TUI AG

Thank you, Claire. Good morning, ladies and gentlemen.

A very warm welcome to our third quarter results presentation from the TUI campus in a very hot and sunny Hanover. My name is Nicola, and I'm Group Director, Investor Relations.

I'm joined today by our CEO, Sebastian Ebel; and our CFO, Mathias Kiep. We are pleased to present a good set of numbers with Q3 delivering the best ever result.

No doubt, you will have seen our ad hoc statement yesterday evening, which highlighted that on this basis, we are raising our full year '25 underlying EBIT guidance. Following the presentation in a moment, we will be available for Q&A.

And with that, I have the pleasure to hand over to Sebastian and Mathias. Yes, Sebastian to you first.

Thank you, Nicola, for the nice introduction. And you see us -- not you see us, you hear us in a good mood.

There are not many good news today around in the world. I think what we can show and deliver are good news and that keeps us very positive.

You are familiar with our agenda. it's the same like before.

I will talk about operational and strategic highlights. Mathias will go into the numbers in detail.

We also will give you a trading and outlook and a short summary. We have seen a very strong 9 months: revenue up by 8%; EBIT up EUR 115 million, EUR 150 million at constant currency driven by record Hotels and Cruise results.

How do we do that? We have had an even intensified look into the integration benefits.

This, doing into our own hotels, our own cruises, into the Musement products, have even been optimized and that drives superior results and growth, and we are really proud of that. Markets + Airline transformation is accelerating.

Very important because we still have significant room for profit improvements. And we are -- and we have presented that before, more customers more products to deliver growth.

And by rolling out now our standardized global IT platform, we are able to significantly reduce cost. We will go into the details in December this year, so in 3 months, to give more guidance on what we do there.

And on this basis of the great 9 months, we are not only well on track for the full year, but we were also able to increase the guidance for the full year to 9% to 11% at current currency (sic) [ constant currency ]. If you look into the third quarter into the details, significant improvement, EUR 90 million, almost EUR 100 million at current currencies (sic) [ constant currency ], driven by the Holiday Experiences record and Markets + Airline benefit of the Easter shift, which we had expected when we presented the Q2 numbers.

Revenue up by 7% and EBIT up to EUR 321 million, the highest Q3 result ever. I can remember, and the team looked into it so to verify it for the whole TUI.

When we look into Holiday Experience, forward trading momentum is there, it stays. So by the vertical integration benefits, by the strong demand, we are able to have higher rates for our unique and differentiated products.

By the way, the focus on unique and differentiated products makes TUI different also for the Markets + Airline. And the Markets + Airline helps a lot through the integration effects to get the outstanding occupancy and -- rates.

If we look into the Markets + Airline, summer bookings are minus 2%, ASP holding up 3% in a very competitive market with a later booking trend heatwaves and especially the Middle East conflict had some impact. If we look into the winter season, we have seen a very positive start.

It's still early, but a good start is a good start. And by having said that, as said, we were able to increase the guidance.

If we go into the details. Q3 and the 9 months, Hotels & Resorts were on the same level as Q3 '24.

This is taking into effect a negative effect. We had a onetime effect on revaluation effect, and we also had the effect of the Turkish lira.

Operational result has been significantly better. But again, this is a strong comparative we had last year and we keep that.

On the Cruise side, a significant improvement. The good thing is it's not only because TUI Cruises' capacity increase, it's we haven't had the negative effect of the Suez channel rerouting last year.

And we do see that we have a very good development also when it comes to rate. You could argue -- on Hotels side, the occupancy has further increased daily rate, 3%.

You could argue why is the occupancy, and also when we look into the fourth quarter, is stable? Because the cruise ships are fully booked.

So the future tasks will be to optimize further the rate. Also good development with Musement.

Especially we put a lot of effort to direct our TUI customers into our own produced experience through the built database we have with all customers and that is doing very well, and that has led also to a significant increase in the 9 months of the TUI Musement. So Holiday Experiences doing extremely well, benefiting from global distribution that I should have mentioned as well.

We now get more and more hotels also from other source -- TUI source markets. We went into Portugal.

We went into Spain. By the way, we will go in the autumn into Italy as a new source market.

We went into Eastern Europe, but also into the Americas, South America, Middle America, and that helped us to keep the high load factor or even improve the load factor. So it's an important effect of the vertical integration.

If we look into Markets + Airline, we have seen the expected increase due to the Easter shift in Q3, but we are still behind the 9-month number. Departed pax, 2% up.

What is really important for us is the increase in the dynamic package share. This is a very important source of growth in the future, and we have now built a dynamic connection to airline content, to hotel content and that's why we also expect not only here a significant -- we see not only here a significant increase, but we hopefully can accelerate that in the future.

App sales also very important for us, 40% increase, now to 10.5 percentage points. That's a great development and clearly what is even better is that when we want to go to the 50%, there is a lot of what we can achieve by improving our app and load factor on the same good level as we had before.

If we look into the regions, U.K., having seen the biggest improvement; Germany, a small improvement; and Western Region, negative. Western Region consists of 3 countries, France, Belgium, Holland.

France is doing well, but we haven't had -- we have this for 2 years, before that it was our Sorgenkind, our main concern, problem child. Holland and Belgium needs a lot of focus, and we are turning around the business.

We're changing the business model to a more dynamic model, a more direct sales model. We actually had the same situation in Scandinavia, Finland a year ago.

We changed -- turned around the Nordic countries and this is what we will achieve, also invest in region next year. So it gives us a solid base of further improvement as well.

Some highlights like we always do, we said for Markets + Airline more products, more customers. For more products, there is a very important product, which we are now rolling out in Europe, starting with all the TUI markets, starting with Germany.

This is our Tours products. The tours market is a big, big market in Europe, but everywhere in the world.

And the new tool consists -- which is available for online but also for retail, it consists of preproduced round trips at the moment, 200, but that will increase to several thousands closely. But what we have seen there is a big demand of personalized agendas from the customer.

So where he books 2 days Los Angeles, 1 day San Francisco, 1 day in Yosemite Park, and the Tour will make sure that the flight fits to the hotel. The time schedule fits of the excursion, fits to the location where you are.

So it's a great tool and the first signs are very promising. It's a huge untapped market.

I talked about the app, a lot of small and big improvements there. We bring AI into the search, not only search algorithm, but also the customer can do full text search.

We did start that in the U.K. And every month, there is new functionality in the app, location-based service and so on.

On the Hotel, on the Holiday Experiences side, last time we presented what we are doing in Asia. We are now also expanding in Africa, which is, by the way, a very attractive market and the TUI brand is very well received there.

Now new hotels in Gambia, Cote d'Ivoire, thank you. I was never so good in French.

And also in South Africa, there are more hotels coming. As you know, we successfully launched in March the Mein Schiff Relax, which was now in full operation in the third quarter.

In the third quarter, TUI third quarter of '26 the Mein Schiff Flow is coming into the market, and that will also be a significant base of improvement. Sustainability.

This is not a fashion for us. It's a sound business case for us.

It's, of course, good for the climate, it's important for the customer, but it's also commercial business case in itself. Here, we have some examples for what we do.

Turnarounds on airports, we had the first U.K. airport, was it Birmingham, where we use hydrogen-powered ground support equipment.

What is really not on the list here, what makes us proud, we had the first trip traveled with Mein Schiff Relax completely with e-LNG. So carbon-free LNG, which was made out -- or which is made out of biogas coming price-wise closer to the carbon LNG.

And this is something where we always dreamt of and we have brought this into reality. Mathias, the hard numbers.

Thank you very much, Sebastian, and good morning also from my side. Let me, on the next page, just briefly go through the numbers, the bridge is 3 and 9 months and then P&L, cash flow and balance sheet.

And as Sebastian just presented, we're very pleased naturally with this quarter. Revenue increased by 7%.

This is also because of the positive shift of Easter into this quarter. And then an underlying EBIT 9 months at constant currency of EUR 199 million and EUR 165 million at actual rates.

This results in this EUR 150 million increase year-to-date at constant currency. And as a result, we are very pleased that we can raise our guidance to a range of 9% to 11%.

Just mathematically, this range also allows us to even have a softer Q4 and still result in a positive area with this range. Net debt has further improved, that's a result of our financial discipline.

And we target our further improvement of leverage for the full year and can confirm that we are on track to do so. We also, and that's a very good reference, we think, has issued a promissory note of around EUR 250 million at a very favorable coupon.

I think this shows also the trust and the terms that we are now achieving in the credit market that really helps us to not only refinance the business, but to optimize our financing structure. Now the 3 months, as Sebastian just has explained, I think on this one page, you just very clearly see the success of Cruise, which goes beyond to just the addition of the new tonnage into Cruises.

And the not having the Suez effect this year, it's also an improvement in the underlying operational performance of both units. Now cumulative 9 months numbers, as I just said, EUR 165 million for the 9 months at actual rates.

If we would apply prior year rates, that would be at EUR 200 million, so EUR 35 million higher. But this is in particular coming from the volatility in the pound, for example.

And you may also have just seen the volatility in the year that we thought earlier this year this will maybe reverse because we have the stronger summer months at current rates, I don't expect that we will have a significant benefit in Q4. On the picture in terms of where is it coming from strong performance in Hotels & Resorts, as Sebastian mentioned also the benefits of vertical integration that's really encouraging Cruises.

That's something we've seen in Q3, we have seen already in Q1. This is really a strong market.

And through the localization of both units, it's a very strong product proposition. Musement in line with expectations, strongly benefiting from the Markets + Airline clients.

And then in Markets + Airline, accumulated a position of minus EUR 35 million. And that's why we also think going forward in Q4 this will be, for the full year, challenging to turn around.

And this is also reflected in our guidance going forward. Now to the P&L, cash flow and balance sheet.

If you look at the details, what needs to be highlighted, this is in particular adjustments. Net interest and the EPS adjustments, you see a positive number.

This quarter, we had some disposals and they resulted in positive one-offs. We expect that this positive impact of around EUR 20 million will be carried forward.

And therefore, we can, for the adjustments, update our guidance to the lower end of our range. Interest is very favorable.

Again, there's a one-off included because of the valuation of our bond. But the other half of the improvement of around EUR 20 million in the quarter is various elements, lease improvement, interest on derivative improved.

And we expect that these improvements will hold for the full year. And if you then again, just do the math, you will come to a situation and we will expect a similar improvement in Q4.

And on that basis, we expect that we will actually be slightly below the range that we already reduced last time for interest. And all of this results in a very strong increase in earnings per share by EUR 0.26 in the quarter, EUR 0.10 last year and EUR 0.36 this year.

For the 9 months and 3 months on cash flow. Cash flow is in line with our expectations.

Let me highlight a couple of elements. First, working capital is a bit softer in the quarter than last year, but fully in line.

Sebastian mentioned it, we also go for margin rather than volume. The other cash, there were a couple of one-offs included last year as well that we don't see this year again.

And there's also always the movement in maintenance reserves when we hand back aircraft, that's an impact that we will also see in future years that whenever the Boeing portfolio switches around and we get new aircraft that we then see the outflow for the old aircraft on the maintenance. Interest, the same positive effect that we've seen on the P&L side and resulting also in improvement of our guidance.

So we expect that we can go below the range. Again, we lowered that range in H1 as well, but we think we can get below this for the full year.

Investments in line with our expectations. You see an increase also when you see -- look at the 9 months, it's probably around EUR 100 million more.

And just be reminded that we saw substantial divestment proceeds last year. And in line with H1 communication, we therefore expect that we are at the upper end.

The rest of the cash flow is in line with our expectations. And as a result, we see that net debt has improved by EUR 200 million versus prior year.

There are 2 effects. One is there's a bit of FX as well, which is supporting us on the lease portfolio.

Dollar against the euro is a bit weaker versus last balance sheet date. And the second impact is that against July -- against the comparison in June of last year and July, we issued a convertible and the equity component is accounted here in the comparison.

All in all, the development here since the 1st of October is reflecting our strategy to keep net debt under control, increase our earnings and thereby reduce our leverage step by step. Just before I hand back to Sebastian on bookings and -- just one final comment on the promissory notes that we could -- issued.

As I said, I'm very pleased with the terms and is very pleased with the support that we received from the banks that handled this transaction. The rationale, again, this is not a refinancing.

It's really about optimizing our financing structure. And it's cheaper than what we have.

While -- but even more important, it gives us more flexibility for the aircraft that we intend to refinance with these proceeds. So we will not prolong lease payments, lease arrangements for these aircraft, but use the proceeds from this Schuldschein.

So no impact on our debt position because we're just replacing it, but it will give us much more flexibility in our aircraft ownership and that's something which is a positive for the operations of our airline. And with that, I would like to end and hand it over back to you, Sebastian, on trading and outlook.

Thank you, Mathias. If we look into the fourth quarter, and I want to start with Holiday Experiences.

We do see that our occupancy we can further optimize by 3 percentage points, and we are able to increase the daily rate by 6%. Two main effects: global distribution we have built up and the steering of our markets into our own assets.

This brings us into this great situation. And by the way, the Net Promoter Score for our own assets are outstandingly positive.

On Cruise side, another increase of capacity, but only a small increase of occupancy. Why is it only 1%?

Because the ships are full. They are above 100%.

We have just seen an absolute record with additional beds for children. So we are well above 100%.

This is amazing. And this is an outstanding result, gives us future possibilities for price optimization.

And despite this strong increase, a great result. By the way, when we look forward into -- because of one ship more next summer, we do see that we are even ahead of bookings of this year.

If we look at TUI Musement, we expect high single-digit growth, which is an outstanding result because we are able to increase further the uptake rate of TUI customers. Why?

Because with the single database we have built and personalized offer management, we are able to bring the right product at the right time to the customer and Musement is benefiting from that very much. By the way, we are now also starting to offer Musement customers.

So Musement customers, which they got in cities, which they got in the destination, but not through TUI, we have started to offer TUI products to them as well. So overall, a great development and vertical integration is paying off with all the tools we have built.

If we look into Markets + Airline, bookings are at minus 2%. U.K., plus 1%, and we do see a momentum through all the measures we have taken in the U.K., 90% sold.

Germany going backwards by 5%, the Tour operator product, minus 4%. Why is that the case?

We have seen a significant impact not only of the heatwave, but also from the tension in the Middle East and as long-haul destinations in the Middle East has been a significant part of the TUI business, we have seen some impact there. And we have very much focused on margin, less on volume.

Therefore, the ASP is plus 3%. And program sold almost 90% today.

So that's why we are very -- and summer includes October. So we are very confident that we can achieve what we have.

Looking into winter, we had a very positive start. It's still early, but it's important we expect a good winter because of the shoulder season is getting more important because customers who may have not traveled in summer will go in October and November.

We also are getting -- that's part of the transformation. We are bringing more products to it like city trips.

TUI has never been strong in city trips. Now we have started to offer them.

So it's a little bit the reverse by how easyJet is doing it who went from city trips into sun and beach. We go from sun and beach into cities.

It's a complete untapped area for TUI. And as we can now dynamic package, the Ryanair deal helps us a lot.

We are offering attractive products in the city destination area and that supports especially autumn, but also the early season in summer. So that's what we understand with more products, dynamically produced TUI Tours component products.

And for -- we talked a lot about this and we now see that all these things come into place. And that's why we are positive not only, of course, for winter, but for the future.

Hedge position is also something I would like to reflect on during COVID and the first years after, we have still limitations. Now the limitations with the sound balance sheet and the benefits improvements we have seen on the balance sheet and the trust of the banks, we are back now to a normal situation.

We can do what we want to do. We have full flexibility.

And we are happy that next winter is hedged for good rates. We have, especially on the fuel side, good hedging for summer and we have even started to hedge for winter '26, '27.

So we are back to normal. So the outlook we think is very positive.

And that helps us to increase the guidance on constant currency from 9% to 11%. And what is maybe even more important, Mathias will go into more details on the guidance, is that we can also confirm the longer-term outlook for the coming years because we are very convinced that with all the improvement in Markets + Airline, we will see a significant, better catch-up mode in the coming years.

And maybe you do some more?

Thank you, Sebastian. And indeed, this is more to summarize what we've presented so far.

So the segment view compared to our position when we set up this guidance in December, Hotels & Resorts, we had a slight growth in our expectations. Given the very strong results and performance, we have upgraded that to strong growth.

Same to Cruises. As discussed, this is really a strong market and the performance is beyond what we see from just adding the additional capacity and the Suez effect.

Musement remains unchanged. The translation of clients into earnings is continuing to work very well.

And then in Markets + Airline, unfortunately, we need to downgrade from our moderate growth expectations, which were triggered by the expectations, particularly on the fourth quarter. We now expect this segment to be below what we've seen in full year 2024.

But as a result, with the very strong performance in our product businesses, as we just presented, the underlying EBIT for the group is expected to increase higher than we had and by 9% to 11% at constant currency rates. And the details in the P&L and cash flow, again, to summarize these adjustments.

We expect now at lower end of this range of EUR 40 million to EUR 60 million. Net interest, we've lowered the range in H1.

And we expect both for P&L and for cash to be slightly below that range. Net investment, we confirm that we're at the upper end of this, and there is this additional EUR 50 million prepayment for the Marella refleeting, which has been triggered in the fourth quarter.

Lease and asset financing remains stable. And net debt in line with what we've just seen for Q3, we expect a slight improvement for the full year.

And with that, I would hand back to Sebastian for final words and midterm outlook.

Thank you. Final words for today, hopefully.

As said, the guidance this year, but we want to confirm our midterm ambition. We see a significant improvement -- we foresee significant movement in Markets + Airline to the measures we have take, shoulder month, dynamic packaging.

I had forgotten one important thing, more differentiated product because today we have 25% differentiated product with great margins. The commodity product is under pressure.

And if we move in the next years to 50% differentiated product, we will see a significant improvement there as well. And differentiation is not good for the sake of differentiation.

It's because the NPS, the Net Promoter Score, what we do see is well above whatever normal products mean. So this is an important thing for us as well.

And we do that through optimizing and putting a lot of effort into the vertical integration to drive scale and profitability. We have now the tools, the database so that we can do personalized offers.

And we have, as said, the platforms, which we are rolling out. Not we want to roll out, we have rolled it out in some markets.

We will roll them out to all markets, and that gives us a significantly lower cost base for the future. We will see that in next year, the first big effects, and we will give more details in December.

The transformation, as said, very important. A lot of effort and great progress, which is not yet reflected in this year's numbers, but we will see that very much.

And of course, one big effect is the turnaround in Belgium and the Netherlands. On the Holiday Experiences side, we have a lot of opportunities to invest.

We are limit in the capabilities we have, and that helps us to really focus on the best out of good investment that was also in the past the trigger point for outstanding returns. What we even do more is that we focus on the integrations to build clusters, which means -- and we have 2 or 3 clusters, which we are just preparing.

It's about flying to a cluster. It's building and having great hotel content in the clusters and have Musement activities on the ground there as well.

So clear focus on the best returns, we can achieve that. And that will leave us -- brings us to further improvements on the cash flow.

We still have to do something there and we do know that, which will strengthen the balance sheet. And this knowing what we are doing, independent if we have headwind or tailwind, would be great at one stage to have tailwind again.

But with what we do, we get even more resilient to geopolitical change, to demand changes and we can confirm our ambition to grow further the underlying EBIT by 7% to 10% in the coming years. It's a tough program and we have made, especially when I look at what we presented in Madrid, when was it, 3 months ago, 4 months ago, it seems like it was half a year ago, we have made significant progress in implementing what we had promised to implement and now it's the right time to start to earn the commercial benefits in next year and the years after.

Thank you, Sebastian. Claire, we are now available for Q&A.

I've got a few questions on Markets + Airline and then one on free cash flow. So just on Markets + Airline, the margins looked like they dropped to only 1% this year.

It will be helpful for us to understand how much of that pressure, is it demand environment, whether that's the consumer, the weather, the Middle East? How much of it is the competitive environment, basically insufficient ASPs?

And how much of it is the higher cost of the transformation? And is there a risk that your margins in 2026 in Markets + Airline will drop further?

Secondly, on the strategy in that division, you sound really confident it's working. As you said, we can't see any evidence yet.

Is there anything you are disappointed about? Or are you going to be making any changes?

And why are you so confident it is working? And then, finally, on cash.

The mix of profit is moving even more towards the joint ventures. So what does that mean in terms of your free cash flow conversion and the eventual possible payout to your shareholders at the end of the year?

Thank you. I start with the disappointment.

If you look isolated -- or if you look in details what we presented, the one thing where I'm disappointed was the development in Belgium and Holland. And we have addressed that like we did it in Nordic, and there, we have seen the change.

And therefore, we will see there the change and that will be also a significant part of the incremental profit for the coming years. If you ask about the margin, yes, there are costs of transformation in it quite significantly.

If you look into the margin profile, you see that the traditional wholesale package is under pressure. By the way, wherever we act as a nondifferentiated OTA, that's where the pressure is.

If you look at differentiated products, so 25%, we have significantly higher margin not only on the Hotels side, if I would add that, but also for Markets only. And therefore, to further increase, we put a lot of effort to increase the differentiated product set.

As said, the target one day 50% will -- there we will benefit. So important non-diff change to differentiated product.

It can be a hard diff, it can be a soft diff and that will have a significant effect. Second thing is, when it is non-diff, it is important that it's produced dynamically.

The old model is not bringing the benefit as it has been, and therefore, it's so important that we increase the number of dynamic packaged product. Thirdly, new products we bring into the market.

The commercialization of the airline will -- there, we will start in next year. We will see a slightly changed route network.

More also we have some optimization for seats only. So it's a lot of activities, which will make a difference and the new product, as said, towards city trips and so on.

So one, disappointment, addressed and we will change that. Gives us a huge -- big upside.

And the change in the traditional business into the modern world with a lot of differentiated product. And maybe I should add the more -- despite that we support retail as much as we can do, one of the biggest things is to get the AI systems implemented into the distribution, which remains linked to social media, means into the ChatGPTs, the [ proximities ] and so on.

Would you like to do the third question, Mathias?

Yes. So on cash flow and capital allocation, I think as we point to this from my side, capital, I think, one is the capital return strategy needs to be based and will be based on the robustness of the business overall.

I think we can confirm that the change in earnings mix has not altered any of our internal discussion and road map. And of course, naturally, a third point, we are working on the improvement of profitability and cash flow of all our businesses.

Could I just come back on a couple of things you said, Sebastian? Could you please, if possible, quantify Belgium, Netherlands hit?

And also, you didn't answer the question about margins in 2026 In Markets + Airline. We're not asking for forecast, but do you think we have bottomed or it could be a bit more of a U-shape before we get to the 3%?

I expect a significant improvement for next year when it comes to margin. On the Belgium holiday -- Belgium, Netherlands things, you see the losses and this is a business which should be structurally significantly positive.

I guess if we go back to Q2, you were quite optimistic that the slight step down in bookings you've seen was due to a later booking window and you were calling out the improvements you'd seen since Labor Day at that print. So just a little bit more color on what's happened in the last couple of months that, that trend didn't hold.

Is that all down to heatwave and Middle East? And in particular, maybe second question, just a bit of color over the last 12 months as to what's particularly happened in Germany.

I think after FTI came out, we kind of assumed there was a vacuum there, the 2-year lease was slightly filled. Who has stepped into that vacuum?

And has that actually sort of raised the competitive pressure? Is the replacement more competitive against you than FTI?

And then the third question is just around the dividend. I mean you haven't mentioned it today, but I guess we're expecting a dividend policy at your next print in December.

Does dividend policy mean you're going to declare a dividend? Or does it mean you're going to set out a policy and declare a dividend at the end of 2026?

I think, first, I would like to reiterate, we have a great result in Holiday Experiences and this is the result of the vertical integration. The customers of the markets brought into the Holiday Experience assets.

Second, we see a good momentum in the U.K., more to come. And yes, Germany has been a weaker market.

If you asked for the reason, there are external onetime effects like the Middle East situation, also less trouble to the U.S. And if you asked about FTI, as I said, the differentiated products bring the volume.

We could have got quite more customers, we would have liked to do it. But as we wanted to protect margin, the market environment was not with the products we had to get to these customers.

So the market has been weaker, and the heatwave also played a role, definitely. And FTI, it was a decision in this market development situation to focus on the differentiated product.

We will also bring more products into the market with a different cost base to also be competitive with there, but it's, again, for us, margin protection is very important. So it's more that we go into the area of differentiated product.

You may recall that FTI was heavily loss-making, so not because it was a bad company or they had -- they had a lean cost structure. It was just the market segment they have been in, and this market segment has not improved yet.

And with -- and therefore, it was not our main focus today.

Yes. Thank you.

And on the specification of what dividend policy means in December, I would say please understand that we cannot really go beyond the communication that we have set. We need to ask for your understanding that we cannot further comment on this.

Reason is we've been quite transparent at our internal discussions and the discussions that we are having with our Board. This will be in Q4 calendar year and we cannot, therefore, go beyond what we've presented externally yet.

It's on our agenda.

Okay. Maybe just one quick clarification.

Why has Germany suffered more from the heatwave and the Middle East than the U.K. has?

What is the differentiation there?

Why has Germany more suffered? I would say that the economical climate in Germany is less good as it is in the U.K.

Second, the U.K. is more orientated to the Caribbean than Germany.

We have a significant business to the East, by the way, it's now coming back and that's why I said with heatwaves, we probably have to expect year-by-year. But these geopolitical incidents, they impact us for 8 weeks.

Unfortunately, we're the wrong 8 weeks, but it's over. And what we do see now that this market is coming back.

And yes, so these are onetime effects. And of course, what you also see maybe Germans are more risk averse.

If you look at bookings to the North Sea or to the Baltic Sea, German North Sea, German Baltic Sea, they are even down 25% if you look at the official data. So Germans have been more hesitating.

So in our segment, we are actually doing very well compared to others. And by enlarging the product portfolio and so on and so on, we will now turn it around again.

Important for us that the relativeness to others is good. And with the new products and the new production method, despite these incidents when they happen, we will win.

And we will prove that.

Could I please start with the working capital? Correct me if I'm wrong, but I think your revenues in Markets + Airline in the first 9 months are EUR 800 million higher year-over-year.

You usually have a negative working capital. So this should mean some cash inflow from working capital better than last year.

But I believe, the contrary, I think the working capital cash inflow is EUR 100 million less than you had last year. Could I just double-check the moving part and what's happening there?

I think the second one on Markets + Airline, coming a bit back to the cost savings and transformation costs and benefits, I think you mentioned you'll provide us more details in December. But just ballpark for us to understand is this year the transformation program, is it a net headwind to the EBIT or the benefits are higher than the transformation cost?

Could you give us a bit -- I'm trying to understand if this year there's a EUR 50 million, EUR 100 million benefit from the transformation or it's a headwind or anything like that? And maybe the third one, if I may, just coming back to your guidance for a modest improvement in the net debt.

If I look on Slide 33, I think that the segments which may be a bit more difficult, at least for me, to forecast is this movement in the lease and other repayments and other noncash additions to the lease. Could you talk a little bit about that?

So leaving aside the free cash flow generation, while the impact on the net debt from all these movements in the leases and additions and other movements, I think you've mentioned in Q3 you had a benefit from the FX on the dollar-denominated leases. I think that itself helps you by EUR 200 million.

So could you help us for the full year roughly how we should think at these moving parts?

Yes. Maybe I can start with working capital.

If you just look at Q3, you have a EUR 50 million softness in working capital, again this is something where I'm not kind of too excited to be out, to be honest. I mean, there's always what is exactly the date and how does it compare that plays a role in this.

If you look at the order of magnitude, if you compare revenues to working capital, there's also the advanced bookings, which are included in working capital. And that's if you just look at the trading statistics, which are a bit down, that's also reflected in this position.

But in the end, that's something that over the full summer and over the full season, which will then go out. And I think, again, which is an even more important, is how is the winter for us because in the summer we are anywhere on the surplus cash with regard to seasonality.

On the third point, net debt, modest improvement. Yes, indeed, if you just look at what is the earnings and cash flow forecast operationally for the business, implicitly then you would be at a kind of good improvement on net debt.

At the same time, we had order delivering, Boeing deliver in the winter and that has increased because they move directly on balance sheet our lease position, and that is netting some of this positive effect off. That's why we have a slight improvement only for the full year.

On the transformation cost effect on the results, one is, of course, we will always see operational improvements and we're working -- I mean, this is a step-by-step project. This is not like a turnkey project where in certain point of months you will see a very different business.

This is stepwise. At the same time, when you look at our adjustments, we factor in kind of costs that would be involved in our fourth quarter in terms of realize some of these benefits.

And on the program, more details in December. It's a significant benefit we want to achieve.

And I think it's important for us to really have the time to give you a full overview about that. And of course, the net costs were still bigger than the positive effect.

Can I add one short -- sorry, go ahead.

And the transformation then is one step to bring us to the 3%.

Can I add one short follow-up on the working capital? So Mathias, based on your answer you suggested that at the end of the year, the working capital should be pretty much aligned with the usual relationship.

So this means that the usual EUR 600 million cash inflow you're seeing from working capital in Q4, that's more or less what you're counting on for this year, too? And maybe secondly, looking at your -- in your balance sheet the Touristic payments received, I think this have increased year-over-year by something like 3% while your revenues have increased by 7%.

Just double checking this increased competition in the market, does that materialize also by offering better payment terms for your customers or lower deposits or collecting money closer to the departure date, is this something you're seeing at an industry level or not really?

No, we're not seeing this. And these are 2 questions, but anyway and -- but the prepayment schedule and how they're coming in, advanced payments, this is fully in line with last year.

I mean, this working capital, we see the cash flow is also the delta against prior year and that's where the trading position of the current year is reflected. And what I said is over the full season, I expect a fully normal working capital inflow and position.

And at the same time, of course, if we steer the business more for margin than volume, you will see an impact on the net development on working capital. But this is something I'm more relaxed about because in the end, to give away product in order to generate working capital would not be a good thing, to be honest.

I've got three. First one is on your Hotels & Resorts segment, I wondered if you could quantify your pipeline of hotel rooms today and how that compares historically?

So what the number would have been in [ 2019 ]? My second question is around your EBIT guidance.

I think you might have mentioned it earlier, but could you just go into more detail around why your guidance only implies flat EBIT growth in Q4? And then lastly, my third question, I just wondered if you could give a bit more detail on your view on the health of the U.K.

consumer. Bookings are flat in the winter in the U.K.

so far. It appears that you've been losing share given Jet2 and easyJet holidays are putting on much more capacity.

Can you talk about the competitive dynamics and your view on whether travel in the U.K. is slowing?

Yes, thank you. I can maybe start with the EBIT guidance.

Indeed, mathematically, the guidance, as it's now said, allows us to be softer in Q4 versus prior year or flat. I think -- and if you just look at our segment expectations, then, indeed, the most important quarter for the Markets + Airline business we have reduced our forecast for the full year.

And at the same time, the expectation for the product business, which is more evenly distributed amongst the quarter has increased. On the hotel pipeline rooms, I mean, the capacity has increased.

At the same time, also the number of management contracts have increased. I would stress that the IR team comes back to you with details on that.

And then maybe, Sebastian, some words on the health of the U.K. consumer.

I mean, I'm surprised how stable the U.K. market is.

And the interesting question is how do you grow? Do you grow with significant increased risk capacity or are you growing with using the risk capacity?

Yes, we have our airline. We will have an even better route network, thanks to the transformation.

But the growth will come through using a third-party network to use the dynamic packaging. And that leads to, in a way, that our passenger also counts if it's a Ryanair flight, at the Ryanair number.

And therefore -- but it's initiated by us. We have stopped the losing of market share.

We will gain market share by going more and more into the dynamic space. And that's why we are so confident with what we do see as one of the main markets where we see the benefits of the transformation first.

Most of my questions were already answered, but just follow-up on the airlines and the cruise lines. Could you give us some more color about your intentions about financing?

Do you plan to continue to end some lease contracts for the airlines and transform them into a full ownership? And have you made any progress on the financing of the 2 new ships from Marella?

Yes. Thank you.

On the airline financing, I would say, generally, our strategy is to have more ownership and it's purely, I would say, the one -- biggest reason is operationally the flexibility we currently don't have. We profit a lot from the lease market, and at the same time, we want to continue to use opportunities that we have and that's particularly for leases that run out.

I would expect that first deliveries, we would always naturally put into a lease structure so far for the coming time because of the benefits that we see there on the financing market. And the same applies, because you asked for both, on the cruise side.

So the financing offers for new ships, that's something which is very favorable and then that's something we would always go for. And then once the ships are used, you can see how you steer leverage.

On the Marella new ship financing. This is all going well to plan and we are very pleased with the developments on the financing side there.

Two questions from my side, a follow-up on the Airline business here. Is there an ideal share of owned airlines?

Or is that rather a moving target that you decide on the opportunities and whenever or whatever is possible? And then secondly, on the bookings, Germany, down 5%, summer.

What are you seeing in terms of length of the vacations? Are people or are the consumers in Germany specifically also cutting down on the length?

Or is it (just) the number of bookings that is down? And maybe one additional one, so that makes 3.

How are you planning the winter period? I would assume no capacity increase because you want to grow with dynamic packaging, but maybe some words on how you're seeing the winter period coming along.

Welcome. We have not really focused on airline.

Part of the transformation is -- with huge benefits is to making out of 1, 2, 3, 4, 5 airlines, 1 airline. We had the model that the source market had an airline.

We had some global synergies. But now -- and we have the management team together.

We are implementing 1 airline at the end with 2 AOCs, one for the U.K., unfortunately needed, and one for Europe. So a lot of benefits to have 1 integrated airline cost benefit, but also revenue airlines.

We don't sell from the designation. So if a Spanish customer wants to go to London or Frankfurt, he has to visit different sites.

And that's all changing. So a big change and that will increase efficiency.

When you talk about capacity, there are 2 things easy to address. One is the dynamic packaging, and that's the main focus.

But we also have had a lot of efficiency, not used efficiency gains. By building 1 airline, we are able to -- without having more aircraft, without having more pilots, we can increase the utilization significantly.

This also will lead to do better product and less cost. So this is a huge change.

And with the price to win is high and we have now the structure built, we have the management team, we have made a lot of decisions, we will have a combined fleet plan for the next summer. So a lot of great things we are looking forward to.

And in a way, it's the normal -- it has been a big change for TUI because, of course, it changed the OT. But if you look at the main airlines, no one would have run it as we have done it.

And with the new management team, David Schelp and so on, we were able to address it. When you talk about German trading trends, I think a lot of things have been onetime effects, but also a kind of a consumer sentiment.

And therefore, it's so important that we go into market segments where we haven't been in. The stay length has become -- at least that's my -- what I do see at the moment, slightly less long, which is -- I mean, during COVID or after COVID, we saw an increase by 1 day.

This is getting more normal than as it was before. And winter capacity change, I answered.

There will be more capacity or a little bit more capacity through dynamic packaging. Again, it's not only airline capacity.

It's also bed capacity. And second, in the system, we had a lot of opportunities to increase efficiency and that's what we are doing.

And again, not only on the airline side, but also why, as I said, we try to be -- having better offers -- or more offers, not better, more offers on the shoulder season to have hotels longer open till January in Greece and Turkey and that should also help us with the same cost structure to increase capacity. We are not planning to have X aircraft more and so on.

We want to -- we have still a huge potential in increasing efficiency.

Three quick questions from my end. The first one is on group EBIT sensitivity to top line growth within Markets + Airline.

I'm wondering if you could share something on the drop-through here? Second one is again on the Q4 implied EBIT growth coming in slightly softer than previously expected.

Sorry if I missed it, but just if you could touch a bit on the phasing between Q3 and Q4 once again. And the last one is on your sort of evolution of German market share in the context of the minus 5% bookings that you communicated today.

Again, I mean, the biggest part of the profit of TUI is Holiday Experiences. And we get all the questions on Markets + Airline, yes, we have room for improvement.

The important thing is that through steering, we further improve the Holiday Experience business and that's what we do very well. And therefore, the sensitivity, you're probably asking a downward sensitivity, is very limited or not existing in Markets + Airline.

Yes, there is a huge opportunity with the transformation and so on. So that's why we are so positive when it comes to the outlook into the outer years.

And to add on this, I mean, this is not really -- the business is driven by margin. That's how they're also steered by our colleagues.

And to give you an example Nordics, with less capacity, so less revenues, they will do better results this year than last year. It's about where are you with your capacity, where is the market and what is the right capacity in terms of risk profile and product profile.

So I think that's fine. I think the second question or third one was about phasing between Q3 and Q4.

I think I can just repeat what I said before. So if you look at our guidance target, we can achieve the new upgraded guidance for the group with even a softer Q4.

And on that basis, we have defined our guidance targets.

And the market share question is an interesting one. Our market share in the Tours business is maybe 3%, but our natural market share should be 30%.

On the city trips, it's maybe 5%, it should be 30%. If you look at the market share, 4-, 5-star segment hotels differentiated, we increased significantly the market share.

What we didn't do is in a soft market increase the market share, which is very low in the 2- or 3-star undifferentiated product because, as Mathias said, it's all about positive margin. It's not all about volume.

Yes, the cost we will take out will make us also more competitive at the lower end, but we have to be very, very careful there because especially in the soft market -- and you see the example of FTI. As I said, it was a good company, but they were loss-making because they were in a segment where it's really difficult: high prepayments, undifferentiated product to earn money with.

And therefore, in this market condition, we said we are very careful there because increased market share would have meant increased losses. That's why we focus very much on the 4-, 5-star differentiated product market.

Makes sense. Just if it's possible to sort of give sort of a high-level understanding of blended market share in this context.

Just trying to understand what the market is doing in terms of bookings versus minus 5%?

So in winter, we have gained significant market share. In summer, I would at least expect that the market share is stable.

First question, on Cruises, it's a clearly strong performance this year and I see your guidance upgrade on that specific segment. As we think about next year on Cruises, can you talk about the building blocks for this business and separately between JV and Marella?

What's your visibility for next year at this point? And then also on the cash flow side from Cruises and the dividends, you've clearly said it for this year, but also a bit of thinking about it for next year.

So that's my first question around just overall Cruises into next year. And then secondly, just on FX.

So your guidance is at constant currency. There was a EUR 10 million headwind in the third quarter.

What are the moving parts on FX for the fourth quarter as we model out reported EBIT?

We have given you the ambition for the next years, which includes next year, which includes also that we are positive on the Cruise. One thing is a fact that there is one more ship to come.

And I also gave you an indication that the bookings looking forward are promising. So that's why we are optimistic for the Cruise sector.

For TUI Cruises, one ship more, big ship more. Marella, very well booked, very stable operation, optimizing yield also positive.

And the real guidance -- and therefore, I should say about our ambition for the next year, not guidance, ambition for the next year and the full guidance you will get in December, including the cost program. And I was told -- I should not talk about cost program.

It's because it's the effect, which we do it not as a cost program. It's the automatic effect that you have one sales system, one buying system, one airline system and that leads to automatic cost saving and real significant cost savings.

Foreign exchange?

Yes. Thank you.

And indeed, I mean, on FX, again, when we looked at the start of the year with the currencies that we had at that point in time, if you just look at the euro-to-pound relation, we would have seen losses translating at rate and then the earnings in the summer coming back at the same rate. Now in the summer, the relation has changed and now the euro is stronger.

So we get less income in pounds when we translate that into euros. And I think that's something, which we will also see in the fourth quarter.

So if currency stays where they are, there is not expected to be a big catch-up against where we are accumulated as of Q3.

And apologies if these questions have been answered as I did join rather late. But I'd like to ask about the transaction buying back the aircraft from the lessors.

What motivated that? And what are the economic benefits?

If I look across some of the other airlines, we've seen Norwegian and easyJet do similar things and they've had really quite strong P&L benefits from these moves. Are you going to be seeing the same sort of P&L benefits from this transaction?

And then my second question would relate to the change to your CapEx guidance, which is a bit more money for the Marella new boats that are being built. Does this give us any indication in how your funding strategy has evolved for the 2 new boats?

Does it change whether there's a likelihood of Marella staying on balance sheet or being moved off balance sheet? And apologies if they've already been asked.

Because as an expert, Mathias, you go into the details. Being 40 years in the business, I have learned if you buy aircraft when the euro is strong and you sell aircraft when the dollar is strong and that you can only do when you have ownership.

It's a long way to go for us, but this is a fundamental part of the benefits of the P&L of other airlines. And therefore, if you can -- and of course, there are other reasons.

One, when you want to keep, besides the currency, sometimes it has to do with optimizing the maintenance cost, the difference between lease rates and purchase contracts you have. So it's more than the currency.

But if you do that well, you have an income stream, which you don't have, if you rely on leases. And that's why in Ryanair is 90-plus percent, easyJet has 70% or 60% to 70% and they all move into this direction.

So again, this is part of the transformation of TUI, or as Mathias would say, optimization of financing.

Yes. And I think just to reconfirm this, this is triggered by the optimization of our financing portfolio.

So we take the opportunity of leases that are up for renewal that we kind of replace them with these proceeds. But also to be clear about this, we haven't factored any other benefits other than the operational for the Airline team.

And the kind of financing structure benefits that we have on balance sheet interest on -- and cash flow into our models internally. And on Marella, maybe you can take this up with the IR team as well what is triggering the question because from my point of view, we haven't changed our view between H1 and Q3.

In H1, we already announced this EUR 50 million payment that would be triggered by signing of the contract with the shipyard. The contract has been signed.

So the payment has been triggered, and the amount is the same.

Thank you. As said, we are building on our strength, and I would like -- really to like our team and sometimes challenging market conditions, we are really working hard on a successful transformation, and the team is doing a great job.

It's the same on the optimization of the investment policy we have on Holiday Experiences. And above all, it's the integration, which helps us to get -- to have the best usage and the most profitable usage of our assets, and that's what you do see with the outstanding result.

And Holiday Experiences is working extremely well to optimize their result, and that is not God-given. It's the result of very tough work, and I'm really grateful about, and I probably can talk also for Mathias, really grateful of what the team is doing because this degree of change including being more product, having higher productivities is outstanding and I have not seen before in TUI.

So thank you for participating on this journey. I always said TUI of today is different to TUI of yesterday.

It will be different to TUI tomorrow, and we are, as the result of the third quarter shows, on the right track. Thank you very much.