the way you're going to run the business going forward? So always you're going to tap into the RCF for the winter months.

So you'll always need a larger RCF than before, higher interest costs and of that? Or is one of your targets once you delever the balance sheet, you also need to increase this cash position, it's unrestricted cash position that you hold in the business.

Can you provide any comments there, please?

Maybe I take the question. First one, do you believe that a positive working capital contribution in Q2.

We are working towards that we have a positive working capital contribution even if summer bookings would be delayed. The restricted cash, I don't know where you have the number from -- as I'm not so much for long in this position here, I can just say that we worked very hard on the restricted cash number around €500 million, and we think this is sustainable.

We even work on it to further reduce this number, and we are on a good way forward. And your second question, range of cash generation for the full year.

If we would assume for the time being that we have a very -- still a difficult half -- first half year and a normal year half -- second half year, then we will be generating cash, not only from profitability, but also from still bringing working capital to a normalized basis, which is also a quite significant number. So therefore -- and of course, keeping CapEx as low as possible, we just spent CapEx for health and safety, maintenance and these things.

So for the next years, we anticipate the CapEx number where it has been last year.

Just regarding your comments around EBIT significantly building on FY '19 levels, driven by the top line and the Global Realignment Programme, which of those 2 would you lean on as offering the greatest upside on EBIT? And your EBIT, does your EBIT outlook include capacity gains from Thomas Cook?

And if so, how much? And then finally, on that?

What does that sort of rebound EBIT assumed for the TUI margin? And then another area of questions.

I just wondered if you would update us on forward bookings and pricing in TUI cruises. So I think back at the Q3 update, you said TUI Cruises was on 2022 bookings within the historical range at slightly higher rates.

So if you could just update us on that and also on Marella as well.

In TUI Cruises, I think in TUI Cruises, I said in my section, right? That H2, we are on historic levels and at higher prices.

That stays the same, right? It's my chart with a little bit of a lot more text, right?

And on our ambition. I mean, one thing is very clear.

When you take out cost, right? And we take out -- we took out -- well, we take out cost of €400 million, in the effect of €400 million, almost 10,000 people.

FTE, which actually we get to less duplication and so on and so on and so on. This all is 100% certainty it falls to the bottom line.

Now of course, you can say this is -- but others will have similar things and so on. But here, we are just playing our scale, which actually we had inefficiency in the system, and we just took out inefficiencies.

So this is there to stick. That is my view.

And one effect we have not encountered in our profitability, EBIT numbers is the healthy effect of less risk capacity because if you have less aircraft 20%, then your yields are automatically better, because you have to fill less risk capacity. Now the only issue could be if you have -- if you run -- if you need more capacity because the market is growing stronger and you don't have enough capacity to fly your customers.

But with overcapacities in the airline market, it will be a beneficiary of low prices in that respect. And with the growth, of course, that is something particularly in the source markets where we are striving to also participate on particularly dynamic packaging because we have independent hotels and flights, which we actually package.

And here, you asked for margins. And I've said in the past, and I'm still convinced that a good tour operator should have -- in the precrisis levels, a good tour operator should have the ambition to do something like 5% in the order of magnitude of 5% margins, right?

And in the U.K., we had above, in Belgium, we had above. In Germany, for example, we were significantly below.

But in Germany, we have now reduced risk capacity in the airlines to a level which is almost a little bit more than half of what it has been before. And before that -- because of that, because of our high risk capacity, our risk and price or volume price actuation was actually heavily tilted towards volume with the respective dip and bad implications on price.

So therefore, I think Germany was a 1 percentage EBIT margin business. And here, I would definitely see also -- expect to see good effect.

And is your significant EBIT build includes Thomas Cook capacity gains?

I mean, one thing is clear. When we do our 3-year plan, of course, we assume that we participate in the market in a fair way.

So it doesn’t include that we will that we get more capacity than fair. It just said, but until end of year 3, yes, it includes that the market is consolidated.

Just 2, if I could. You talked about the impact of COVID, I guess, [indiscernible] on bookings.

And then first, you talked about Q1 being sort of in the bag, I think your words. Could you just talk a little bit about cancellations.

Obviously, the risk is if travel restrictions get worse on actual cancellations of bookings that are already in the bag. So if you can just talk a little bit about that?

And the terms and conditions around who can cancel or can't cancel? Just so that we know how [indiscernible] you currently have or are?

That would be fantastic. And then the second question is on hotel rates and the pricing that you're seeing into next summer and what that impact that could have on margins?

Because obviously, pre-COVID hotel prices were very strong and kind of hurtful to margins, so how that's progressing?

And maybe I’ll start. So first of all, we have seen a couple of days with net negative movements.

But now in Europe, in total, we are not net negative, right? So yes, the U.K.

has hit more, but we are not net negative, right? So therefore, I wouldn’t be worried too much.

Then the question of cancellations, most of the cancellations are now at least in the first days and are not amendments into the future, right? So we are talking 2/3, 3/4 of our amendments into the future.

And the only real effect we are seeing now actually in the U.K. Of course, the sentiment has been better a week ago, that’s clear.

So in all markets, a little bit softer then in a couple of weeks. But this is purely winter.

So when you look at summer, the summer is largely unaffected. Now on the hotel rates.

The hotel rates are heavily influenced by perception of scarcity and also local demand, right? And here, the rates are healthy.

So therefore, like also in the packages in summer ‘22. I would say good prices, right, good prices at this point in time.

Two questions, please. First, I wanted to drill into summer '22 bookings a bit more.

Last time you spoke, you had 1.65 million bookings for next summer, and now you're 2.2 million. So 550,000 gain.

If I'm right, like you had about 1.2 million bookings, incremental bookings over that equivalent period between October and December in 2019. So quite a sharp slowdown in recent months in terms of the pace of bookings.

Could you talk to kind of why that happened? Was there an element of people may be using credit vouchers early on to rebook, was that a very high discounting early on that sort of brought forward some of those bookings, and some color on that, please?

The second question is just coming back to this debate about the Thomas Cook capacity. I acknowledge that, but also, I guess, we've seen some pretty significant competitive challenges.

People like Jet2 adding more capacity, easyJet ramping up the holiday product. When you sort of net that all out, do you think TUI going forward is going to be in a position to take more than its sort of 21 million passengers a year on holiday?

Or is that really still the kind of number we should be anchoring around?

Okay. So first of all, when you look at the slowdown this reflects the short-term booking trend, which we have also seen in the past, right?

We had the amendments and the amendments with a very good price. So liquidity is in for these amendments, but profitability for that price and these margins will be only recorded like the revenues in summer, right?

So therefore, it's very positive to have these. And particularly, these are around the U.K.

market, which is the most important market we have. So half of our profitability in the Swiss market usually is in the U.K., more than 30%, 35% of bookings are in the back, like, let's say, for the summer next year at better prices than '19.

So now the slowdown in our analysis or -- we are convinced that the slowdown we see right now is mainly based on uncertainty, right? So people say, yes, maybe I shouldn't book and so on.

Now this will be only really changed if we get not uncertainty, the prevailing motivation, but perception of scarcity. And the interesting thing here is that at least for the peak season, and you saw that in April.

Yes, in April, we are 90% precrisis levels booked, right? So therefore, the perception, the peak season, I'm pretty sure at a certain point in time, we'll toggle away from -- I'm not certain if I should book right now to the perception, If I don't book right now, I don't have a decent holiday, right?

So therefore, we -- it will be not black and white. It will be a little bit later.

The summer bookings will be a little bit later than in precrisis levels, at least for the next year, but for the coming years, but it will be a migration here as we always say, right? Part of the customers will still have uncertainty, part of the customers will start seeing scarcity.

Now in both cases, price movements, hectic price movements are not good idea because price elasticity is not the main driver, right? That's the reason why we stick to good prices, very healthy prices.

The bookings we get in are very good margin bookings, and we assume and we are absolutely certain in the short-term business. The capacity will be filled at least what you can see in summer '21, capacity was not filled, our load factors, our occupancy were good, right?

So that's my first answer. My second answer is Thomas Cook.

Thomas Cook, was actually -- had 20% market share or 15% market share, let's say, right? And in '20, so in '20 January and February, our revenue, booking revenue was 17% or above 11% for the summer, up, right?

So we always -- that was strategy, strategy is we get our fair market share. And that's what we assumed, and that's how we price and that's how we planned capacity.

And I would say, in ballpark, let's say, this is, of course, different countries have different Thomas Cook participation. And in Thomas Cook in different countries at different -- sometimes it was more low class, sometimes more upmarket and so.

But in the mix is maybe not a wrong assumption to assume that we will participate, not overly aggressive, but participate. Does that help?

Yes. Yes.

Just going back to your first answer. Do you have any credit vouchers outstanding now?

Or are those pretty much all been burned through?

No we allocated most of them nonallocated, I think Sebastian or Mathias, is it a couple of hundred million or so.

It has been reduced significantly to around €200 million, which is not yet the normal base but close to the normal base. And they are normally for the initial payments of when the customer then travels, he still has to play another [70%].

So it's still looks big, but it's a quite normal amount.

Is normal €100 million or so?

Yes.

So liquidity of €3.5 billion is most likely.

Actually I have two, one by one. The first one was, I'm just losing a little bit track of your authorized capital.

You mentioned, obviously, raising equity is not on the immediate agenda. But if the situation is to get worse and you would need to raise equity, how much authorized capital do you have available now?

And are you going to go for a new or a big authorization for next AGM? Just wondering what is the strategy there?

And then I have another question.

One question only?

Well, I have another question, but maybe after that. The second question...

At the moment we have no authorized capital, but we have the next AGM in February, and it's normal standard that you asked for authorization, which doesn't mean that you use it, but it's very normal that you go to the limit to ask that gives you the potential possibility to do capital measures. But this is pure technic, and we will do so in the next AGM.

How much will you do? And the next AGM is in May?

Or when is that?

February.

February. And how much are you going to ask for?

We're not asking for something. We -- it will be the authorization to...

Yes. No, I understand the authorization.

What numbers of shares would you like to authorize.

Standard authorizations, 10% conditional and 10% authorized. But this asset is not that we do something.

It's just what I think all companies at least in Germany, would do so to ask for authorization.

Okay. No, I understand and certainly the right way.

The second question was, if I understand it right, so you -- in the summer, you want to be at 90% to 100% capacity and your ASP is up 22%. So splitting the question to 2 parts.

Do you expect the ASP to decline the more closer you get to bookings, that short-term booking behavior you described? Or is it -- maybe if you can get -- if you can tell me anything around expectations, how you would expect that number to change if you could so?

And then secondly, if I take that together, you're having close to 100% capacity and your sales prices are significantly up. Should we expect a significantly higher profitability in your Q4 then?

Or is there anything that we need to consider in addition to that, like input prices or other factors?

Okay. No.

I mean -- maybe I'll get the first one. We have increased our summer prices.

Last time we talked to you, our summer prices, I think, were 70% or 80-odd-percent up for the bookings we had. In our trading environment, yes, you always think about when you start really yielding.

At a certain point in time, you will start yielding, right, because you will start to lower price in order to fill your fixed capacity, right? But for the time being, we believe that healthy prices in the best interest because we don't expect a lot of price elasticity now.

Now -- because now it's uncertain, and now the buyers will not go up even if you lower the prices because now price is not the main motivation, but certainty is the main motivation. Now in -- comes closer, so short-term booking, we will use capacity.

And here, it's difficult to say how the prices will develop. There are 2 scenarios.

The one scenario is maybe the more likely scenario, all destinations are open, you have plenty capacity at everywhere, then the average -- then scarcity is not an issue. Then the average will go down, I mean, and maybe we even overshoot on our expectations in volume, who knows.

And the alternative scenario is that the significant destinations are not bookable or are not advisable to travel to. And then the remainder of destinations are scarce and then the prices will stick up and maybe then it's closer to the 90%, right, and of bookings.

So it really, really depends on -- and we have some rigor room, we will only finalize the volumes or fix the volumes for next summer, let's say, in most of the parts in February, March. So until then, more or less, we are -- we tactically, we operate the business in a way that we -- not for the bookings we take in right now.

We optimize the commercial position. So it is a little bit of -- today, we believe elasticity would not be big enough in order to be smart in order to lower the prices.

Okay. I mean that makes a lot of sense.

But -- and then the kind of like the over arching question, if you are at 90% and your price levels are higher, should we expect same EBITDA level? Or is there like something to consider on the input factors and other things that...

I mean, it was recognized for now that it was very helpful in the last or more than a week or 2 that the fuel has come down 15%, whatever, 18%, and we could do our hedging lines and improve our position there. But that is maybe the main input cost to consider, right?

I mean, fuel and dollar. But here usually – the policy usually is to be hedged because otherwise, the risk – we would be on a currency or commodity business instead of a holiday business, right?

So thank you very much to all of you. The good thing is underlying trends are intact.

We have made our homework. We believe that we will be a company more lean, more agile, more digital and, of course, with higher profitability and cash conversion.

Eventually, when the crisis is over. And it will be a little bit of a bumpy road with Omicron and so on, but the positions we are in today is very different than the position we have been in a year ago where no vaccination, there's no booster available and no medicine in front of us.

And even this summer was not a disaster in the countries where we could travel and the hotels and the resorts. So we are very optimistic and look forward to actually next summer season as well.

With that, I would like to close. Thank you a lot, and wish you all a great day.