TUI Group Half-Year Financial Report 1 October 2022 – 31 March 2023

Half-Year

Financial Report

1 October 2022 – 31 March 2023

Content

Interim Management Report

Summary

Report on changes in expected development

Consolidated earnings

Segmental performance

Financial position and net assets

Comments on the consolidated income statement

Alternative performance measures

Other segment indicators

Corporate Governance

Risk and Opportunity Report

Unaudited condensed consolidated Interim Financial Statements

Notes

General

Accounting principles

Group of consolidated companies

Acquisitions – Divestments

Notes to the unaudited condensed consolidated Income Statement

Notes to the unaudited condensed consolidated Statement of Financial Position

Responsibility Statement

Review Report

Cautionary statement regarding forward-looking statements

Financial calendar

Contacts

This Interim Financial Report of the TUI Group was prepared for the reporting period from 1 October 2022 to 31 March 2023.

Interim Management Report

Summary

Q2 2023 underlying EBIT of €-242.4m delivering a strong improvement year-on-year (Q2 2022: €-329.9m) with the strong booking momentum continuing into the Summer seasons. Successful completion of €1.8bn capital increase in April

• Successful completion of capital increase with gross proceeds of €1.8bn following Q2 close1. This enables full repayment of WSF state aid and reduction in the size of KfW RCF to €1.1bn and is a significant measure to restore our balance sheet strength and has led to a first improvement of our credit rating, with S&P upgrading to B with a positive outlook.
• 2.4m customers enjoyed a holiday with us in the quarter, an increase of 0.6m customers versus the prior year and 88% of Q2 2019 customer levels on a like for like basis2. As a result, average load factor for the quarter was 93% (Q2 2022: Load factor 85%).
• Group revenue of €3.2bn, improved significantly across our segments by a total of €1.0bn against the prior year (Q2 2022: €2.1bn), reflecting the strength of demand for our products in a restriction free travel environment with Group revenue above pre-pandemic levels at improved prices (Q2 2019: €3.1bn). 
• Q2 Group underlying EBIT at €-242.4m, up by €87.5m and €181m on a comparable basis3 (Q2 2022: €-329.9m loss), with the Group results almost back to 2019 levels.
  • Hotels & Resorts continued its strong performance reporting a fourth consecutive quarter above 2019 levels and significantly up year-on-year, driven by good operational performances across our key brands.
  • The recovery in Cruises continues with the segment achieving a fourth positive quarter since the start of the pandemic. As a result, the business recorded a strong improvement against last year boosted by higher volumes as well as improved occupancies with a full fleet able to operate again within a restriction free environment.
  • Markets & Airlines operational growth continued in the quarter generated by higher ASPs and volumes. Results were well ahead of last year on a comparable basis excluding the positive benefits in the prior year of state aid in Germany and the impact of ineffective hedge positions.
• Net debt of €-4.2bn as of 31 March 2023 excludes the impact of the capital increase in April 2023 (31 March 2022: €-3.9bn). If retrospectively, net debt is adjusted at 31 March 2023 to include these proceeds4, net debt reduces to €-3.1bn.
• A total of 12.9m bookings5 have been taken across the Winter and Summer seasons with ~4.2m bookings added since our Q1 2023 Interim Report. Winter 2022/23 closed out in line with expectations with ASPs well ahead.
• Easter bookings confirmed the strong customer demand across all our markets. To date bookings for Summer 2023 are significantly up at +13% on prior year accompanied by higher ASPs. Summer 2023 volumes in the last six weeks remains strong and are ahead of 2019 levels at +6% accompanied by higher ASPs emphasising the strength of customer demand and underlining the popularity of our product offering. In the UK, which is currently 64% sold, bookings are in line with the prior season and +10% versus pre-pandemic levels again accompanied by higher ASPs.
• Given the latest positive booking trends, we are confident in our Summer 2023 capacity assumption of being close to normalised 2019 Summer levels.

1 For details please refer to page 29

2 Excluding businesses sold and discontinued since 2019

3 Reverse out of Q2 2022 benefit €50m COVID cost compensation from the German state, and €43m hedging ineffectiveness  

4 Net debt less €1bn redemption of drawn credit lines and €0.1bn bond with warrant

5 Bookings up to 30 April 2023 relate to all customers whether risk or non-risk and includes amendments and voucher re-bookings

• During the quarter we have continued to translate our Sustainability Agenda into actions across our businesses to shape a more sustainable future for tourism. In airlines, we have a new agreement in place with Shell on sustainable aviation fuel to promote production and supply of sustainable aviation fuel (SAF). TUI Cruises introduced a new sustainability strategy with the ambition to offer their first climate-neutral cruises in 2030. In Hotels & Resorts, we launched the Green Building Guidelines to drive emission reductions for construction and refurbishment projects.
• Based on the strong booking momentum which is continuing into the Summer season, we reconfirm our expectations to increase underlying EBIT significantly for financial year 20231.

1 Based on constant currency. In view of the effects from the war in Ukraine, the assumption for underlying EBIT is subject to considerable

  uncertainty. Amongst others, the greatest area of uncertainty will be the impact on consumer confidence, should there be further cost inflation

  volatility and/or an escalation of the war in Ukraine

Sustainability as opportunity  

• For TUI Group, sustainability covering all three areas of economic, environmental and social sustainability is a fundamental management principle and a cornerstone of our strategy for continually enhancing the value of our company. We firmly believe that sustainable development is critical to long-term economic success. Together with our many partners around the world, we are actively committed to shaping a more sustainable future for tourism.
• We have near-term targets set for airline, cruises and hotels, to reduce emissions in line with the latest climate science. These 2030 targets were validated by the Science Based Targets initiative (SBTi) and published in our Q1 Interim Report in February 2023. Emission reduction roadmaps have been developed for each business area and progress made during the quarter, including:

• In Airlines, a new collaboration agreement has been signed with Shell to promote the production and supply of sustainable aviation fuel (SAF), a key tool to further reduce the carbon footprint of air transport, these fuels will be produced from circular raw materials that do not compete with food resources.
• TUI Cruises has launched it’s new sustainability strategy in its 15th anniversary year as a company. The strategy is aligned with the Sustainability Agenda and covers brands Mein Schiff and Hapag-Lloyd Cruises. Strategic fields include climate protection, destination responsibility and sustainable business transformation. The ambition is to offer the first climate-neutral cruises by 2030.
• TUI Hotels & Resorts has published new Green Building Guidelines for its hotels and TUI’s hotel partners. The guidelines include valuable environmental advice and measures for construction and refurbishment projects – an important toolkit for reducing emissions across hotels. We aim to achieve zero emissions in our TUI Blue Montafon hotel in Austria by the end of 2023 with further hotels to follow in Austria and Spain in 2024.
• Within our destinations we have launched a new eco-mobility project to create low emission transport options. This includes e-bike options in Rhodes for our destination reps.