Menu
Microsoft strongly encourages users to switch to a different browser than Internet Explorer as it no longer meets modern web and security standards. Therefore we cannot guarantee that our site fully works in Internet Explorer. You can use Chrome or Firefox instead.

TUI AG: Annual Financial Report - Part 2


TUI AG (TUI)
TUI AG: Annual Financial Report - Part 2

06-Dec-2023 / 08:00 CET/CEST
The issuer is solely responsible for the content of this announcement.


Financial Highlights

 Group – financial highlights

€ million

2023

2022
adjusted

Var. %

Var. %
at constant
currency

Revenue

20,665.9

16,544.9

+ 24.9

+ 25.8

 

 

 

 

 

Underlying EBIT 1

 

 

 

 

Hotels Resorts

549.5

480.3

+ 14.4

+ 15.9

Cruises

236.0

0.8

n. a.

n. a.

 Musement

36.0

23.7

+ 51.7

+ 86.9

Holiday Experiences

821.5

504.7

+ 62.8

+ 65.8

Northern Region

71.5

 101.6

n. a.

n. a.

Central Region

88.1

74.6

+ 18.1

+ 13.9

Western Region

81.1

 31.5

n. a.

n. a.

Markets Airlines

240.6

 58.6

n. a.

n. a.

All other segments

 84.8

 37.4

 126.6

 127.0

 Group

977.2

408.7

+ 139.1

+ 136.8

 

 

 

 

 

EBIT 1

999.3

320.0

+ 212.3

 

Underlying EBITDA

1,775.3

1,224.6

+ 45.0

 

EBITDA 2

1,858.5

1,203.3

+ 54.4

 

 

 

 

 

 

Group profit / loss

455.7

 212.6

n. a.

 

Basic earnings per share3€

0.80

 1.02

n. a.

 

Net capex and investment

493.7

315.9

+ 56.3

 

Equity ratio (30 Sept)4%

12.1

4.2

+ 7.9

 

Net debt (30 Sept)

2,106.2

3,436.2

 38.7

 

Employees (30 Sept)

65,413

61,091

+ 7.1

 

Due to the re-segmentation of Future Markets from All other segments to Hotels Resorts,  Musement and Central Region in financial year 2023, previous year’s figures have been adjusted.

Due to rounding, some of the figures may not add up precisely to the stated totals, and percentages may not precisely reflect the absolute figures. All change figures refer to the previous year, unless otherwise stated.

This Annual Report 2023 of the  Group was prepared for the reporting period from 1 October 2022 to 30 September 2023.

1 We define the EBIT in underlying EBIT as earnings before interest, income taxes, and result of the measurement of the Group’s interest hedges. For further details please see page 65.

2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-downs of other intangible assets, depreciation and write-downs of property, plant and equipment, investments and current assets.

3 Earnings per share for all periods presented were adjusted for the impact of the 10-for-1 reverse stock split in February 2023 as well as the impact of the subscription rights issued in the capital increase in March 2023.

4 Equity divided by balance sheet total in %, variance is given in percentage points.

Profitable and sustainable growth:
That’s what
it’s all about.

Interview WITH Sebastian Ebel

TUI’s growth is profitable and sustainable. Sebastian Ebel, TUI’s CEO, talks about new
trends in travel, growth potential, political
hurdles but also notable experiences with
partners and colleagues – from Cape Verde
to Hanover.

Behind you lies your first financial year as CEO. Is  back on course?

Definitely, yes. 19 million customers travelled with  in financial year 2023. That is 13 per cent more than last year. We had a strong Summer and bookings have held up their healthy momentum into the early weeks of Winter 2023/24. We are working at a profit again; we have paid back the state loans. This has enabled us to invest in our own growth once more. And I am looking towards the new financial year with confidence. The economy may be under a few clouds, but people attach high priority to their holidays. We have a clear growth strategy. We are improving our market position in our traditional markets. We also want to offer new products to our regulars while winning over new customers in general.

What opportunities do you see for TUI’s classical operations in Markets Airlines?

Our tour operators are growing profitably. In Germany we have acquired market share and in countries like France and the Netherlands we are
on a robust track as well. In markets where the competition is tougher, like UK  I, we are walking taller all the time. We hope to score some points there and offer our customers a pleasant surprise. Some markets are causing us particular pleasure. One is Poland, where we notched
up a million customers last year for the first time. Our Polish colleagues have now launched operations in the Czech Republic too.

How is  responding to new customer expectations?

There can only be one objective for us, which is to surpass our customers’ hopes. That is what we always set out to do and we are succeeding more and more, not least thanks to some new business models. First Choice, our second brand in the UK, targets young people in particular. We are restructuring First Choice as a web- and app-based platform where our customers can piece together their own holidays. Or take our spectrum of tours in Belgium. With  Tours customers can select a flexible route and then adapt it at the click
of a mouse or combine it with flights, hotels and experiences. A third example are the accommodation-only bookings. After a successful launch of that concept in Sweden, we have extended it to other markets. These examples illustrate our innovative spirit. We dare to try out new ideas. That is an incredible advantage and it says a lot about how we learn from each other and spur each other on.

How do you rate the prospects, especially in the hotels business, for the Holiday Experiences that now constitute your second-biggest field of operations?

Our hotels and resorts have turned in excellent results now for six quarters in succession. We still expect strong growth potential there. What is important is to secure long-term growth with a light approach to capex investment. We are aided by new funding models like the Hotel Fund which we have created along with partners. This year the Fund completed its first transactions.  BLUE is also heading for growth with five new hotels in Africa and Asia this summer, and seven more on the cards for 2024. Taken as a whole, our strong portfolio with altogether 12 hotel brands – for the price-conscious customer right through to the luxury holiday-maker – is generating growth via management and franchise contracts.

Cruises were expected to recover rather more slowly after the pandemic …

… but then returned to normal very quickly. The segment had another strong year for the first time since the outbreak of the pandemic. The Mein Schiff fleet operated by  Cruises began 2023 by breaking its bookings record. Some voyages were booked up within days. Further growth is already certain, with three vessels joining  Cruises straight out of the shipyard in the next three years. They will set new standards in terms of comfort and environmental protection. This underscores our ambition to run one of the most cutting-edge, climate-friendly cruise fleets in the world.

And how is Musement getting along?

Our profitable growth continues with experiences and activities. Last year we reached out to a million new customers and arranged more than seven million experiences, from hiking trips and sporting activities to theme park visits. We are focusing increasingly on exclusive content of our own, boosting sales through partnerships.
 Musement is designed to be a personal guide and concierge for our customers all year round, not only during their summer holiday.

That means you want to offer additional services to TUI’s customers?

Correct. The core of that is the Central Customer Ecosystem, which enables us to make new, more personalised suggestions. The idea is to sell new products to existing customers but also to gain new customers. I don’t think there is any other company in the world that has anything like as many different customer contacts in the travel market
as we do – not just online, but face-to-face in the retail shops, in our hotels, on our aircraft and liners, and during experiences. We will
be tapping even more deeply into that potential and building on our sustainability.

You mentioned sustainability. How is  shaping the future in that respect?

For a start, any travel company that ignores climate change and does not adopt a sustainable view is undermining its own business model and placing a heavy burden on future generations. We take a different approach. In January 2023 we published our new Sustainability Agenda – it’s ambitious. By 2030 we will reduce CO2e emissions per air passenger by nearly a quarter. In the Cruises segment we will cut absolute emissions by almost 28 per cent, in our hotels by at least 46 per cent. The emission reduction targets set out in our Agenda were evaluated and verified independently by the Science Based Targets initiative. Our cruise companies are the first in the world to adopt
a reduction target that has been scientifically validated, just like  Airlines among leisure flight operators. By 2050 at the latest 
will be a net zero emissions company. We bear this target in mind every single day and every day we change a little more to draw us closer
to that goal. Our internal targets are, of course, even more ambitious. I have to say, nevertheless, that politicians cannot keep piling new strains on us.

What do you mean exactly?

Travel has been brandmarked by some politicians. Flying is demonised, cruising too. Holiday-makers are bombarded with excessive rules and prohibitions. The package holiday – which is without a doubt the safest way to travel – is deliberately priced up by statutory obligations, while non-European groups are largely free to sell their unregulated products, which are not very consumer-friendly. Besides, the government doesn’t do its homework: rail does not provide a punctual feeder service – we have to pay compensation for the delays. And
the same can often be said of flights, as air traffic control in Europe has still not been standardised, which would consistently permit routes and procedures to be as climate-friendly as possible. Carbon emissions in European air space would, at a guess, be five to ten per cent lower
if that could be achieved. There is simply not enough being done!
At the same time, the fact that we have been investing massively for a long time in technologies to protect the environment is often ignored.

What specific environment measures are underway?

Over time the airlines will be using substantially larger quantities
of sustainable aviation fuel, or SAF. In fact, we intend to exceed the statutory blending requirements, even if these biofuel blends currently cost three to five times as much. Apart from that, we are optimising flight routes and renewing our fleet.

A lot is happening with our cruise liners too. In May Mein Schiff 4 drew on green shore power for the first time at the port in Hamburg. Two months later the vessel set off for the Nordics with its first sustainable biofuel. The principal basis for that is left-over cooking oil, which cuts carbon emissions by 90 per cent. Mein Schiff 7, which will put to sea next summer, will eventually run on green methanol, making her almost carbon-neutral. And we will operate the other two newbuilds on low-emission liquid gas. Our hotels are also playing a pioneering role. Robinson Club in Italy, for example, boasts one
of the biggest hotel photovoltaic systems in Europe. And since November 2023  BLUE Montafon has been our first hotel to cut its carbon emissions to zero.

So we are slashing emissions hugely with our holidays. We also encourage travel formats that entail lower emissions and we are considerably expanding our rail services, like the  Ski Express that we launched last winter to take Dutch and German customers to Austria.

Apart from the environmental aspects, to what extent can tourism drive economic and social development in destination countries?

The travel sector provides education and career prospects for people in the destinations and it enhances environmental and social standards. We want to step up these positive impacts. In early June we signed a major Memorandum of Understanding with the government of
Cabo Verde. The core idea: further development of the huge tourist potential in the Cape Verde islands with a deliberate focus on strengthening local value chains, promoting environmental protection and driving partnerships for innovation. The independent  Care Foundation set up by our company is very active on this front. For one thing, it works to ensure that young people in the destinations, in particular, can benefit from better prospects for the future. We want to enable them to participate even more in successful tourism. Our industry is opening up entirely new opportunities, especially in emerging economies and developing countries. But we should not underestimate the need in our European source markets either. Young people are our future. We must accompany and support them.

You need to demonstrate opportunities to your own employees as well. How is that going?

TUI’s success stands and falls with our people. Their expertise and commitment is of superlative importance. That applies every day and for that I extend the warmest thanks to all our employees all over
the world. But their professionalism is all the more striking in difficult situations. I am thinking in particular of those weeks in July, when more than 300 service staff put in such a magnificent effort during local forest fires on Rhodes and in round-the-clock crisis teams. In the conversations I held with people in the field, I experienced a huge sense of responsibility, and it moved me. Another genuine highlight is the new  Campus in Hanover. It has become a place for exchange and dialogue, not only between our employees but also with customers from all over the world. It is a similar story in our other offices, whether Rijswijk in the Netherlands, Luton or Stockholm, all places where
we are fostering a new Way of Working.

But I think the most motivating thing of all is that we help people
to enjoy the most wonderful moments of their year. We contribute to people experiencing the world and getting to know other cultures. That often gives them a more differentiated picture of distant lands and cultures. I firmly believe that no other sector can do this as well
as tourism – and given the situation in the world today, that is more important than ever.

Last of all a look ahead. What do you see?

Tourism and  have huge potential. We have triggered plenty of initiatives over the last twelve months. Now we are seeing the commercial payback, the profitable growth. Of course there will be geopolitical conflict and crisis in future too. We have to live with such things. We will work hard at our success without getting too big for our boots, and we will always keep our eyes on our objective: to offer our customers unique holidays and experiences. That is what  is all about – today and tomorrow!

“We are working
at a profit again;
we have paid back the state loans.
This has enabled
us to invest in
our own growth once more.“

“Tourism and
 have huge
potential.”

“We have triggered plenty of initiatives over the last twelve months. Now we
are seeing the commercial payback, the profitable growth.”

Report of the Supervisory Board

Dear Ladies and Gentlemen,

dear Shareholders,

The financial year 2023 was characterised by a further recovery in business operations and the Group achieved a result that was significantly higher than in the previous year. At the same time,  realised further important measures that enabled the company’s financial stability to be restored. Following the challenges posed by the pandemic, the time has now come to refocus on the implementation of strategic measures and profitable growth.

Even at the beginning of the financial year, we benefited from good incoming bookings, with average prices at times exceeding pre-pandemic levels. In a macroeconomically challenging environment, this demonstrated the great importance of travelling for people and the pent-up demand created by the years of the coronavirus pandemic. Although customers continued to book at shorter notice, the strong demand for  products also demonstrated the attractiveness of the Group’s product portfolio. As the financial year progressed, incoming bookings developed in line with expectations and we recorded a strong summer season. However, the financial year 2023 was not without its operational challenges. Flight operations had normalised compared to the previous year and the tourism industry was able to recruit staff comparatively better and faster. However, periods of heat and forest fires in southern Europe kept us and our customers busy in summer 2023, which also had a short-term impact on the development of bookings. For TUI, the safety of our guests and employees was always our top priority.

In addition to operational development, strengthening TUI’s financial stability remained a key task in the past financial year. In December 2022, a repayment agreement was negotiated with the Economic Stabilisation Fund (WSF) regarding the stabilisation measures granted during the coronavirus pandemic. The Executive Board informed us as the Supervisory Board in detail about the developments in the talks and negotiations. The measures to implement this agreement were then also the subject of our Annual General Meeting in February 2023, which was held virtually for the first time on the basis of the new legal regulations. This enabled us to engage in direct dialogue with our shareholders again, but unfortunately it was not free of technical disruptions. However, we gained important insights from the completely new format and will work on facilitating a disruption-free dialogue in future. Due to the pleasingly positive response to the recapitalisation measures, a reverse stock split at a ratio of 10:1 was completed following the Annual General Meeting, creating the conditions for the successful placement of a further capital increase in March / April 2023. As a result,  was able to fully repay the stabilisation measures of the WSF, achieved a further reduction in interest costs and debt and thus also a significant improvement in its credit ratios. A further important step was then taken in May 2023 with the extension of our revolving credit facility until summer 2026. The support from the banks was once again a vote of confidence in our business model and the Group’s future strategy.

Combined with strict liquidity and investment management, this led to a significant improvement in the company’s financial situation, which the rating agencies also honoured with an upgrade.

With the repayment of the WSF stabilisation measures, the conditions and requirements to be fulfilled by  AG in accordance with Framework Agreement II ended and thus also the remuneration restrictions for the members of the Executive Board. Accordingly, the Supervisory Board dealt with the re-implementation of the current Executive Board remuneration system and defined target values for the long-term variable remuneration. Together with the Executive Board, we were able to update the Declaration of Conformity with the German Corporate Governance Code in August 2023 and declare that the recommendations of the German Corporate Governance Code as amended are now fully complied with again. We also addressed the remuneration system as a whole, as the past few years since the Boeing grounding have shown the limits of the existing system. We have therefore initiated a revision. The feedback from investors and proxy advisors on the existing system and our experience since its introduction have been incorporated into our deliberations on adjustments. We now intend to submit a balanced proposal for a revised Executive Board remuneration system to the upcoming Annual General Meeting in February 2024.

The strategic direction and further development of the Group was also always the subject of our meetings. The Executive Board informed us in detail about the growth initiatives in the two divisions Holiday Experiences and Markets Airlines, which are embedded in a central customer ecosystem and supported by the sustainability agenda and employees. As part of the Supervisory Board’s discussions, the Group’s sustainability agenda „People, Planet, Progress“ was given high priority. For example, we were informed about the emission reductions of our airlines, cruise ships and hotels by 2030, which have been tested and validated by the Science Based Targets initiative (SBTi) on the basis of the latest climate science findings.

Before I turn to the report of the Supervisory Board, I would like to express my sincere thanks to the shareholders of  AG. As in the years of the coronavirus pandemic, you showed your comprehensive support in the past financial year and paved the way for further capital measures with a large majority at the Annual General Meeting 2023. You have thus once again demonstrated your confidence in the  Group and helped the company regain its financial stability. You have ensured that the management can once again focus on the strategic development of the company and on profitable growth.

Cooperation between the Supervisory Board and the Executive Board

The Executive Board and the Supervisory Board are closely guided by the principles of responsible and good corporate governance and work together in a spirit of trust in accordance with the principles set out in the Corporate Governance Report (page 119). In doing so, the Supervisory Board has primarily monitored the legality, propriety, expediency and efficiency of the work of the management and the Executive Board, with a significant focus on the refinancing of the Group. Further details can be found in the report below.

The Executive Board kept us regularly, promptly and comprehensively informed by means of written and oral reports at and outside meetings. The reports included all relevant information on the development and implementation of strategic targets, liquidity development, planning, business development during the year and the situation of the Group, and risk management and the internal control system, compliance, but also reports from the capital markets (e.g. from analysts) and the press. In the financial year 2023, the focus was on the refinancing strategy for the Group, in particular the capital split and implementation of a capital increase with subscription rights and the extension of the revolving credit line. Other topics of discussion were the personnel and Group strategy as well as the booking behaviour of customers in the current macroeconomic environment. The Supervisory Board was involved in all decisions of fundamental importance to the company in a timely manner. We passed the resolutions required by law, the Articles of Association or the Rules of Procedure after thorough consultation. For this purpose, we regularly prepared ourselves on the basis of documents that the Executive Board made available to the Supervisory Board and the committees in advance. The Executive Board also informed the Supervisory Board immediately about urgent issues in writing and at extraordinary meetings convened at short notice. As Chairman of the Supervisory Board, I was also regularly informed by the Executive Board about the current business situation and important business transactions in the company outside of the Supervisory Board meetings.

Deliberations in the Supervisory Board and its Committees

Prior to the Supervisory Board meetings, the shareholder and employee representatives met in separate preparatory meetings. Members of the Executive Board also regularly participated in these meetings. Discussions of Executive Board and Supervisory Board matters take place without the members of the Executive Board, unless otherwise requested by the members of the Supervisory Board. All members of the Supervisory Board may also submit to the Chairman of the Supervisory Board the need to discuss an item on the agenda without the presence of the Executive Board. In addition, the agenda of each meeting of the Supervisory Board provides for a separate agenda item, irrespective of the topic, for which the members of the Executive Board are not present. Members of the Supervisory Board may raise all topics to be discussed without the Executive Board within the scope of this agenda item.

In addition to the plenum, a total of three committees were established in the past financial year: the Presiding Committee, the Audit Committee and the Nomination Committee. The Mediation Committee to be formed in accordance with section 27, paragraph 3 of the German Co-determination Act did not have to meet. The chairpersons of the committees reported regularly and in detail on their work at the ordinary meetings of the Supervisory Board. In connection with the implementation of a capital increase in spring 2023, a transaction committee set up by the Supervisory Board and consisting of Dr Zetsche, Mr Jakobi, Prof. Dr Ernst and Mr Flintermann met. This made it possible to pass resolutions at very short notice within the framework granted by the Supervisory Board, insofar as this was necessary. All documents and the minutes of the transaction committee meetings were always accessible to all members of the Supervisory Board. In addition, the meetings were reported on at the respective subsequent Supervisory Board meetings. No additional remuneration or attendance fees were paid for the meetings of the Transaction Committees.

Despite the numerous meetings, we were able to record a consistently high attendance rate at our deliberations in the 2023 financial year, as in previous years. Attendance at the plenary meetings averaged 96.0 % (previous year 96.3 %) and at the committees 97.2 % (previous year 98.7 %). The vast majority of the members of the Supervisory Board participated in all meetings of the Supervisory Board in the financial year 2023 and in its committees in accordance with their respective membership. Members who were unable to attend the meetings generally participated in the resolutions by sending voting messages. The timely distribution of documents by the Executive Board in advance of the meetings and the almost universal avoidance of table papers made the preparation of the meetings much easier for the members of the Supervisory Board. For organisational reasons, some Supervisory Board and committee meetings were also held as video conferences to ensure the availability of Supervisory Board members for meetings scheduled at short notice. The exact breakdown of presence and video conference meetings can be seen in the table below.

Until the stabilisation measures were redeemed on 27 April 2023, the Economic Stabilisation Fund (WSF), in addition to the members of the Supervisory Board, exercised its right to be a guest at the meetings of the Supervisory Board and its committees, as agreed in the second framework agreement of January 2021, insofar as there was a relevant interest in accordance with the framework agreement. After the election of Dr Dönges as a member of the Supervisory Board, this guest right was exercised by individual representatives of the Finance Agency of the Federal Republic of Germany.

Attendance at meetings of Supervisory Board in financial year 2023

 

Supervisory Board meetings

Transaction committees

Presiding committee

Audit
committee

Nomination committee

Meetings total

10

1

6

8

1

thereof virtual

4

1

1

2

0

 

 

 

 

 

 

Name

 

 

 

 

 

Dr Dieter Zetsche (Chairman)

10 (10)

1 (1)

6 (6)*

7 (8)

1 (1)*

Frank Jakobi (Deputy Chairman)

10 (10)

1 (1)

6 (6)

8 (8)

 

Ingrid-Helen Arnold

9 (10)

 

 

 

 

Sonja Austermühle

9 (10)

 

 

 

 

Christian Baier

7 (10)

 

 

8 (8)

 

Andreas Barczewski

10 (10)

 

 

 

 

Peter Bremme

10 (10)

 

6 (6)

 

 

Dr Jutta Dönges

8 (10)

 

5 (6)

7 (8)

1 (1)

Prof. Dr Edgar Ernst

10 (10)

1 (1)

6 (6)

8 (8)*

1 (1)

Wolfgang Flintermann

10 (10)

1 (1)

 

 

 

Maria Garaña Corces

9 (10)

 

 

 

 

Stefan Heinemann

10 (10)

 

 

8 (8)

 

Janina Kugel

10 (10)

 

 

 

 

Coline Lucille McConville

10 (10)

 

 

 

 

Helena Murano

10 (10)

 

 

 

 

Mark Muratovic

10 (10)

 

 

8 (8)

 

Anette Strempel

10 (10)

 

6 (6)

 

 

Joan Trían Riu

10 (10)

 

 

 

 

Tanja Viehl

10 (10)

 

 

 

 

Stefan Weinhofer

10 (10)

 

 

8 (8)

 

Attendance at meetings in %

96.0

100.0

97.2

96.9

100.0

Attendance at Committee meetings in %

97.2

 

 

 

 

(In brackets: number of meetings held)

* Chairperson of Committee

Main topics of the Supervisory Board’s work

There were ten meetings of the Supervisory Board. Of these, six were held as presence meetings, while four were held as video conferences. Furthermore, the established transaction committee of the Supervisory Board met one time, and four additional resolutions were passed by circular resolution. The following main points were the subject of the individual meetings:

1. In its meeting on 5 October 2022, the Supervisory Board first dealt with the preliminary report on the past financial year. In addition, the Supervisory Board was informed about the current booking situation, the liquidity situation and the refinancing options of the Group. The agenda also included an update on the sanctioning of a major shareholder and the revised competence profile of the Supervisory Board, including a qualification matrix. The Supervisory Board also informed itself about the law on the introduction of virtual general meetings and decided to hold the next ordinary general meeting in virtual format. Furthermore, the members of the Supervisory Board received an update on the definition of the performance criteria for the individual performance of the Executive Board members, the performance of the Executive Board as a whole and the achievement of stakeholder targets. Finally, the Board dealt with general succession planning and discussed possible changes to the Executive Board.

2. In a circular resolution on 18 October 2022, the Supervisory Board approved, in implementation of the changes discussed at the meeting on 5 October, the termination by mutual consent of the appointment of Mr Frank Rosenberger as a member of the Executive Board of  AG and the amendment of the business allocation plan.

3. The extraordinary meeting on 23 November 2022 dealt with an update on the Group’s refinancing strategy. The prerequisites for the refinancing options and, among other things, their implications for the company’s rating were examined. In addition, the members of the Supervisory Board also had the potential consequences and effects of the possible refinancing for the company and the shareholders and their legal assessment explained to them.

4. The meeting on 13 December 2022 initially included a discussion of the draft repayment agreement with the WSF and the associated key conditions, requirements and implications. The agenda also included the financial statements of the Group and  AG, each of which had been issued with an unqualified audit certificate by the auditors, and the combined management report for the Group. The Executive Board and the auditors were also present. The Audit Committee had already dealt extensively with these reports the previous day and also had the opportunity to discuss them with the auditors without the Executive Board. The members of the Supervisory Board approved the financial statements prepared by the Executive Board and the combined management report for  AG and the Group. The annual financial statements for 2022 were thus adopted. The Supervisory Board also approved the Report of the Supervisory Board, the Corporate Governance Report and the Remuneration Report. In addition, the declarations of compliance with the German and UK Corporate Governance Code and the proposal to the Annual General Meeting to commission Deloitte GmbH Wirtschaftsprüfungsgesellschaft for the 2023 half-year and annual financial statements were adopted. Furthermore, the Supervisory Board adopted the agenda for the Annual General Meeting on 14 February 2023 and approved the revised competence profile and the qualification matrix. Other topics discussed at the Supervisory Board meeting included the personnel and social report, an update on the IT organisation and remuneration topics for the Executive Board.

5. The meeting on 13 February 2023 included explanations on the quarterly report and quarterly financial report as well as the current booking situation. In addition, the current developments regarding the refinancing project were discussed at the meeting. The Supervisory Board was also informed about the current status of the preparations for the Annual General Meeting and received an update on the implementation of the strategic initiatives and on customer satisfaction. The agenda also included the extension of Mr Peter Krueger’s appointment for another three years, the related remuneration adjustment in the second cycle and remuneration topics for the Executive Board.

6. At the extraordinary constituent meeting on 14 February 2023 after the Annual General Meeting, the members of the Supervisory Board re-elected Dr Dieter Zetsche as Chairman of the Supervisory Board and thus also as a member and Chairman of the Presiding Committee and the Nomination Committee. In addition, Dr Dieter Zetsche and Mr Christian Baier were elected members of the Audit Committee.

7. In a so-called learning session on 23 February 2023, the Supervisory Board was informed in detail about the requirements of the UK stock exchange supervisory authority as well as the rights and obligations of the directors in connection with a possible capital increase, in particular with regard to the prospectus required for BaFin and FCA. This was a requirement of the UK Listing Rules. This was attended by both our external legal advisors and representatives of the sponsoring bank.

8. In an extraordinary meeting on 10 March 2023, the Executive Board reported to the Supervisory Board on the process, timetable and potential volume of a capital increase. The Supervisory Board approved the capital increase in principle and set up a Transaction Committee for further implementation.

9. At its meeting on 24 March 2023, the Transaction Committee approved the measures required for the placement of the capital increase and its implementation within the scope of its authority as assigned by the Supervisory Board.

10. In a circular resolution on 4 April 2023, the Supervisory Board approved the sale of the stake in peakwork AG.

11. At the meeting on 9 May 2023, the Executive Board explained the report on the current financial year, the quarterly financial statements and the first half of 2023, which the Audit Committee had already discussed on the previous day. In addition, the Executive Board gave an update on the successfully completed capital increase and the refinancing strategy. Other key topics of the meeting were updates on the People and Group strategy. The Supervisory Board also dealt with changes in the composition of the Group Executive Committee and discussed succession planning in general. In addition, the Supervisory Board decided on the exercise of LTIP adjustment mechanisms in the context of Executive Board matters, received an update on the remuneration restrictions for the Executive Board and on the termination of the WSF’s guest rights as a result of the redemption of the stabilisation measures.

12. At its meeting on 4 July 2023, the Supervisory Board first received an update on the current business development and IT security. Furthermore, the Board dealt with the establishment of two joint venture companies. In the context of Executive Board matters, the Supervisory Board approved the appointment extension of Ms Sybille Reiss for another three years as well as the related remuneration adjustment and discussed the remuneration structure of the Executive Board members. The agenda also included an update on corporate governance at  AG and a report on a revised internal guideline on the control of related party transactions.

13. In a circular resolution on 16 August 2023, the Supervisory Board approved the exercise of LTIP adjustment mechanisms and the update of the corporate governance declaration in the course of the year in accordance with section 161 of the German Stock Corporation Act.

14. In a circular resolution on 28 August 2023, the Supervisory Board approved the sale of the stake in Raiffeisen-Tours RT-Reisen GmbH and the purchase of a share in TRAVELStar GmbH.

15. At its strategy meeting on 6 September 2023, the Supervisory Board received an update on the strategic orientation and developments in the individual company segments. It also discussed the People strategy, IT and sustainability as well as the impact of artificial intelligence on the tourism industry and TUI’s business model.

On the second day of the meeting, the Supervisory Board received a report on the current financial year at its ordinary meeting on 7 September 2023. In addition, the Board adopted the budget for the coming financial year and the three-year plan and took note of the report on security, health and safety. In addition, the Supervisory Board set the target values for the annual performance-related remuneration of the Executive Board for the following financial year and discussed in principle the options for revising the Executive Board remuneration system. Other topics included an update on the revision of the qualification matrix and the assessment of the independence of shareholder representatives in accordance with the German Corporate Governance Code and the UK Code.

Presiding Committee

The Presiding Committee is responsible for Executive Board matters (including succession planning, appointments, terms of employment contracts, remuneration, proposals on the remuneration system), which in this function corresponds to a remuneration committee in accordance of UK principles. In addition, the Presiding Committee prepares the meetings of the Supervisory Board. In the reporting period, six meetings were held. Of these, five were held as presence meetings, while one were held as video conferences.

The Presiding Committee, which is made up of equal numbers of members, consists of:

  • Dr Dieter Zetsche (Chairman)
  • Peter Bremme
  • Dr Jutta Dönges
  • Prof. Dr Edgar Ernst
  • Frank Jakobi
  • Anette Strempel

1. At its meeting on 4 October 2022, the Presiding Committee dealt with possible changes to the composition of the Executive Board and the definition of performance criteria for the individual performance of Executive Board members, the performance of the Executive Board as a whole and the achievement of stakeholder goals and their relative weighting for the following financial year. The Executive Committee also dealt with the revised competency profile for the Board and the qualification matrix as well as with the drafts of the Report of the Supervisory Board and the Corporate Governance statements for the annual report 2022.

2. On 12 December 2022, the target achievement for the variable remuneration components of the Executive Board in the 2022 financial year was the subject of discussion, subject to the validity of the remuneration restrictions. In addition, the exercise of LTIP adjustment mechanisms was discussed. In the context of Supervisory Board matters, the annual planning of the Supervisory Board and its committees for the 2023 and 2024 financial years as well as the competence profile and the qualification matrix were among the items on the agenda.

3. At its meeting on 13 February 2023, the Presiding Committee received an update on the remuneration restrictions for the Executive Board in the course of the utilisation of stabilisation measures of the WSF. In addition, the Committee discussed the extension of the appointment and service agreement of Mr Peter Krueger for a further three years.

4. On 8 May 2023, the Presiding Committee received an update on the composition of the GEC and discussed the general succession planning, including the quota for women. Furthermore, the members of the Committee again dealt with the remuneration restrictions for the Executive Board, the exercise of LTIP adjustment mechanisms and the termination of the WSF’s guest rights after the redemption of the stabilisation measures at the end of April 2023.

5. At the meeting on 4 July 2023, the Presiding Committee dealt with the extension of Ms Sybille Reiss’s service agreement by a further three years and discussed the level of remuneration of the members of  AG’s Executive Board. Apart from other remuneration topics, the agenda included an update on corporate governance at  AG.

6. On 5 September 2023, the Presiding Committee discussed the determination of the target values for annual performance-related remuneration for the following financial year. Furthermore, the general further development of the remuneration system was discussed. In addition, the update on the revision of the qualification matrix and the assessment of the independence of the shareholder representatives on the board according to the German Corporate Governance Code and the UK Code were discussed.

Audit Committee

The Audit Committee met for eight ordinary meetings in the 2023 financial year. Of these, six were held as Presence meetings, while two were held as video conferences. Please refer to the detailed report of the Audit Committee on page 19 for information on the composition, tasks, deliberations and resolutions of the Audit Committee.

Nomination Committee

The nomination committee, composed exclusively of shareholder representatives, nominates suitable shareholder candidates to the Supervisory Board for its election proposals to the general meeting or for appointment by the district court.

The members of the Nomination Committee, which met one time in an attendance meeting, were:

  • Dr Dieter Zetsche (Chairman)
  • Dr Jutta Dönges
  • Prof. Dr Edgar Ernst

In its meeting on 13 December 2022, the Nomination Committee dealt with the resolution recommendation for the nomination of Mr Baier, Ms Murano and Dr Zetsche (shareholder representatives) for election at the following Annual General Meeting.

Corporate Governance

The  AG share has its initial listing on the London Stock Exchange in the United Kingdom. In this context,  AG’s constitution as a stock corporation under German law naturally requires the Supervisory Board to deal regularly and in great detail with the recommendations of both German and British corporate governance. Apart from mandatory compliance with the provisions of the German Stock Corporation Act (AktG), the Co-Determination Act (MitbestG), the Listing Rules and the Disclosure and Transparency Rules,  AG had declared in the framework of the merger that it would comply with both the German Corporate Governance Code (GCGC) and – to a practicable extent – the UK Corporate Governance Code (UK CGC).

For the GCGC, which is based on the German Stock Corporation Act (AktG) in its basic conception, we were able to submit the Declaration of Conformity 2023 with the Executive Board in accordance with section 161 AktG. The GCGC will be fully complied with again from August 2023. For further details, please refer to the Corporate Governance Report. The deviations from the UK CGC are largely due to the conceptual difference between the monistic management system of a public listed company in the UK (so-called one-tier board) and the dualistic management system consisting of Executive Board and Supervisory Board in a public limited company (so-called two-tier board) under German law.

In conducting the audit of the financial statements, the auditor did not identify any facts that would indicate that the declaration on the GCGC issued by the Executive Board and the Supervisory Board was incorrect.

Further information on corporate governance, the Declaration of Conformity 2023 pursuant to section 161 of the German Stock Corporation Act (AktG) and the declaration on the UK CGC can be found in the Corporate Governance Report jointly prepared by the Executive Board and the Supervisory Board in this Annual Report (page 11) and on  AG’s website.

Conflicts of interest that have arisen

The Supervisory Board has continuously monitored the existence of conflicts of interest in the current financial year and determined that no conflict of interest arose in the 2023 financial year.

Audit of the annual financial statements and consolidated financial statements of  AG and the  Group

The Supervisory Board examined whether the annual financial statements and the consolidated financial statements as well as the other financial reporting complied with the applicable requirements. The annual financial statements of  AG prepared by the Executive Board in accordance with the rules of the German Commercial Code (HGB), the combined management report of  AG and the  Group and the consolidated financial statements for the financial year 2023 prepared on the basis of the International Financial Reporting Standards (IFRS) were audited by Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hanover, and issued with an unqualified audit opinion in each case. The aforementioned documents, the Executive Board’s proposal for the appropriation of the balance sheet profit and the auditor’s reports were submitted to all members of the Supervisory Board in good time. We discussed them in detail at the Audit Committee meeting on 4 December 2023 and at our balance sheet meeting on 5 December 2023, at which the Executive Board explained the financial statements in detail. At these meetings, the Chairman of the Audit Committee and the auditor reported on the results of their audits, the focus of which had previously been determined with the Audit Committee for the reporting year. Neither the auditor nor the Audit Committee identified any weaknesses in the early risk detection and internal control system. Following our own review of the annual financial statements, the consolidated financial statements and the combined management report, we had no cause for objections and therefore concurred with the Executive Board’s assessment of the situation of  AG and the  Group.

On the recommendation of the Audit Committee, we approve the financial statements for financial year 2023; the annual financial statements of  AG are thus adopted.

Composition of the Executive Board and Supervisory Board

The composition of the Executive Board and the Supervisory Board as at 30 September 2023 is shown in the overviews on pages 115 for the Supervisory Board and on page 117 for the Executive Board.

Supervisory Board

In the following, I will give you an overview of the personnel changes on the Supervisory Board.

At the proposal of the Supervisory Board, Dr Zetsche was re-elected by the AGM 2023. In addition, the AGM 2023 confirmed Ms Murano and Mr Baier as members of  AG’s Supervisory Board. Both members had initially been appointed by court order on 31 May 2022.

Presiding Committee

In financial year 2023, there were no changes in the composition of the Presiding Committee of  AG.

Audit Committee

In financial year 2023, there were no changes in the composition of the Audit Committee of  AG. Dr Zetsche and Mr Baier were also re-elected to the Audit Committee following their election by the Annual General Meeting.

Nomination Committee

In financial year 2023, there were no changes in the composition of the Nomination Committee of  AG.

Executive Board

Frank Rosenberger, Chief IT Officer and Future Markets, has decided to leave the Group with effect as of the expiry of 31 October 2022. Mr Rosenberger had been with  since 2015 and had been responsible for Future Markets and the Group’s digitalisation on the company’s Executive Board since 2017. Under his responsibility, a global system for  tour operators was launched and the digitalisation of the company was significantly advanced.

The reduction in the number of Executive Board members also required a reorganisation of responsibilities in the management body. The CIO with his central IT functions of the  Group is located in the direct area of responsibility of CEO Sebastian Ebel. The other IT units are interlinked with the operational areas to enable a fast and efficient implementation of the digitalisation strategy. Peter Krueger is fully responsible for the Holiday Experiences area at Executive Board level.

Thanks to

The Supervisory Board would like to thank the employees of the  Group for their great commitment in the past financial year. Thanks to your commitment,  has managed to regain its strength after the pandemic – in your respective areas of responsibility, you have all contributed to enabling  customers to enjoy the best time of the year.

Hanover, 5 December 2023

For the Supervisory Board

Dr Dieter Zetsche

Chairman of the Supervisory Board

Report of the Audit Committee

Dear Shareholders,

As the Audit Committee, we have the task of supporting the Supervisory Board in the performance of its supervisory function. In doing so, we deal with the audit of the accounting, the monitoring of the accounting process, the effectiveness of the internal control system, the risk management system and the internal audit system as well as the audit of the financial statements and compliance. The accounting process includes, in particular, the consolidated financial statements and the group management report including CSR reporting, financial information during the year and the individual financial statements according to the German Commercial Code (HGB). In the completed financial year, we dealt in particular with issues relating to  Group’s accounting and financial reporting, as required by law, the German Corporate Governance Code (GCGC) and the UK Corporate Governance Code (UK CGC) and the rules of procedure of the Supervisory Board. In addition, the Board Office also dealt for the Audit Committee with the implementation of the Financial Reporting Council’s (FRC) ‘Audit Committees and the External Audit Minimum Standard’ and determined that the requirements are already being met.

Furthermore, the Audit Committee is responsible for the selection of the external auditor, whereby it also reviews the qualification as well as the independence of the auditor. The selected auditor is then proposed by the supervisory board to the general meeting for appointment. After the appointment by the general meeting, the Supervisory Board formally commissions the external auditor to audit the annual financial statements and the consolidated financial statements. The auditor is also commissioned to review the half-yearly financial report as well as any additional interim financial information that meets the requirements for the half-yearly financial report. The Audit Committee has agreed with the auditor that the auditor shall inform the committee without delay of all findings and events of significance for the committee’s tasks that come to the auditor’s attention during the performance of the audit. Furthermore, the Audit Committee has agreed with the auditor that the auditor will inform the committee and make a note in the audit report if, during the performance of the audit, the auditor discovers facts that show a misstatement in the declaration on the GCGC issued by the Executive Board and the Supervisory Board. In addition, the Audit Committee regularly assesses the quality of the audit.

The Audit Committee, which has equal representation, currently consists of the following eight members of the Supervisory Board:

  • Prof. Dr Edgar Ernst (Chairman)
  • Christian Baier
  • Dr Jutta Dönges
  • Stefan Heinemann

 

  • Frank Jakobi
  • Mark Muratovic
  • Stefan Weinhofer
  • Dr Dieter Zetsche

Through the appointment of financial experts, the Audit Committee has expertise in the areas of accounting and auditing. The expertise in the field of accounting consists of special knowledge and experience in the application of accounting principles and internal control and risk management systems. The expertise in the field of auditing consists of special knowledge and experience in the auditing of financial statements. Accounting and auditing also include sustainability reporting and its audit. The Chairman of the Audit Committee, Prof. Dr Edgar Ernst, is an expert in both areas. In addition, Mr Christian Baier and Dr Jutta Dönges fulfil the requirements of a financial expert within the meaning of the GCGC. The relevant members of the Audit Committee are also named in the Corporate Governance Report starting on page 119, where more detailed information on their expertise in the aforementioned areas is also provided. In summary, it should be noted here that the members of the Audit Committee all have competences relevant to the sector in which the company operates.

With regard to the Chairman of the Audit Committee, Prof. Dr Edgar Ernst, the Supervisory Board is of the opinion that he is independent of the Company and the Executive Board (for the independence of the other members of the Audit Committee, see page 121).

The Audit Committee regularly meets six times a year. The meeting dates and agendas are based in particular on the reporting cycle of the Group and the agendas of the Supervisory Board. In addition, there may be other topic-related meetings. These topic-related meetings generally also include a meeting in which the Executive Board explains to the Audit Committee the main contents of the Pre-Close Trading Update, which is usually published shortly before the annual closing date.

In addition to the members of the Audit Committee, the meetings were also attended by the Chairman of the Executive Board and the Chief Financial Officer, as well as the heads of Group Financial Accounting Reporting, Group Audit, Group Legal, Compliance Board Office, Group Treasury, Group Controlling, Group Corporate Finance Group Investor Relations.

The auditors were invited to attend the meetings to discuss relevant issues. Other members of  Group’s senior management as well as  Group executives with operational responsibility or external consultants were invited as required.

In addition to the meetings of the Audit Committee, the Chairman of the Audit Committee also held individual discussions with the Executive Board, division heads or the responsible partners of the auditor if this appeared necessary to go into more detail on individual topics and issues. The Chairman of the Audit Committee reported on the main results of these discussions at the following meeting of the Audit Committee.

The Chairman of the Audit Committee reports on the work and proposals of the Audit Committee as well as on the content of individual discussions in the respective subsequent Supervisory Board meeting.

The members attended the meetings of the Audit Committee as shown in the table on page 14. The format of the respective meeting is also shown there, as these meetings are held both in person and as a video conference.

Informative value of financial reporting and monitoring of the accounting process

The preparation of the annual financial statements and annual report of a German public limited company is the sole responsibility of the Executive Board. According to § 243 (2) HGB, the annual financial statements must be clear and concise and provide a realistic overview of the company’s economic situation. This is in line with the requirements of the UK CGC, according to which the annual financial statements and annual report must be accurate, balanced and understandable. Against this background, the Executive Board is convinced – although the assessment was not delegated to the Audit Committee – that the submitted annual report meets the requirements of both legal systems.

In order to also satisfy ourselves of the informative value of the annual financial statements and the interim reporting, we were informed in detail by the Executive Board about the business development and the financial situation of the Group in the four Audit Committee meetings, which took place immediately before the publication of the respective financial statements. The corresponding reports were discussed. If the auditor had conducted an audit or review, the auditors reported on the results of the audit at these meetings in detail on important aspects of the financial statements and on the results of the audit or the auditor’s review. According to the DCGK discussions should take place in the absence of the Executive Board on a regular basis. In the past financial year, the Audit Committee was also regularly given this opportunity. This applies in particular to the audit of the financial statements. In the past financial year, the Audit Committee also discussed with the auditor the assessment of the audit risk, the audit strategy and audit planning as well as the audit results. In addition, the Chairman of the Audit Committee regularly discussed the progress of the audit with the auditor and reported to the Audit Committee on each occasion.

In order to monitor accounting, we dealt intensively with individual aspects. As in previous years, TUI’s economic development was a central topic in our meetings. In particular, we received detailed reports from  AG’s Executive Board on the measures taken to refinance the company.

In addition, we considered the accounting treatment of significant balance sheet items, in particular goodwill, specific provisions as well as the development of  AG’s equity. In consultation with the auditor, we assured ourselves that the assumptions and estimates underlying the accounting were appropriate. Furthermore, material aspects arising from the operational business were acknowledged by the Audit Committee.

In the reporting period, we dealt in particular with the following individual aspects:

Even before the outbreak of the COVID-19 pandemic,  AG’s Executive Board initiated optimisation processes with regard to the structure of working capital and the associated cash flows. These measures also included the further development of a central finance area. Structured working capital management was also extended to the subsidiaries. We were regularly informed about these projects in our meetings. Also after the outbreak of the COVID-19 pandemic, these processes were accompanied by strict cost control. As in previous years, we received detailed reports on the corresponding measures.

In addition, the consistency of the reconciliation to the key figure ‘underlying EBIT’ and the significant items (adjustments) eliminated here were discussed for each quarterly report and for the annual financial statements. In this context, the going concern report prepared by the company was also discussed to verify the relevant going concern statements in the half-year report and the annual financial statements. The viability statement to be issued in the annual financial statements under the regulations of the UK CGC was also the subject of discussion.

The report of the Chairman of the Audit Committee on the monitoring of transactions with related parties within the business year was also discussed. Since none of the transactions – neither on an individual nor on a cumulative basis – exceeded the defined threshold value in the reporting year, a control of the monitored individual matters was carried out.

Since the introduction of mandatory reporting on corporate social responsibility (CSR) in the management report, the Supervisory Board has been responsible for reviewing the content of these disclosures. The Supervisory Board decided to seek support of the auditor, Deloitte, in reviewing the disclosures. Accordingly, we have been informed of the results of the auditor’s review and are of the opinion that the information published in the CSR Report is appropriate and adequate.

Our assessment of all aspects of accounting and financial reporting discussed is consistent with the assessment of the Executive Board and the auditor.

On 21 November 2022,  received a letter from the UK regulator (FRC) with respect to the inclusion of  in the selection for their thematic review on earnings per share (IAS 33). The letter raised no questions requiring a response or further correspondence with the FRC. The schedule to the letter set out a number of observations on the reporting for earnings per share in TUI’s Annual Report for the year ended 30 September 2021. The observations and the recommendations made in the FRC’s publication on their thematic review of earnings per share (IAS 33) have been taken into account in the preparation of the 2023 Annual Report.

The FRC’s review is based on the published Annual Report and Accounts and does not benefit from detailed knowledge of the business or an understanding of the underlying transactions. lt provides no assurance that the Annual Report and Accounts is correct in all material respects. The FRC’s role is not to verify the information provided, but to consider compliance with reporting requirements. The FRC accepts no liability for reliance on the FRC’s review by the Company or any third party, including but not limited to investors and shareholders.

On 22 August 2023,  received a letter from the German regulator (BaFin) ordering a random audit of the annual report as of 30 September 2022. The scope of the audit comprises the reporting on the macroeconomic environment, the consideration of climate-related risks, the maintenance provisions in connection with aircraft lease agreements and specific notes to the financial statements. BaFin’s catalogues of questions received on 30 August and 30 October 2023 were answered by  in due time respectively.

Effectiveness of the control and risk management system

The Audit Committee is guided in its legal obligation to deal with the effectiveness of the internal control and risk management system by the conviction that a stable and effective internal control system is indispensable to ensure economic success in the long term. To fulfil its monitoring task, the Audit Committee is regularly informed about the maturity of the implemented controls and also about the further development of the internal control system.

The Group has continuously developed its internal control system based on the COSO concept. The routine review of key financial controls is carried out by local management and monitored by the Executive Board. In the largest source markets, the UK and Germany, other internal controls are also reviewed.

The compliance function in the Group is further divided into the areas of finance, legal and IT. This division plays an essential role in the identification of further control needs and the permanent improvement of existing controls. In addition, the auditor also reports on any weaknesses in the Group’s accounting-related control system that it identifies, and management follows up on their timely elimination.

The Audit Committee receives regular reports on the effectiveness of the risk management system, as shown in the risk report starting on page 35. The Risk Oversight Committee that has been set up is of crucial importance within the group. We are convinced that an adequate risk management system is in place.

The internal audit department ensures the independent monitoring of the implemented processes and systems as well as the significant projects and reports directly to the Audit Committee at each regular meeting. During the reporting period, the Audit Committee was not informed of any audit findings that indicated material weaknesses in the internal control system or the risk management system. In addition, regular discussions take place between the Chairman of the Audit Committee and the Director of Internal Audit for closer coordination. The annual audit planning is carried out in an agile manner. The Audit Committee has received detailed reports on the methodology and has taken note of and approved it, together with the audits for the coming financial year that have already been determined in this context. The Audit Committee believes that the regular coordination ensures the effectiveness of the internal audit.

In the course of our meetings, we were again informed in this business year about the implementation and guarantee of the regulations of the European Data Protection Regulation (EU GDPR) in the individual business areas. Based on this report, we are convinced that the projects continuously initiated and measures taken throughout the Group for this purpose are designed to fulfil the requirements of the EU GDPR.

Whistleblowing systems for employees in the event of compliance violations

A standardised whistleblowing system has been set up in  Group through which employees can draw attention to possible breaches of compliance guidelines.

As part of the reporting on the legal compliance system, we were presented with the key findings from the whistleblower system in the past financial year.

Review of the independence and objectivity of the auditor

For financial year 2023, the Audit Committee recommended to the Supervisory Board that Deloitte GmbH Wirtschaftsprüfungsgesellschaft (Deloitte) be proposed to the Annual General Meeting as auditors. Following the appointment of Deloitte as auditors by the Annual General Meeting in February 2023, the Supervisory Board commissioned Deloitte to audit the 2023 financial statements.

The Audit Committee had Deloitte explain to it in advance the audit plan for the annual financial statements as at 30 September 2023. This plan includes the main focal points of the audit and the group of companies to be audited from the Group’s perspective. The Audit Committee is convinced that this plan ensures that the audit adequately takes into account the identifiable risks. It also considers the independence and objectivity of the auditor to be given and has also established with the quality of the audit within the framework of a structured survey.

Based on regular reporting by the auditor, we have satisfied ourselves of the effectiveness of the external audit and have decided to recommend to the Supervisory Board that Deloitte be proposed to the Annual General Meeting as auditor again for financial year 2024. Deloitte was selected by us as auditor in a public tender process in financial year 2016 and has been appointed as auditor without interruption since the first election by the Annual General Meeting in 2017.

In order to ensure the independence of the auditor, all engagements for the provision of non-audit services by the auditor must be submitted to the Audit Committee for approval before the engagement is awarded. The Audit Committee makes use of the possibility to delegate the approval to the company depending on the size of the order. The chairperson of the Audit Committee is only involved in the decision if a fixed cost limit is exceeded. If the auditor provided services to the group outside of the audit, the nature and amount of these services were explained to the Audit Committee. This procedure is in line with the company’s existing policy on the approval of non-audit services, which takes into account the requirements of the regulations of the Audit Reform Act (AReG) on prohibited non-audit services and on limitations on the amount of non-audit services. Worldwide, the non-audit services amounted to € 2.1 m. The audit fee received by the auditor, excluding voluntary audits, amounted to € 8.6 m. The corresponding non-audit services accounted for approximately 24 % of Deloitte’s audit fees.

I would like to thank the members of the Audit Committee, the auditors, the Executive Board and all employees involved for their trusting and committed cooperation in the past financial year.

Hanover, 4 December 2023

Prof. Dr Edgar Ernst
Chairman of the Audit Committee

TUI Group Strategy

Tourism is a growth sector driven by strong fundamentals

The travel and tourism market is a significant contributor to the global economy1, growing above global GDP levels pre-pandemic2. Demand for tourism is driven by strong fundamental trends – people living longer, healthier lives; the growth of middle classes across the globe, which increases disposable income; and the desire for experiences, of which travel plays a significant part. This demand has proved highly resilient – after the disruption of COVID-19 and resulting travel restrictions, international arrivals are expected to return almost to pre-pandemic levels in 20233. At TUI, we experienced a strong uplift in bookings for our destinations on the easing of government travel restrictions during the pandemic, and in Summer 2023, Markets Airlines customer numbers rebounded almost completely to Summer 2019 levels, coupled with a strong 8 % increase in average selling price versus prior season, and 26 % increase versus Summer 2019. Therefore, we expect leisure tourism to continue to be an attractive growth market over the long-term.

The industry still faces some key challenges. Cost inflation (driven by higher energy costs and labour supply shortages), higher interest rates and foreign exchange fluctuations all impact supplier cost bases, as well as putting a squeeze on household income and hence consumer sentiment. In turn, this reinforces customer needs for brands which they can depend on, and which deliver choice and flexibility in configuring the right product for them. TUI’s focus on delivering quality to our customers while increasing choice and flexibility, both in terms of our product offer, and by increasing the flexibility of flight and hotel sourcing, mean that we can deliver growth by offering value and choice, without additional risk capacity.

Climate change is a pressing global challenge. There is an urgency to act and for everyone to play a role in the transition to a low carbon economy.  has committed to Science Based Targets, in order to significantly reduce carbon emissions in our airline, hotels and cruise business by 2030, with a further commitment to reach net-zero by 2050 at the latest. In addition, our Sustainability Agenda sets out our wider commitments to Sustainability, in terms of People, Planet and Progress.

Also see page 26 – 27 and the Non-financial Group Declaration from page 81 onwards.

1 Based on WTTC Economic Impact Research 2023 – Travel Tourism sector contributed 10.3 % to global GDP in 2019; this decreased to 5.3 % in 2020, 6.1 % in 2021 and 7.6 % in 2022, due to government restrictions on mobility. However, Travel Tourism GDP is expected to reach 95 % of 2019 levels in 2023.

2 Based on UNWTO international travel arrivals CAGR versus global GDP CAGR for 2015 to 2019

3 UNWTO World Tourism Barometer September 2023

TUI’s business model – foundation for success

 is a leisure experiences group covering the entire holiday journey, serving millions of customers, operating 126 aircraft, 424 hotels (including our concept hotels) and 16 cruise ships4, as well as a sizeable experiences, transfers and tours business. The group is structured into two divisions – Holiday Experiences and Markets Airlines.

Holiday Experiences delivers differentiated content in hotels, cruises, experiences, transfers and tours:

  • Our hotel portfolio consists of own and differentiated leisure brands such as Robinson,  Magic Life,  Blue and  Suneo, complemented by JV hotel brands such as Riu, Atlantica, Blue Diamond and Grupotel. The portfolio is well-diversified in terms of product offer, destination mix and ownership models, and benefits from multi-channel and multi-source market distribution via Markets Airlines, direct to customer, and via third parties such as Online Travel Agents (OTAs) and tour operators mainly outside our own source markets.
  • Our three cruise brands (Mein Schiff, Hapag-Lloyd Cruises, Marella) cover the cruises sector from premium all-inclusive to luxury to expeditions, with leading positions in the German-speaking and UK markets5, benefitting from multi-channel distribution via Markets Airlines, direct to customer and via third parties.
  •  Musement is one of the largest6 digital providers in the online intermediary market for tours and activities, including experiences (excursions, activities and tickets) and tous (multi-day tours), connecting our own and third party product portfolio in destinations with Markets Airlines customers, direct to customer and via third parties; as well as providing transfers and customer support in the destination.

4 As at 30 September 2023, including concept hotels in third party properties

5 As measured by capacities

6 As measured by market share

Markets Airlines distributes and fulfills holidays to a large customer base in more than a dozen source markets.  is (according to consumer surveys for unaided brand awareness and consideration) a leading tourism brand7. We differentiate ourselves from the competition (such as tour operators, OTAs, hotels and airlines) based on our products and services. By covering the whole customer journey,  holds multiple digital and physical touchpoints with its customers, and therefore delivers a strong blend of digital and human interaction. This enables  to follow a customer centric approach, aiming to create long-term relationships with its customers.

As a vertically integrated group, it is also important to leverage cross-sell and upsell potential across all divisions, and the power of our brand in order to reduce cost of sales. Our Central Customer Ecosystem creates the basis of this, covering all aspects of marketing, sales and service.

TUI’s strategy for profitable growth

As demand recovers post-pandemic  is committed to delivering profitable growth. We have already laid the foundations for this, and delivery is underway.

Our strategy is defined across both of our business divisions, embedded onto one central customer ecosystem, underpinned by our Sustainability Agenda and by our people. The framework for implementation can be visualized with our “strategy diamond”, based on five key elements – Holiday Experiences, Markets Airlines, Central Customer Ecosystem, Sustainability and People.

7 As measured by brand consideration in  brand performance tracking, completed by Metrixlab

HOLIDAY EXPERIENCES

Our Holiday Experiences strategy focusses on asset-right, profitable growth in differentiated content and expanding the customer base with multi-channel distribution, in particular outside Markets Airlines.

In Hotels Resorts, product growth is delivered by expanding our portfolio in new and existing destinations. In financial year 2023 we added 41 new hotels to our pipeline. Growth in hotels is based on an asset-right and scaleable approach – through our joint ventures, the  Global Hotel Fund, launched by  and partners, and management and franchise contracts. We have continued to develop and enhance our own global distribution platform, with a focus on global distribution alongside our existing source markets; and we are also expanding our appeal across customer segments, with launch of new brands.

Product growth in Cruises is driven by investment into new-build ships by our  Cruises JV, with three new ships being delivered over the next three years. In addition, we are continuing Marella’s fleet upgrade, by replacing older ships with newer, larger ones, including the launch of Voyager in June 2023 (previously Mein Schiff Herz). Customer growth will be driven by a broader marketing positioning for both  Cruises and Marella.

In  Musement, we have realigned our strategy to digitalise all three business sectors – experiences (excursions, activities and tickets), transfers and tours (multi-day tours), with a strong focus on delivering profitable growth from the marketing of our own products across all channels, and investing in particular in more of our own products. In this way, we simultaneously differentiate and position ourselves in the attractive producer margin area. The digitization of the Experiences segment has already been completed (with the acquisition in 2018 and subsequent integration of the Musement platform), and we are now focusing on the Tours and Transfers segments. This will help us generate further customer growth.

MARKETS AIRLINES

Our Markets Airlines strategy focusses on strengthening and leveraging our capabilities (including brand and distribution, differentiated and exclusive product, quality and service) and market positions, with growth delivered from new products and new customers, based on scaleable common platforms. Product growth is based on an expanded offer of accommodation only, flight only, car rentals, ancillaries and tours, as well as increasing the volume and proportion of dynamic packaging and supply, to deliver choice, flexibility and hence growth, without increasing risk capacity. Customer growth is driven by this increase in choice and flexibility, as we enlarge our appeal across more customer segments, supported by our brand and marketing strategy, and initiatives such as the relaunch of First Choice in the UK which targets new, especially younger, customers.

To increase efficiency and scaleability, we grow based on common platforms and central production. This year, we rolled-out our group-wide platforms for accommodation only, flight only and dynamic packaging to more markets, as well as continuing to develop and enhance the capabilities of these platforms. In  Airline, we operate a strong leisure network, with a high degree of integration with our Markets, on a modern and fuel efficient fleet. We leverage these strengths and continue to deliver transformation through increased flexibility and cost efficiency.

CENTRAL CUSTOMER ECOSYSTEM

As well as growing customer volumes, our marketing and distribution strategy focuses on maximizing customer value, leveraging the synergies between both of our business divisions, and lowering our cost of distribution. As the basis for this, we will continue to strengthen and leverage the  brand in existing and untapped customer segments and broaden our brand image for our growth products (such as cities, tours, accommodation only and experiences). We continue to enhance our app with a focus on native bookflows, targeting futher growth in the proportion of digital sales made in-app. Our customer relation management strategy is focused on growing the marketing base through improved permission capture, extension of automated marketing to all products and channels, and growing revenue by improved cross-channel marketing. We also continue to streamline the digital customer experience via the operation of a single customer account and implementing a common payment process. All of this facilitates a full product suite offering and cross-selling, and increases the number of holiday and experience touchpoints we have with the customer, whilst at the same time reducing our cost of sales.

Sustainability agenda ‘People, Planet, Progress’

As an industry leading Group, we want to set the standard for sustainability in the market. We believe that sustainable transformation should not be viewed solely as a cost factor, but that sustainability pays off – for society, for the environment, and for economic development. Our strategy is therefore underpinned by clear science-based goals and targets on sustainability. TUI’s Sustainability Agenda consists of three building blocks – People, Planet and Progress.

For details please refer to page 82.

PEOPLE

  • We will ensure that local people and communities benefit from tourism and the local supply chain.
  • We will empower a generation of sustainability changemakers.  Care Foundation will drive positive social and environmental impacts in tourism communities around the world.

PLANET

  • In 2023, our emission reduction targets were recognised by the Science Based Targets initiative (SBTi).  commits to implementing these targets in line with the latest climate science findings.
  • We will achieve net-zero emissions across our operations and supply chain by 2050 at the latest. We will change the way we use natural resources and become a circular business.

PROGRESS

  • Together with our partners, we will co-create the next-generation sustainable business model for the tourism industry through our Destination Co-Lab Rhodes.
  • We will enable our customers to make sustainable holiday choices in every stage of the customer journey.

We already operate one of Europe’s most carbon-efficient airlines and we aim to continuously improve our environmental performance. We will build on the progress we have already made and reduce emissions further through our commitment to science-based targets and our emission reduction roadmap.

In 2023, relative carbon emissions of our airlines decreased by 3.9 %. This improvement was primarily driven by higher load factors versus 2022, as well as our re-fleeting programme, with older aircraft being replaced by new, more carbon-efficient aircraft. In 2023, we still operated 19 Boeing 787 aircraft. In the period under review, our Boeing 737 Max fleet grew from 35 to 37 aircraft.

Further information is provided on pages 85 to 90

People strategy – digital, engaging, inclusive

Our employees make a key contribution to  Group’s success. Our goal is to secure that success in the long term. In the period under review, we focussed on the continuation of our strategic initiatives defined in the framework of our People Strategy.

The vision of our People Strategy is to be digital, engaging and inclusive.

In order to implement our strategy, six relevant areas of action have been defined:

1. Simplification, harmonisation and focus

2. Digital transformation

3. Supporting growth

4. Positive employee experience

5. Diversity, equity and inclusion

6. Facilitating top performance

We are thus seeking to create a framework that empowers our employees to deliver the best performance and succeed as a team.

Further information is provided on pages 91 to 98.

 is set for profitable growth

Having driven the recovery post-pandemic, delivered our Global Realignment Programme and defined our strategy,  is well positioned and committed to capturing market growth. The execution of our strategy is well underway. As a result,  will continue to grow its differentiated Holiday Experience and Markets Airlines product offerings, grow the volume and value of its customer ecosystem, increase flexibility for our customers and operations, and maximise efficiencies and synergies within the business.

Corporate Profile

Group Structure

 AG parent company

 AG is  Group’s parent company headquartered in Hanover. It holds direct or, via its affiliates, indirect interests in the principal Group companies conducting the Group’s operating business in individual countries. Overall,  AG’s group of consolidated companies comprised 266 direct and indirect subsidiaries at the balance sheet date. A further 20 affiliated companies and 27 joint ventures were included in  AG’s consolidated financial statements on the basis of at equity measurement.

For details on principles and methods underlying the consolidated financial statements and  Group shareholders, see page 190 and 281.

Organisation and management

 AG is a stock corporation under German law, whose basic principle is two-tiered management by two boards, the Executive Board and the Supervisory Board. The Executive and Supervisory Boards cooperate closely in governing and monitoring the Company. The Executive Board is responsible for the overall management of the Company.

The appointment and removal of Board members are based on Sections 84 et seq. of the German Stock Corporation Act in combination with Section 31 of the German Co-Determination Act. Amendments to the Articles of Association are effected on the basis of the provisions of Sections 179 et seq. of the German Stock Corporation Act in combination with Section 24 of  AG’s Articles of Association if applicable.

Executive Board and Group Executive Committee

As at the balance sheet date, the Executive Board of  AG consisted of the CEO and four other Board members.

For details on Executive Board members, see page 117.

The Executive Board is the Company’s central decision-making body. In addition, there is the Group Executive Committee (GEC), which as of 30 September 2023 consisted of twelve members, including the Executive Board members, and is chaired by the Chairman of the Executive Board. As a rule, the Group Executive Committee participates in all Board meetings, with the exception of items dealing with personnel matters relating to the composition of the Senior Leadership Team. The GEC was set up to enhance informed, effective decision-making and to create a flat hierarchy and strong execution environment. It reflects a culture of openness and information sharing.

For further details, also see: www.tuigroup.com/en-en/investors/corporate-governance

 Group reporting structure

 Group is a global integrated tourism group. Its core businesses, Holiday Experiences and Markets Airlines, are clustered into the segments Hotels Resorts, Cruises and  Musement as well as three regions: Northern, Central and Western Region.  Group also comprises All other segments. The Group’s reporting structure thus remained unchanged year-on-year in the reporting period.

Holiday Experiences

Holiday Experiences comprises our hotel, cruise and destination activities.

Hotels Resorts

The Hotels Resorts segment comprises  Group’s diversified portfolio of Group hotel brands and hotel companies. The segment includes hotels majority-owned by TUI, joint ventures with local partners, stakes in companies giving  significant influence, and hotels operated under management contracts.

In financial year 2023, Hotels Resorts comprised a total of 360 hotels with 285,127 beds. 330 hotels, i. e. the majority, are in the four- or five-star categories. 53 % were operated under management contracts, 38 % were owned by one of the hotel companies, 8 % were leased and 1 % of the hotels were managed under franchise agreements.

Hotels Resorts portfolio

Hotel brand

3 stars

4 stars

5 stars

Total
hotels

Beds

Main sites

Riu

2

45

50

97

105,712

Spain, Mexico, Caribbean, Cape Verde, Portugal, Morocco

Robinson

1

17

8

26

16,016

Spain, Greece, Turkey, Austria, Maledives

Blue Diamond

2

14

21

37

35,329

Cuba, Dom. Rep., Jamaica, Mexico, Saint Lucia

Others

25

122

53

200

128,070

Spain, Greece, Turkey, Egypt

Total

30

198

132

360

285,127

 

As at 30 September 2023

Riu is the largest hotel group in the portfolio of Hotels Resorts in terms of the number of hotels. The Mallorca-based enterprise primarily operates four- and five-star hotels in Spain, Mexico and the Caribbean. Its three product lines Riu Classic Hotels, Riu Plaza Hotels (city hotels) and Riu Palace Hotels (premium segment) target different customer groups.

Robinson operates mainly four- and five-star club hotels and is a leading German provider of club holidays in terms of the number of resorts. Most of its clubs are located in Spain, Greece, Turkey, the Maldives and Austria.

Blue Diamond is a hotel chain in the Caribbean. The Hotels Resorts segment comprises 37 resorts in the Caribbean and Mexico.

Other hotel brands include the  signature hotels  Blue,  Magic Life and  Suneo.

 Blue, present in about 20 countries, is  Group’s global hotel brand and targeting an international audience. After five hotel openings in summer 2023,  Blue continues its growth path, primarily in new holiday destinations in Asia and Africa.

 Magic Life is an all-inclusive brand, targeting an international audience seeking club holidays with different profiles in beachfront locations.

 Suneo offers value for money hotels.

Our hotels operated by third-party hoteliers include a total of 64 hotels belonging to our international concept brands. This brings the total number of  Group portfolio hotels to 424.

Cruises

The Cruises segment comprises the joint venture  Cruises, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises. With their combined fleet of 16 vessels as at the reporting date, the three cruise lines offer different service concepts to serve different target groups.

Cruise fleet by ownership structure

 

Owned

Leases

Total

 Cruises (Joint Venture)

11

0

11

Mein Schiff

6

0

6

Hapag-Lloyd Cruises

5

0

5

Marella Cruises

3

2

5

Total

14

2

16

As at 30 September 2023

 Cruises is a joint venture in which  AG and the US shipping company Royal Caribbean Cruises Ltd. each hold a 50 % stake. With its six ‘Mein Schiff’ vessels,  Cruises is top-ranked in the German-speaking market for cruises. The Insight Guides (formerly Berlitz Cruise Guide), an international reference for cruise ship ratings, ranked all six ships operated by  Cruises into high positions in the four-stars category. The Mein Schiff Herz was transferred to the Marella Cruises fleet in Q3 2023. The commissioning of three newly built ships is planned for the coming years, which will bring the fleet to a total of nine ships. After the pandemic years,  Cruises is thus continuing its growth as planned.

The traditional Hapag-Lloyd Cruises brand, which is also part of  Cruises, is a leading provider of luxury and expedition cruises in German-speaking markets. At the reporting date, the fleet comprised two luxury liners and three expedition cruise ships. They are the only ships worldwide to have each been awarded a five-star rating by Insight Guides. This makes Hapag-Lloyd Cruises the winner of the title of best fleet worldwide.

With a fleet of five ships, Marella Cruises offers voyages in different segments, including family and city cruises, in the British market. The former Mein Schiff Herz joined the fleet as Marella Voyager in June 2023.

TUI Musement

The  Musement segment delivers local services at our holiday destinations around the world. To do this  is present in numerous holiday destinations with its own staff.  Musement’s business model for the distribution of experiences (excursions, activities), tickets and tours (multi-day tours) is based on an online platform open to customers and suppliers. In addition, transfers are provided in the destinations.

 Musement serves three customer groups:

  •  customers: Providing services to our guests in the destination via service and operation teams and tour guides as well as via the  Digital Assistant App and the  Experience Center.
  • Strategic B2B customers: Digital and on-site services for partners from various sectors of the travel industry, such as airlines, cruise lines, ground transport, OTAs and tour operators.
  • B2C Open Market clients: Global distribution of tours, activities and experiences for travellers.

Markets Airlines

With our three regions – Northern, Central and Western – we have well-positioned sales and marketing structures offering our customers attractive holiday experiences. Our sales activities are based on online and offline channels. The travel agencies include Group-owned agencies as well as joint ventures and agencies operated by third parties. In order to offer our customers a wide choice of hotels, our source market organisations have access to a large portfolio of  hotels. They also have access to third-party hotel bed capacity, some of which has been contractually committed.

Our own flying capacity continues to play a key role in our business model. Thanks to a combination of Group-owned and third-party capacity, we offer tailored travel programmes for each individual source market region and can respond flexibly to changes in customer preferences. Balanced management of flight and hotel capacity enables us to develop destinations and optimise the margins of both service providers.

Northern Region

The Northern Region segment comprises tour operator activities and airlines in the UK, Ireland and the Nordics. Our strategic venture Sunwing Travel Inc., Canada, sold its tour operation business, which was previously included in this segment, in May 2023.

Central Region

The Central Region segment comprises the tour operators and airlines in Germany and the tour operator activities in Austria, Poland, and Switzerland.

Western Region

The Western Region segment comprises the tour operators and airlines in Belgium and the Netherlands and the tour operator activities in France.

All other segments

‘All other segments’ includes amongst others the corporate centre functions of  AG and the interim holdings, the Group’s real estate companies and the Group’s key tourism functions. The future markets business, which has also been shown in All other segment so far, was resegmented to Hotels Resorts,  Musement and Central Region in financial year 2023.

Research and development

As a tourism service provider, the  Group does not engage in research and development activities comparable with manufacturing companies. This sub-report is therefore omitted.

Value-oriented Group Management

Management system and key performance indicators

A standardised management system has been created to implement value-driven management across the Group as a whole and in its individual business segments. The value-oriented management system is an integral part of consistent Group-wide controlling and planning processes.

Our key financial performance indicators for tracking our earnings position are revenue and underlying EBIT. Accordingly, underlying EBIT represents the segment indicator as defined by IFRS 8.

We define the EBIT in underlying EBIT as earnings before interest, taxes and expenses for the measurement of the Group’s interest hedges. EBIT by definition includes impairment of goodwill.

Underlying EBIT has been adjusted for income and expense items which, due to their level and frequency, impact or distort the assessment of operating profitability in the segments and the Group. These one-off items include gains on disposal of investments, major gains and losses from the disposal of assets, and major restructuring and integration expenses. The indicator is additionally adjusted for all effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments. The reconciliation to underlying EBIT also adjusts for goodwill impairments.

To track the Group’s financial position in financial year 2023, we identified net capital expenditure and financial investments as well as  Group’s net financial position as key performance indicators. In addition, we monitor the Group’s leverage ratio as a further indicator of financial stability.

Key management variables used for regular value analysis are Return On Invested Capital (ROIC) and Economic Value Added. ROIC is compared with the weighted average cost of capital before tax (WACC).

We regard specific carbon emissions (in g CO2 / pkm) from our aircraft fleet as a key non-financial performance indicator.

To track business performance in our segments in the course of the year, we also monitor other non-financial performance indicators, such as the customer numbers in tour operation, capacity or passenger days, occupancy and average prices in Hotels Resorts and Cruises.

Information on operating performance indicators is provided in the sections on Segmental performance (page 67), the Non-financial Group declaration (page 81) and in the Report on Expected Developments (page 55).

Cost of capital

The cost of capital is calculated as the weighted average cost of equity and debt (WACC). While the cost of equity reflects the return expected by investors from  shares, the cost of debt is based on the average borrowing costs for  Group. The cost of capital always shows pre-tax costs, i. e. costs before corporate and investor taxes. The expected return determined in this way corresponds to the same tax level as the underlying EBIT included in ROIC. For financial year 2023, we apply a cost of capital of  Group of 11.76 % (previous year: 12.63 %).

ROIC and Economic Value Added

ROIC is calculated as the ratio of underlying earnings before interest and taxes (underlying EBIT) to average invested interest-bearing capital (invested capital).

Given its definition, this performance indicator is not influenced by any tax or financial factors and has been adjusted for one-off effects. From a Group perspective, invested capital is derived from liabilities, comprising equity (including non-controlling interests) and the balance of interest-bearing liabilities and interest-bearing assets with an adjustment for the seasonality of the Group’s net financial position. The cumulative amortisations of purchase price allocations are then added to the invested capital.

Apart from ROIC as a relative performance indicator, Economic Value Added is used as an absolute value-oriented performance indicator. Economic Value Added is calculated as the product of ROIC less associated pre-tax capital costs (WACC) multiplied by interest-bearing invested capital.

In the year under review,  Group’s ROIC amounted to 19.10 % (previous year: 7.49 %). Taking into account the Group’s weighted average cost of capital of 11.76 %, this resulted in an Economic Value Addded of € 375.6 m (previous year: negative Economic Value Addded of – € 280.7 m).

Invested Capital

€ million

Notes

2023

2022

 

1,947.2

645.7

Subscribed capital

(24)

507.4

1,785.2

Capital reserves

(25)

9,090.1

6,085.9

Revenue reserves

(26)

 8,474.6

 8,432.7

Non-controlling interest

(29)

824.3

787.3

Silent Participations

(27)

0.0

420.0

plus interest bearing financial liability items

 

4,922.5

5,921.0

Pension provisions and similar obligations

(30)

670.4

601.4

Non-current financial liabilities

(32)

1,198.5

1,731.4

Current financial liabilities

(32)

98.5

319.9

Derivative financial instruments

(41)

37.0

60.7

Lease liabilities (IFRS 16)

(32)

2,918.1

3,207.5

less financial assets

 

1,926.4

1,669.6

Derivative financial instruments

(41)

268.4

259.1

Cash and cash equivalents

(22)

2,060.3

1,736.9

Other financial assets

 

97.7

173.5

Seasonal adjustment1

 

 500.0

 500.0

less overfunded pension plans

 

98.5

163.4

Invested Capital before addition of effects from purchase price allocation

 

4,844.7

4,733.7

Invested Capital excluding purchase price allocation prior year

 

4,733.7

5,569.7

Ø Invested capital before addition of effects from purchase price allocation2

 

4,789.2

5,151.7

 

 

 

 

Invested Capital before addition of effects from purchase price allocation

 

4,844.7

4,733.7

plus effects from purchase price allocation

 

336.4

315.4

Invested Capital

 

5,181.1

5,049.1

Invested Capital prior year

 

5,049.1

5,866.6

Ø Invested Capital2

 

5,115.1

5,457.8

1 Adjustment to net debt to reflect a seasonal average cash balance

2 Average value based at beginning and year-end

ROIC

€ million

2023

2022

Underlying EBIT

977.2

408.7

Ø Invested Capital*

5,115.1

5,457.8

ROIC%

19.10

7.49

Weighted average cost of capital (WACC)%

11.76

12.63

Value added

375.6

 280.7

* Average value based on balance at beginning and year-end

Group performance indicators used in the Executive Board remuneration system

JEV-relevant EBT at constant currency

Group earnings before interest and taxes (EBIT) on a constant currency basis, weighted at 75 %, are used to determine annual variable remuneration (JEV) for the Executive Board. EBIT is quantified on a constant currency basis in order to avoid any distortion caused by currency-driven translation effects when measuring actual management performance.

Group earnings before interest (including the result of the measurement of the Group’s interest hedges) and taxes on a constant currency basis developed as follows in the financial year under review:

Reconciliation EBIT

€ million

2023

EBIT

999.3

FX effects from translation to budget rates

 8.3

EBIT at budget rates

991.1

JEV-relevant cash flow before dividend

The second Group key figure taken into account in the JEV in accordance with the remuneration system is the cash flow figure ‘cash flow before dividends’, which is included in the calculation with a weighting of 25 %. For these purposes, cash flow before dividends is generally calculated using a simplified approach based on the management cash flow statement. The  Group’s EBIT is also generally adjusted for currency effects for this purpose. This basic rule was deviated from for the 2023 financial year. The deviations are explained below:

When adopting the resolution on the target setting for the JEV in September 2022, the Supervisory Board of  AG took into account the particular effects on the originally planned cash flow component resulting from the changes in accounting regulations that have occurred since the remuneration system was established. In September 2022, the Supervisory Board decided to use total cash flow as the second Group key performance indicator for determining the target achievement of the JEV.

The total cash flow corresponds to the cash flow after dividends (€ 571.0 m) plus the cash inflow from capital increases through the issue of new shares (€ 1,760.9 m) less payments for financing / leasing (€ 2,021.4 m). For the 2023 financial year, it amounts to € 310.5 m. The cash flow after dividends in turn results from the cash flow before dividends (€ 708.1 m) less a coupon on a silent partnership (€ 16.8 m) and dividends from subsidiaries to non-controlling interests (€ 120.3 m).

When adopting the resolution on target achievement, the Supervisory Board also exercised its right to adjust the conditions of the JEV at its reasonable discretion in the event of extraordinary events or developments in order to take account of rare special situations that were not adequately covered by the defined targets. The cash inflow from capital increases through the issue of new shares (€ 1,760.9 m) was therefore deducted from the above-mentioned total cash flow (€ 310.5 m) and the following items were increased: Payments for the revolving credit line (€ 561.2 m), payments for the repayment of hybrid capital (€ 682.4 m) and payments for the repayment of promissory note and WSF loans (€ 241.7 m). Taking into account payments for other items, the total cash flow excluding one-off financing effects totalled € 33.5 m. The following items were added back in order to reconcile to the cash flow relevant to JEV: Dividend from Riu II to Riu for the establishment of a new subsidiary (€ 75.0 m), payments for the investment in a new subsidiary (€ 73.5 m), payments already received in the previous year from the Riu earn-out (€ 17.1 m) and other payments (€ 7.4 m). This results in a JEV-relevant cash flow of € 206.5 m.

As a result of the adjustments to take account of the special situations, the cash flow relevant to JEV fell by around € 100 m to € 206.5 m, which also led to a lower target achievement for JEV.

Pro-forma underlying earnings per share

The measurement of the long-term incentive plan (LTIP) for the Executive Board is exclusively based on the average development of pro forma underlying earnings per share from continuing operations (LTIP-relevant EPS).

The table below shows  Group’s pro forma underlying earnings per share. The normalised Group tax rate for the year under review is 18 %, the prior year rate was reduced to 0 % against the background of the considerable decline in earnings caused by COVID-19.

Pro forma underlying earnings per share from continuing operations (LTIP-relevant EPS) developed as follows in the financial year under review:

Pro forma underlying earnings per shares  Group

€ million

2023

2022
adjusted

Underlying EBIT

977.2

408.7

less: Net interest expense

 448.2

 465.9

Underlying profit before tax

529.1

 57.1

Income taxes (18 % assumed tax rate, prior year 0 %)

95.2

0.0

Underlying Group profit

433.8

 57.1

Minority interest

149.9

64.6

Underlying Group profit attributable to  shareholders of  AG

283.9

 121.7

Numbers of shares at FY end (in million)

384.3

273.1

Underlying earnings per share (€)

0.74

 0.45

Earnings per share for all periods presented were adjusted for the effect of the capital reduction carried out in February 2023 at a ratio of 10:1 and the effect of the bonus component of subscription rights issued as part of the capital increase in March 2023.

Risk Report

Successful management of existing and emerging risks is critical to the long-term success of our business and to the achievement of our strategic objectives. In order to seize market opportunities and leverage the potential for success, risk must be accepted to a reasonable degree. Risk management is therefore an integral component of the Group’s Corporate Governance.

At TUI, managing risk has always been a vital part of how we conduct our business. At  we incorporate all elements of a fully developed risk management system. It is not limited to identifying only those developments that could jeopardise the companies continued existence, it also includes the active management of all other material risks. Risk management is limited to risks only, short-term chances or opportunities are managed in the controlling process, whereas Group Strategy continuously identifies and monitors long-term chances. Legal risks are reported in a separate legal risk report.

In financial year 2023, the Group has conducted a Climate Scenario Analysis following the recommendations of the Task Force for Climate Related Financial Disclosures (TCFD) initiative. Certain risks and opportunities resulting from projected climatical changes have been identified and assessed. Given the importance of climate change,  is using its established Risk Management Process to facilitate the management of these risks. Given the variety of potential impacts on our business and to report on these elements centrally, we have decided to set up a new principal risk “Climate change impacting our business model” (see principal risk 10 on page 48) These topics have been discussed intensively in two of our Group Risk Oversight Committee meetings and results have been presented to both, the Group Executive Committee and the Audit Committee.

Risk Governance

Audit Committee – Oversee Review

The Audit Committee, as a subcommittee of the Supervisory Board, is overseeing the appopriateness and effectiveness of the risk management system. The Head of the Group Risk team reports minimum once a year on the system itself, on topics which have been discussed in the Group Risk Oversight Committee, the principal risks and their changes. The Committee considers the adequacy and the effectiveness of the risk management system and reviews and acknowledges the risk appetite on a principal risk level as formulated by the Executive Board.

Executive Board – Direct Assure

With oversight by the Supervisory Board, the Executive Board determines the strategic direction of the Group and agrees the nature and extent of the risks it is willing to take to achieve its strategic objectives.

Ultimate accountability for the Group’s risk management rests with the Executive Board and therefore it has established and maintains a risk management system to identify, assess, manage and monitor risks which could threaten the existence of the company or have a significant impact on the achievement of its strategic objectives: these are referred to as the principal risks of the Group. This risk management system includes an internally-published risk management policy which helps to reinforce the tone set from the top on risk, by instilling an appropriate risk culture in the organisation whereby employees are expected to be risk aware, control minded and to ’do the right thing’. The policy provides a formal structure for risk management to embed it in the fabric of the business. Each principal risk has assigned to it a member of the Executive Board as overall risk sponsor to ensure that there is clarity of responsibility and to ensure that each of the principal risks are understood fully and managed effectively.

The Executive Board reports to the Audit Committee of the Supervisory Board on the adherence to both the German legal and the UK listing requirements, the overall risk position of the Group, on the individual principal risks and their management, and on the performance and effectiveness of the risk management system as a whole.

Group Risk Oversight Committee – Review Communicate

On behalf of the Executive Board, the Group Risk Oversight Committee (the GROC), ensures that business risks are identified, assessed, managed and monitored across the businesses and functions of the Group. As a rule meeting on a quarterly basis, the GROC’s responsibilities include considering the principal risks to the Group’s strategy and the risk appetite for each of those risks, assessing the operational effectiveness of the mitigation in place to manage those risks and any action plans to further mitigate them, as well as reviewing the bottom-up risk reporting from the businesses themselves to assess whether there are any heightened areas of concern.

Chaired by the Chief Financial Officer, senior operational and finance management as well as those Central Functions which are fulfilling the role as a second line are represented on the committee.

Leaders of Central Functions as well as senior executives from the Group’s major businesses are invited on a rotational basis to present on their risk and control framework. This allows members of the GROC to ask questions on the processes in place, the risks present in each business or function, as well as any new or evolving risks which may be on their horizon. It also provides opportunity to seek confirmation that an appropriate risk culture continues to be in place in each of the major businesses and that there are no gaps between risk management at business level and at function level.

The GROC reports biannually to the Executive Board to ensure that it is kept abreast of changes in the risk landscape and developments in the management of principal risks, and to facilitate regular quality discussions on risk management at the Executive Board meetings.

Group Risk team – support report

The Executive Board has also established a Group Risk team to ensure that an adequate risk management system is set up and functions effectively and that the risk management policy is implemented appropriately across the Group. The team facilitates the risk management process by providing guidance, support and challenge to management whilst acting as the central point for coordinating, monitoring and reporting on risk across the Group. It also supports the GROC in fulfilling its duties and the reporting to both the Executive and Supervisory Boards. Additionally, Group Risk is responsible for the operation of the risk and control software that underpins the Group’s risk reporting and risk management process.

Sector Risk Control – COORDINATE, support report in Sector

Sector risk and control teams work as the connecting element between businesses and the Group. They facilitate the risk management process in their respective areas by providing guidance support and reporting. They challenge management in identifying and assessing risks, hence ensuring proper sector governance.

Businesses functions – Identify, assess manage

Every business and function in the Group is required to adopt the Group Risk Management policy. In order to do this, each either has their own risk committee or includes risk as a regular agenda item at their Board meetings to ensure that it receives the appropriate senior management attention within their business. In addition, the businesses each appoint a Risk Champion, who promotes the implementation of the risk management policy within their business and ensures its effective application. The Risk Champions are in close contact with the Group Risk team and are critical both in ensuring that the risk management system functions effectively, and in implementing a culture of continuous awareness and improvement in risk management and reporting.

Risk Reporting

The Group Risk team applies a consistent risk reporting methodology across the Group. This is underpinned by risk and control software which reinforces clarity of language, visibility of risks, mitigation and actions and accountability of ownership. Although the process of risk identification, assessment and response is continuous and embedded within the day-to-day operations of the businesses and functions, it is consolidated, reported and reviewed at varying levels throughout the Group on at least a quarterly basis.

Risk Identification: Management closest to the risks identify those that are relevant to the pursuit of the strategy within their business area.

A risk owner is assigned to each risk, who has the accountability and authority for ensuring that the risk is appropriately managed.

Risk Assessment: The methodology used is to initially assess the gross (or inherent) risk. This is essentially the downside, being the product of the impact together with the likelihood of the risk materialising if there is no mitigation in place to manage or monitor the risk. In line with the Group budgeting horizon, risk assessment is made for a timeframe of one year with longer horizons where necessary, e. g. in case of longer term projects. The key benefit of assessing the gross risk is that it highlights the potential risk exposure if mitigation were to fail completely or not be in place at all. Both impact and likelihood are scored using the criteria shown below.

Impact Assessment

minor

 

moderate

 

SIGNIFICANT

 

major

 

SERIOUS

Impact on

 

Impact on

 

Impact on

 

Impact on

 

Impact on

Financials (Sales and / or Costs)

Reputation

Technology reliability

Compliance

Health Safety standards

Programme Delivery

 

Financials (Sales and / or Costs)

Reputation

Technology reliability

Compliance

Health Safety standards

Programme Delivery

 

Financials (Sales and / or Costs)

Reputation

Technology reliability

Compliance

Health Safety standards

Programme Delivery

 

Financials (Sales and / or Costs)

Reputation

Technology reliability

Compliance

Health Safety standards

Programme Delivery

 

Financials (Sales and / or Costs)

Reputation

Technology reliability

Compliance

Health Safety standards

Programme Delivery

Likelihood Assessment

     

rare

10 %

 

unlikely

10 – 30 %

 

possible

30 – 60 %

 

likely

60 – 80 %

 

almost certain

≥ 80 %

     
                           

The next step in the risk reporting process is to assess and document the mitigation currently in place to reduce the likelihood of the risk materialising and / or its impact if it does. Consideration of these then enables the current (or residual) risk score to be assessed, which is essentially the reasonably foreseeable scenario. This measures the impact and likelihood of the risk with the mitigation in place and effective. The key benefit of assessing the current risk score is that it provides an understanding of the current level of risk faced today and the reliance on the mitigation in place.

Risk Response: If management is comfortable that the current risk position is within the Group’s appetite, the risk is accepted and no further action is required to further reduce it. The mitigation continues to be operated and management monitors the risk, the mitigation and the risk landscape to ensure that it remains at an acceptable level. If management assesses that the current risk score is too high, an action plan will be drawn up with the objective of introducing new or stronger mitigation that will further reduce the impact and / or likelihood of the risk to an acceptable level. This is known as the target risk score and is the parameter by which management can ensure the risk is being managed in line with their overall risk appetite. The risk owner will normally be the individual tasked with ensuring that this action plan is implemented within an agreed timetable. Each business and function will continue to review their risk register on an ongoing basis through the mechanism appropriate for their business e. g. local Risk Committee.

This bottom-up risk reporting is considered by the GROC alongside the Group’s principal risks. New risks are added to the Group’s risk register if deemed to be of a significant nature so that the ongoing status and the progression of key action plans can be managed in line with the Group’s targets and expectations.

Ad hoc risk reporting

Whilst there is a formal process in place for reporting on risks on a quarterly basis, the process of risk identification, assessment and response is continuous and therefore if required, risks can be reported to the Executive Board outside of the quarterly process, should events dictate that this is necessary and appropriate. Ideally such ad hoc reporting is performed by the business or function which is closest to the risk, but it can be performed by the Group Risk team if necessary.

Principal Risks

To keep a manageable overview of the risks reported in the process, and to understand the changes in our risk landscape, we map individual risk into a cluster of similar risks, which we report as principal risks. Principal risks are subject to the risk appetite assessment and are reported separately in this risk report.

Oversight over of the Risk Management System

Based on the work of the GROC and the Group Risk team, the Executive Board regularly reports to the Audit Committee of the Supervisory Board on the performance of the risk management system. Additionally, the Audit Committee receives assurance from Group Audit over a selection of principal risks, processes and business transformation initiatives most critical to the Group’s continued success.

In accordance with Section 317 (4) HGB (German Commercial Code), the external auditor of  AG has audited the early detection system for risks, being a part of the Risk Management System. The early detection system is required by Section 91 (2) AktG (German Stock Corporation Act) and the auditor has to conclude, if the system can fulfill its duties.

Risk appetite

The Executive Board and Audit Committee, in conjunction with the Group Risk Oversight Committee has reviewed the Group’s risk appetite. The results of the review indicate the board’s risk appetite across three risk types:

Operational risks – In the second summer season after pandemic restrictions, significant efforts have and are still undertaken internally and externally to stabilize the tourism value chain significantly at all levels and our offers have been close to normalised levels. We have therefore lowered our risk appetite from a medium-high level in the financial year 2022 to a medium-low level with regards to all operational risks. However, tourism business has always been vulnerable to unforeseen external events and our business is prepared to manage such adverse events and our risk appetite is adapted to this: Since we cannot foresee the type or location of external events and their magnitude of impact to our business, we can – in case events occur – offer a variety of alternative products for rebooking. Further, we manage the situation on the ground for our colleagues and our customers already en route using our highly professional crisis management. In the financial year 2023, wildfires on Southern Europe and an extensive heatwave in the Mediterranean has caused crisis management procedures.

Compliance risks – a continued low risk tolerance with regard to compliance-related risks, including compliance with regulatory requirements, the security of information in any form and the prevention of harm to customers, employees and all other stakeholders.

Financial risks – a continued “elevated-low” risk tolerance with regard to financial risks due to volatile prices of important tourism expenses. With a fundamentally unchanged hedging policy, the hedging ratios for all input costs in foreign currency and fuel risks continue to be below the target values. We assume that the hedging ratios will approach the historical ratios again in the medium term.

Our principal risks are aligned to these risk types.

Adapting the risk appetite to the principal risks

The principal risks to the Group are either considered to be ’Above’ or ’Within’ risk appetite.

Risks above the appetite are those that either require further mitigation in order to reduce them to an acceptable position or are heightened by external events beyond our control. We have action plans in place to increase or strengthen mitigation around each of these risks and reduce the current risk score to the target level indicated in the heat map diagram.

Risks within the appetite are those that considered to be at an acceptable level. For these, we have controls, processes and procedures in place as a matter of course that serve to mitigate each risk to either minimize the likelihood of the event occurring and / or minimise the impact if it does occur. These risks remain on our risk radar where we regularly monitor the risk, the mitigation and the risk landscape to ensure that the risk score stays stable and within our risk appetite in each case.

In the heat map diagram, the assessment criteria used are shown on page 38.

If the risk details in the subsequent tables do not suggest otherwise, the risks shown below relate to all segments of the Group. The risks listed are the principal risks to which we are exposed but are not exhaustive and will evolve over time due to the dynamic nature of our business.

Principal risks above risk appetite

Nature of Risk

1. Lack of integration and flexibility within operations and IT systems

The Group’s strategy is focused on driving profitable topline growth, based on growth in market share, customer growth, product growth, sustainability and winning team.

A clearly defined and comprehensive set of strategic initiatives are in place to deliver this, covering five areas: Markets Airlines, Holiday Experiences, Central Customer Ecosystem, People and Sustainability.

The Group’s strategy ensures that we are more vertically integrated, which reduces the impact of disruption by pure digital players. The overall strategy is to drive profitable topline growth whilst reducing our cost base. This involves the integration of our businesses and the development of core platform capabilities and technical infrastructure providing flexibility of IT services.

Our focus is on enhancing our operations and customer experience by providing engaging, intuitive and seamless customer service through the delivery of these projects.

The Group believes that this strategy positions well  for growth, and will further strengthen  versus the competition. However, the Group recognizes that there is a risk of ineffective strategic execution, arising from various factors including:

  • Failure to notice and respond to structural shifts in market trends
  • Failure to prioritise strategic initiatives with the greatest impact for 
  • Lack of resource to deliver strategic initiatives
  • Inadequate execution of strategic initiatives


The lack of integration and flexibility within our systems and operations, particularly in the Markets Airline businesses can impact our competitiveness and our ability to provide a superior customer experience as well as to deliver on quality and operational efficiency.

Mitigating Factors

  • Evaluation of the current and future leisure experiences market landscape, based on analysis of consumer needs, development of supply, emerging trends, innovation, considerations of sustainability and resource availability
  • Regular updates on and discussion of strategic topics and initiatives at the GEC, Executive Board and Supervisory Board
  • Allocation of resource to strategic initiatives, including product owners, project teams and budget
  • Approval of business cases relating to strategic initiatives by the appropriate body (in accordance with the Group’s Investment Approvals Policy)
  • Strategic initiatives and KPIs incorporated into Budget and 3YP process
  • Strong project management structures exist for all of the major restructuring, acquisition and disposal programs, which are underway to ensure that they are managed effectively.
  • Project reporting tool and reporting of strategic KPIs in monthly Operating and Financial review ensures enhanced visibility of the progress of major projects as a matter of routine.
  • Centralised management structures to oversee the Markets Airline businesses.

Nature of Risk

2. Reduction in customer demand

Spending on travel and tourism is discretionary and price sensitive as well as competitive. The economic outlook remains uncertain. Furthermore, in recent years there has been an emergence of successful substitute business models such as web-based travel and hotel portals which allow end users to combine the individual elements of a holiday trip on their own and book them separately.

There is the risk that these external factors within our industry will impact on the spending power as well as the desire to travel of our customers. This could impact our short-term growth rates and lead to margin erosion.

The price increases observed in the year under review had no relevant impact on customer demand.

Adverse climate conditions (heat-waves, droughts, heavy rain) bear the risk that customer demand for popular holiday destinations, where  is active, decline. This could impact our mid-term growth and the valuation of our hotel assets in these countries.

Mitigating Factors

  • Our market position as a globally operating tourism group, our brand and our integrated business model enables us to respond robustly to competitive threats.
  • The Group is characterised by the continuous development of new holiday experiences, developing new concepts and services which match the needs and preferences of our customers. Our strong and lasting relationships with our key hotel partners further reinforces our ability to develop new concepts exclusive to the Group.
  • The traditional package tour is becoming more diverse by combining low-cost flights with currently available hotels, even at short notice. This also creates new offers, such as city breaks. In the industry we call this process dynamic packaging. In addition, we also offer individual travel products separately, i. e. accommodation, flights, rental cars, insurance and  Musement products which are services ranging from excursions at the holiday destination to visits to museums in the city.
  • Experience shows that many consumers give high priority to their travel spending.
  • Leveraging our scale to keep costs down and prices competitive.
  • The multitude of source markets, which react to external shocks to varying degrees, can lead to a balancing effect.
  • Promoting the benefits of travelling with a globally operating tour operator to increase customer confidence and peace of mind.
  • With our asset right strategy in our hotels business, we aim a mix of owned, leased or other partnership arrangements to manage the investment into the holiday destinations. This secures capacity and thus limiting the financial investment.

Nature of Risk

3. Insufficient cash flow

Tourism is an inherently seasonal business with the majority of profits earned in the European summer months. Cash flows are similarly seasonal with the cash high occurring in the summer as advance payments and final balances are received from customers, with the cash low occurring in the winter as liabilities have to be settled with many suppliers after the end of the summer season.

There is the risk that if we do not adequately manage cash balances through the winter low period this could impact on the Group’s liquidity and ability to settle liabilities as they fall due whilst ensuring that financial covenants are maintained.

Mitigating Factors

  • The Executive Board has continued to place significant focus on the review of the Group’s cash flow position during and after the COVID-19 crisis period.
  • The strong demand for holidays has brought operations back to pre-pandemic levels in FY23 and thus contributed towards improving the cash position.
  • With the positive cash flow in 2023 and, the financing measures implemented in the year under review (capital increase in April 2023 and RCF prolongation in May 2023 net of government handbacks), the Executive Board believes that, despite the existing risks, the  Group currently has and will continue to have sufficient funds resulting both from the borrowing and from operating cash flows to meet its payment obligations and to continue as a going concern.
  • Our focus on holiday experiences is helping to reduce the seasonality risk, as hotels, cruises and destination experiences have a more evenly distributed profit and cash profile across the year.
  • As our business is spread across a number of markets, there are some counter-cyclical features e. g. winter is a more important season for the Nordic and Canadian markets. Some brands, such as the UK ski brand Crystal Ski, have a different seasonality profile which helps to counter-balance the overall profile.
  • The business regularly produces both short term and long term cash forecasts during the year – on a daily basis when needed –, which the Treasury department use to manage cash resources effectively. We continue to maintain high-quality relationships with the Group’s key financiers.  AG’s RCF and KfW credit line are subject to compliance with certain financial target values (covenants) for debt coverage and interest coverage, the review of which is carried out based on the last four reported quarters at the end of the financial year or the half-year of a financial year. As of 30 September 2023,  successfully complied with the financial covenants.

Please refer to the Viability Statement on page 52 for further details on the measures taken this year.

Nature of Risk

4. Volatility of input costs

A significant proportion of operating expenses are in non-local currency and / or relate to aircraft and cruise fuel which therefore exposes the business to fluctuations in both exchange rates and fuel prices.

There is the risk that if we do not manage the volatility of exchange rates, fuel prices and other input costs adequately, then this could result in increased costs and lead to margin erosion, impacting on our ability to achieve profit targets. Although we are still not back to prepandemic levels of hedging lines, we have significantly improved our positions against future volatilities for the upcoming winter and summer seasons.

Furthermore, changes in macroeconomic conditions, such as those that were experienced as a result of the pandemic and other geopolitical events, like the war on Ukraine, can have an impact on fuel rates and exchange rates which, particularly for the £ / € rate has a direct impact on the translation of non-euro market results into euros, the reporting currency of our Group. The increase in inflationary pressures has led to central banks increasing interest rates. Initially, the aggressive raising of US interest rates by the US Federal Reserve vs. a slower pace of monetary tightening by other central banks, most notably the ECB, increased interest rate differentials and caused the US dollar to strengthen against other currencies such as the Euro and British Pound. Central banks are now expected to be nearing the peak of their interest rate hiking cycle, as inflation has generally been falling, but at a slower pace than many had anticipated. Whilst the US Federal Reserve was (and still is) expected to be amongst the first to cut rates, the resilience of the US economy means that US rates are expected to remain higher for longer. It is also the case that interest rates are likely to stay higher for longer in the Euro Zone and the UK, but after a period of US dollar weakening against both Euro and the British Pound, the resilience of the US economy has not yet seen the pivot to a weaker US dollar to the extent that many market commentators have been predicting. Where the Group has unhedged exposures, any strengthening of the US dollar will have an adverse impact on input costs denominated in US dollars. Conversely any weakening of the US dollar will have a beneficial impact on input costs denominated in US dollars.

Mitigating Factors

  • An established Hedging Committee that monitors the Group’s hedging position.
  • Ensuring that the appropriate derivative financial instruments are used to provide hedging cover for the underlying transactions involving fuel and foreign currency.
  • Maintaining an appropriate hedging policy to ensure that hedging cover is taken out ahead of the markets’ customer booking profiles. This provides a degree of certainty over input costs when planning pricing and capacity, whilst also allowing some flexibility in prices so as to be able to respond to competitive pressures if necessary.
  • Tracking the foreign exchange and fuel markets to ensure the most up-to-date market intelligence and the ongoing appropriateness of our hedging policies.
  • Expressing our key profit growth target in constant currency terms so that short term performance can be assessed without the distortion caused by exchange rate fluctuations.

Further information on currency and fuel hedges can be found in the Notes to the consolidated financial statements in the Financial instruments section.

Nature of Risk

5. Access to EU airspace

Our main concern is whether or not all of our airlines will continue to have access to EU airspace as now. If we were unable to continue to fly intra-EU routes, such as from Germany to Spain, this would have a significant operational and financial impact on the Group.

Other areas impacted by Brexit include the status of our UK employees working in the EU and vice versa and potential customer visa requirements for holidays from the UK to the EU.

Mitigating Factors

  • Dedicated workstreams to coordinate suitable mitigation strategies where the UK exit from the European Union has impacted on our operations, particularly the airlines.
  • Regular engagement and lobbying towards relevant UK and EU decision makers to stress the continued importance of a liberalised and less regulated aviation market across Europe to allow access to investment capital and to protect consumer choice in both regions.

Nature of Risk

6. Disruption to IT systems (Cyber Attacks)

Our responsibility is to protect the confidentiality, integrity and availability of the data we process for our customers, employees, and businesses.

This is an evolving risk due to increasing digitalisation, our supply chain, emerging technologies such as generative AI, growing global cyber-crime activity, Russia-Ukraine conflict and more regulation (e. g. EU GDPR). Our consolidation under the  brand and increasing dependence on digital sales and customer care increases our exposure and the potential worst-case impact of a successful cyber-attack.

If we do not ensure we have the appropriate level of security controls in place across the Group, this could have a significant negative impact on our key stakeholders, associated reputational damage and potential for financial implications.

Mitigating Factors

  • Continued commitment from the Executive Board in support of key initiatives to ensure existing and future IT systems are secure by design, protected against denial of service attacks that could impact system availability, exposure to vulnerability is managed and user access is monitored. We consider security first in everything we do.
  • TUI’s Information Security Management System ensures a coordinated, standards based, proactive approach to the identification and management of information security risk across the Group.
  • We keep people safe in the digital world. Our colleagues are made aware of information security risks through appropriate training and awareness campaigns.  are investing in modern authentication and protecting the digital identities of our customers and colleagues.
  • Security is integrated into our software development and release processes.
  • Our security risk assessment methodology, controls, policy, and guidelines have been updated to include provisions for the assessment and secure use of Generative AI.
  • We continue to increase the maturity and coverage of our Security Operations Centre and platform to anticipate, detect and respond to cyber-attacks and information Security incidents.
  • Continuous improvement through lessons learned from real or simulated cyber incidents.

Nature of Risk

7. Lack of sustainability improvements

For the Group, economic, environmental and social sustainability is a fundamental management principle and a cornerstone of our strategy for continually enhancing the value of our Company. This is the way we create the conditions for long-term economic success and assume responsibility for sustainable transformation in the tourism sector.

Our focus is to reduce the environmental impact of our operations and promote responsible social policies and outcomes both directly through our own business and indirectly via our influence over our supply chain partners, thereby driving the sustainable transformation of the tourism industry.

There is a risk that we are not successful in driving social and environmental improvements across our operations, that our suppliers do not uphold our corporate and social responsibility standards and we fail to influence destinations to manage tourism more sustainably.

If we do not maximise our positive impact on destinations and minimise the negative impact to the extent that our stakeholders expect, this could result in a decline in stakeholder confidence, reputational damage and reduction in demand for our products and services.

Mitigating Factors

  • The  Sustainability Agenda purpose is to set and drive industry standards, ambitious goals and develop transformation roadmaps for all parts of the business.
  • This means to actively engage colleagues, partners and customers, bringing sustainability to life in a tangible and emotional way.
  • The Group Sustainability department sets clear goals, priorities, and the framework to deliver the Sustainability Agenda.
  • Operating one of the most carbon efficient airlines in Europe with continued investment in new, more efficient aircraft and cruise ships.
  • Our ambition is to achieve net-zero emissions across our operations and supply chain by 2050 at the latest.
  • Science-based targets have been set for our airline, hotel and cruise operations by 2030, validated by the Science Based Targets initiative (SBTi).
  • Development and implementation of emission reduction roadmaps for airlines, cruises and hotels to significantly reduce emissions.
  • Adhering to increasingly supply chain focused regulations (e. g. German Supply Chain Act, EU Supply chain due diligence regulation 2025) rolling out new processes and structure with a strong focus on procurement.
  • Implemented an environmental management system with all  airlines having achieved ISO 14001 certification.
  • Driving up social and environmental standards through accommodation suppliers achieving certifications recognised by the Global Sustainable Tourism Council (GSTC) and applying the GSTC Criteria to  experiences.
  • Enabling customers to make more sustainable holiday choices by launching our Green Fair label.

Nature of Risk

8. Reliance on key suppliers

Providers of holiday and travel services are exposed to the inherent risk of failure in their key suppliers, particularly for hotels, aircraft and cruise ships. This is heightened by the industry convention of paying hoteliers in advance (’prepayments’) to secure a level of room allocation for the season as well as in areas where a single supplier is used to provide a product or service.

There is the risk that we are unable to continue with our core operations in the event of a major service failure from our key suppliers.

Mitigating Factors

  • Using reputable and financially stable suppliers, particularly in areas where a single supplier is used to provide a service.
  • Regular monitoring of supplier performance against agreed terms and conditions
  • Strong working relationships with all key suppliers
  • Owned and joint venture partner hotels form a substantial part of our program which reduces our inherent risk in this area.
  • A robust prepayment authorisation process is established and embedded to both limit the level of prepayments made and ensure that they are only paid to trusted, credit-worthy counterparties.
  • Prepayments are monitored on a timely and sufficiently granular basis to manage our financial exposure to justifiable levels.
  • Developing adequate controls around key suppliers operative ability. In service meetings, for example, we discuss current challenges with suppliers even more closely, so that we are also in a position to react operationally ourselves.

Nature of Risk

9. Disruption within our destinations

Providers of package holiday and leisure experiences are exposed to the inherent risk of external events in operational areas. This can include natural disasters such as wild fires in Greece or hurricanes in the Caribbean, outbreaks of disease, such as the COVID-19 pandemic, political instability or wars close to our destinations, such as in the Middle East, with an impact on our destinations in Egypt or Turkey, as well as terrorist events such as the tragic incident in Tunisia in 2015.

There is the risk that if such an event occurs, impacting one or more of our destinations that we could potentially suffer operational disruption and increased costs. We may be required to repatriate our customers and / or need to provide additional support and / or the event could lead to a significant decline in demand to the affected destinations over an extended period.

Mitigating Factors

  • Within our Group Security, Health and Safety (SHS) centre of excellence we have a centralised Crisis Management Planning and Coordination function, providing centralised frameworks, personnel reporting structures, incident management systems and crisis communications plans for use in the local delivery of any response.
  • Our well-established crisis management procedures and emergency response and business continuity plans are activated when an event of this nature occurs and focus on the welfare of our customers.
  • Due to our presence in key holiday destinations, in the event of a local event occurring, we can offer alternative options to our customers and remix our destination portfolio away from the affected area in future seasons if necessary.

Nature of Risk

10. Climate change impacting our business model

Climate change is a complex issue and there is significant uncertainty surrounding the climate system, as well as how the world will respond to mitigate the effects of climate change. However, physicals effects are already being felt today and are predicted to worsen, and we’re seeing increasing climate action.

Increased costs due to the introduction of new, or extension of existing, carbon pricing mechanisms (including pass-through of higher costs by suppliers), and new energy and emissions regulations

Increasing regulations and restrictions targeting the airline and cruise industry, leading to reduced revenue and / or stranded assets

Costly or unavailable future fuels and technologies resulting in higher costs, or preventing further decarbonisation and compliance with regulations

  •  is committed to decarbonising its business, and has set ambitious near-term science-based emissions reduction targets with the SBTi.
  • To achieve these,  airlines procures state-of-the-art aircraft, implements operational efficiencies (including route optimisation), and will increase the use of SAF.  already has cooperation agreements in place to promote the production and supply of SAF.
  •  Cruises invests in energy efficiency at ship operations, fuel-saving route optimisation, shore power in ports and alternative fuels, such as sustainable biofuels, bio-LNG and green methanol. The three newbuilds coming into the fleet by 2026 will not use heavy fuel oil. Mein Schiff 7 will enter service in 2024 and will run on lower-emission marine diesel and be equipped with catalytic converters and a shore power connection. In addition, the ship will also be able to run on green methanol in the future. In 2024 and 2026, two ships will follow, which will be operated with LNG. LNG serves as a bridge technology until bio-LNG is available, which will be produced either from biogenic sources or synthetically from renewable energy.
  •  Hotels Resorts is focused on renewable energy and resource-saving operational practices to reduce hotel emissions as far as possible.

Decline of travellers due to shifts in consumer preferences and behaviour, and increasing negative public sentiment towards travel, resulting in loss of revenue

Decline of overall customer demand as the price for our products will increase to reflect higher capital expenditures and operational expenses to offer carbon low products

Difficulties in obtaining access to financing and increasing cost of capital due to the inability to reduce emissions in line with market expectations

  • Managing both market and reputational risks depends on the successful implementation of our emissions reduction initiatives. Accordingly, we have roadmaps in place to deliver on our science-based targets.
  • Whilst the cost for flights is very likely to increase, all markets participants have to roll-over this “green inflation”. With our state-of-the-art efficienct fleet, it is likely that our cost increase is competitive. Further, the share of extra cost from low-carbon flying is lower in a package and hence we believe that we can effectively transfer cost additions.
  •  has set science-based emissions reduction targets for 2030 and a net zero target for 2050.  continues to notice a wide range of financiers due to  Group’s financial performance and is continuing to develop relationships with new sources of finance and monitor development of the market.  is in a continuing education process with lessors and the financial community to maintain confidence in the strategy.

Physical damage to assets and business disruption due to extreme weather-related events

  • This risk is managed at the asset-level.
  • We manage the overarching risk through insurance and a large and regional spread hotels resorts portfolio, providing diversifiying the risk of asset impairment.
  • We hold relatively short-duration lease contracts, enabling flexibility in case of changes in insurability.

Extreme weather events disrupting transport hubs, resulting in delays and cancellations, and increased costs

  • The risk of airport disruption was found to be low in the physical risk analysis. Nonetheless,  works closely with airports in case of disruption and will continue to evaluate the risk profile of its material airports.
  • Whilst docking is already considered a resilient activity, the risk is further mitigated by the flexibility to adjust cruise itineraries.

Physical damage to assets and business disruption due to longer-term shifts in climate patterns

  • Whilst the scenario analysis indicate higher probability of extreme wheather events, non of the locations where our hotels resorts are located is vulnerable to a rising sea level during the time frame of our climate scenario analysis.
  • This risk is managed with insurance and  Hotels Resorts’ renewable energy strategy.

Changing weather patterns decreasing suitability for tourism and / or making source markets more attractive, impacting tourism demand

  • Climate-related factors are considered in the expansion of TUI’s Hotels Resorts business segment.

Principal Risks within appetite

Nature of Risk

A. Security Health Safety failure

The safety and security of customers and colleagues is of paramount importance to any holiday and travel service provider.

There is the risk of accidents, incidents or events occurring causing illness, injury or death to customers or colleagues whilst on a  holiday or whilst using a  operated / provided activity or service.

In addition to the harm caused the affected individual(s), this could result in disruption to operational activities, reputational damage to the business and / or financial liabilities through loss of earnings, lack of demand and / or legal claims being brought by the affected parties.

Mitigating Factors

  • The established Group Security, Health Safety (Group SHS) centre of excellence oversees safety and security risk management activities, delivering alignment and consistency across the  Group.
  • Group SHS operational responsibilities include  Tour Operations,  Hotels Resorts and  Musement (including Intercruises). Operational safety and security risk management activities for Airline and Cruise operations are managed from within the respective business units.
  • Data-led, risk-based Safety and Security Risk Management systems are in place and are subject to continuous review / improvement.
  • Safety and Security Risk Management clauses are included in supplier contracts.
  • Appropriate insurance policies are in place to mitigate any financial losses.

Nature of Risk

B. Breach of regulatory requirements

Most providers of holiday and travel services operate across a number of economies and jurisdictions, which therefore exposes them to a range of regulatory laws which must be complied with.

As we are operating from multiple source markets and providing holidays in more than many destinations, we are exposed to a range of laws and regulations with which we must comply or else risk incurring fines or other sanctions from regulatory bodies.

Mitigating Factors

  • Communication and strong tone from the top concerning compliance with laws and regulations.
  • Risk based compliance management systems managing the most relevant legal areas for the Group.
  • Regular reporting of Integrity and Compliance Director in different bodies (Group Executive Committee, Audit Committee, Group Works Council) in order to guarantee appropriate monitoring, supervision and implementation of action plans and to strengthen the Integrity Compliance culture across the Group.
  • Embedded legal expertise in all major businesses responsible for maintaining high quality relationships with the relevant regulators and authorities.
  • Ongoing implementation and review of Compliance Management System conducted by the Group Integrity Compliance department to monitor compliance with regulations and provide expert advice to local teams on specific compliance areas.

Nature of Risk

C. Management of joint venture partnerships

It is common for tourism groups to use partnerships in some of their operations in order to reduce the risk of new ventures, to gain access to their expertise of the local market and, in case of consolidation at equity, to strengthen the balance sheet position in line with our less capital intensive ‘asset-right’ strategy (e. g. the transaction completed with Riu). There are threee significant partnerships within the Group: Pep Toni Hotels S. A.,  Cruises GmbH and Midnight International Holdings Limited.

For details on our strategy refer to page 24.

There is the risk that if we do not maintain good relations with our key partners that the ventures’ objectives may not remain consistent with that of the Group which could lead to operational difficulties and jeopardize the achievement of financial targets.

Mitigating Factors

  • Good working relationships exist with all of our main partners and they are fully aligned with and committed to the growth strategy of the Group.

Nature of Risk

D. Inability to attract and retain talent

Our success depends on the ability to attract, retain, and develop our talent to ensure that we equip our employees to deliver our strategy as well as to also become our future leaders.

There is a risk that we are unable to attract and retain key talent, build future leadership capability and maintain the commitment and trust of our employees.

Challenges in managing and maintaining our talent pipeline in order to deliver against our strategy, drive competitiveness and maximize on our operating performance, may impact on our ability to future proof the Group and the associated potential for negative impact on shareholder confidence.

The risk has stabilised and reduced to prepandemic levels but we continue to monitor closely to ensure that we retain our key talent through development initiatives, whilst launching a new tool to measure our Employee Experience and supports all of the activities around our new Employee Value Proposition.

Mitigating Factors

  • Support retention by refreshing our Performance Management processes, aligning our development opportunities to the business needs and communicating all internal vacancies to our employees.
  • Promoting a working from anywhere culture, allows us to attract and retain a wider pool of talent that does not require to be located close to our base offices.
  • Build and develop internal talent pools of our high potential employees ensuring that they are diverse and inclusive.
  • A strategically aligned leadership programme for high performing management at all levels and the creation of strong management development programme for all people managers

Viability Statement

In accordance with Rule 31 of the UK Corporate Governance Code, the Executive Board assesses the Company’s future prospects for a period exceeding the twelve months required by the going concern premise. The Executive Board reviews the business development annually and on a rolling basis based on a three-year strategic plan. The current three-year plan was adopted in October 2023 and covers the period until 30 September 2026. A three-year horizon is considered appropriate for a fast moving competitive environment such as tourism.

The global travel restrictions to contain COVID-19 have had a continuous negative impact on the Group’s earnings and liquidity development since the end of March 2020. Following the successive lifting of the measures to restrict contact and travel in most countries, business has been mainly resumed in all segments in the course of the first half year of the 2022 calendar year.

To cover the resulting liquidity needs, the Group has carried out various financing measures in the financial years 2020 to 2022, which, in addition to three capital increases, the use of the banking and capital markets and cash inflows from the sale of assets, also include financing measures from the Federal Republic of Germany in the form of a KfW credit line initially totalling € 2.85 bn, an option bond from the German Economic Stabilisation Fund (WSF) totalling € 150 m and two silent participations from the WSF initially totalling € 1.091 bn.

In financial year 2022,  reduced KfW’s credit line to € 2.1 bn in various steps. In addition, 913 of the 1,500 bonds with warrants issued to WSF were redeemed and the Silent Participation II of the WSF of  671.0 m was repaid in full ahead of schedule.

The financing measures are described in detail in the annual reports for the past three financial years.

On 13 December 2022,  has concluded a new agreement with the WSF on the repayment of stabilization measures (“Repayment Agreement”). This agreement regulates the intended complete termination of the stabilization measures granted by the WSF by means of a right of the Company (i) to repayment of the contribution made by the WSF as a silent partner in January 2021 in the nominal amount of then € 420 m (“Silent Participation I”) and (ii) to repurchase the warrant-linked bond 2020 / 2026 (“Warrant Bond”) issued by the Company to WSF in the remaining amount of € 58.7 m as well as the 58,674,899 option rights (“Warrants”) originally attached to the warrant bond. In addition, the Repayment Agreement regulates the implementation of capital measures for the purpose of refinancing the aforementioned measures.

In February 2023,  AG implemented the ten-for-one reverse stock split previously resolved by the 2023 AGM in accordance with the provisions of the Economic Stabilisation Acceleration Act. As a result, the Company’s share capital declined from € 1.785 bn to around € 179 m. The corresponding reduction amount of around € 1.606 bn was transferred to the company’s capital reserves.

In accordance with the repayment agreement with the WSF, the Executive Board of  AG resolved a capital increase with subscription rights of € 1.8 bn with the approval of the Supervisory Board on 24 March 2023. For the fully subscribed capital increase, 328,910,448 new shares were offered at a subscription ratio of 8:3 and a subscription price of € 5.55. The subscription period for the new shares ended on 17 April 2023.

Following receipt of the proceeds from the capital increase on 24 April 2023, Silent Participation I and the around 56.8 m warrants held by the WSF as well as the outstanding 587 of the 2020 / 2026 bonds with warrants were fully redeemed on 27 April 2023. For Silent Participation I and the 2023 coupon payable on it, a redemption price of € 651.6 m was paid. € 30.8 m were used for the repurchase of the warrants and further € 61.9 m for the early redemption of the 587 bonds with a nominal value of € 58.7 m, including accrued interest of € 3.2 m.

At the same time, the early repayment penalty for Silent Participation II of € 5.7 m, agreed with the WSF in April 2022, became due.  has thus terminated and repaid all stabilisation measures of the WSF.

Moreover,  AG reduced the volume of the KfW credit facility from € 2.1 bn to € 1.05 bn following completion of the capital increase.

The capital increase completed in April 2023 and the subsequent substantial reduction in government financing will enable a significant improvement in the  Group’s credit ratios and reduce current interest costs, allowing  to focus on growth and further market recovery.

In May 2023,  extended the maturity of the existing credit lines of € 2.7 bn by a further two years. The syndicated credit line with the 19 banks (€ 1.64 bn), including the credit line with KfW (€ 1.05 bn), together referred to as the “RCF”, will now mature in July 2026. The RCF of  AG is subject to compliance with certain financial targets (covenants) for debt coverage and interest coverage, the review of which is carried out on the basis of the last four reported quarters at the end of the financial year or the half-year of a financial year.

As at 30 September 2023,  Group’s revolving credit facilities totalled € 2.7 bn, they comprised the following

  •  1.64 bn credit line from 19 private banks (incl. € 190 m guarantee line)
  •  1.05 bn KfW credit line.

The KfW credit line, which was reduced to € 1.05 billion after the successful capital increase, is not expected to be drawn on and serves only as a buffer. The aim is to return this credit line quickly.

The support and stabilisation package as well as the further financing measures are described in detail in the chapter ’Going concern reporting according to the UK Corporate Governance Code’ in the notes.

See chapter Going Concern Reporting in accordance with the UK Corporate Governance Code, page 188.

In the view of the Executive Board, the  Group currently has and will continue to have sufficient funds, resulting both from borrowings and from operating cash flows, to meet its payment obligations and to continue as a going concern in the foreseeable future. Therefore, as at 30 September 2023, the Board does not identify any material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern.

The Board does not foresee risks that may jeopardise the Group’s ability to continue as a going concern and does not believe that compliance with the financial covenants is at risk as at 31 March 2024 and 30 September 2024.

Taking into account the current situation of the Group and the main risks, the Executive Board has a reasonable expectation that the Group will be able to continue operations and meet the obligations arising within the three-year period under review.

Key features of the internal control and risk management system in relation to the (Group) accounting process (sections 289 (4) and 315 (4) of the German Commercial Code)

1. Conceptual framework and governance

The internationally recognised framework created by COSO (Committee of Sponsoring Organizations of the Treadway Commission) forms the conceptual basis for  Group’s accounting-related internal control system.

On the basis of section 107 (3) of the German Stock Corporation Act, the Audit Committee of the Supervisory Board of  AG reviews the auditing of the annual financial statements, monitoring the accounting process and the effectiveness of the internal control and risk management systems. The reliability of financial reporting and the monitoring of the financial accounting process as well as the effectiveness of the internal control and risk management systems are described in the Audit Committee Report. This also takes account of the effectiveness of the accounting-related internal control and risk management system.

Audit Committee Report, see page 19.

The Group’s auditors gain insight into  Group’s established control environment and control measures. The accounting-related audits by the auditor are complemented by an assessment of selected controls. The audit of the consolidated financial statements by the Group auditor and the audit of the individual financial statements of Group companies included in the consolidated financial statements, in particular, constitute a key non-process-related monitoring measure in relation to Group accounting.

In Group accounting, the risk management system, implemented as a component of the internal control system in the form of an Enterprise Risk Management (ERM) System, also addresses the risk of misstatements in Group bookkeeping and external reporting. A more detailed explanation of the risk management system is provided in the section on Risk Governance in the Risk Report.

2. Use of IT systems

Bookkeeping transactions are captured in the individual financial statements of  AG and of the subsidiaries of  AG through local accounting systems, above all supplied by SAP. When preparing  AG’s consolidated financial statements, the subsidiaries complement their individual financial statements by setting up standardised reporting packages in the Oracle Hyperion Financial Management (HFM) reporting system. HFM is used as the uniform reporting and consolidation system throughout the Group and hence no additional interfaces are involved in preparing the consolidated financial statements.

All consolidation processes used to prepare the consolidated financial statements of  AG, e. g. capital consolidation, the consolidation of assets and liabilities and the elimination of expenses and income and at equity measurement, are generated and fully documented in HFM. Virtually all elements of  AG’s consolidated financial statements, including the disclosures in the Notes, are developed from and validated by the HFM consolidation system. HFM also provides various modules for evaluation purposes in order to present complementary information to explain  AG’s consolidated financial statements.

The HFM reporting and consolidation system has an in-built workflow process whereby, when the reporting companies capture their data packages within the system, they are then locked out from making any further changes to that data. This ensures data integrity within the system. This workflow process has been checked and validated by the  AG Group Audit department on several occasions since the system was introduced.

At their own discretion,  AG’s Group auditors select certain individual financial statements from the financial statements entered in the HFM reporting and consolidation system by the Group companies, which are then reviewed for the purposes of auditing the consolidated financial statements.

3. Specific risks related to (Group) Accounting

Specific risks related to (Group) accounting may arise, for example, from unusual or complex business transactions, in particular at critical times towards the end of the financial year. Business transactions not routinely processed also entail special risks. The discretion necessarily granted to employees for the recognition and measurement of assets and liabilities may result in further (Group) accounting-related risks. The outsourcing and transfer of accounting-specific tasks to service companies may also give rise to specific risks.

4. Key regulation and control activities to ensure proper and reliable (Group) Accounting

The internal control measures aimed at securing proper and reliable (Group) accounting ensure that business transactions are fully recorded in a timely manner in accordance with legal requirements and the Articles of Association. This also ensures that assets and liabilities are properly recognised, measured and presented in the financial statements and the consolidated financial statements. The control operations also ensure that bookkeeping records provide reliable and comprehensive information.

Controls implemented to secure proper and reliable accounting include, for instance, analysis of facts and developments on the basis of specific indicators. Separation of administrative, execution, settlement and authorisation functions and the implementation of these functions by different persons reduces the potential for fraudulent operations. Organisational measures also aim to capture any corporate or Groupwide restructuring or changes in sector business operations rapidly and appropriately in (Group) accounting. They also ensure, for instance, that bookkeeping transactions are correctly recognised in the period in which they occur in the event of changes in the IT systems used by the accounting departments of Group companies. The internal control system likewise ensures that changes in the  Group’s economic or legal environment are mapped and that new or amended accounting standards are correctly applied.

To safeguard financial processes, there is a Group-wide framework under which all major companies included in the consolidated financial statements as fully consolidated companies are required to report the nature of their controls and their implementation for financial reporting, fraud prevention and detection and effectiveness of working capital management in relation to defined risks from financial processes to the Group Risk Controls function with system support and to assess their effectiveness on a quarterly basis. The Group Risk Controls function reviews these reports on a sample basis and provides advice on how to improve efficiency and effectiveness. Where financial processes are carried out in the Group’s own Shared Service Center, this function provides support for the further development of the process and control framework. Based on the feedback received, Internal Audit selects companies for an in-depth review of the control measures in accordance with its own risk assessment.

The  Group’s accounting policies together with the International Financial Reporting Standards (IFRS) in compliance with EU legislation, govern the uniform accounting and measurement principles for the German and foreign companies included in TUI’s consolidated financial statements. They include general accounting principles and methods, policies concerning the statement of financial position, income statement, notes, management report and cash flow statement.

The  Group’s accounting policies also govern specific formal requirements for the consolidated financial statements. Besides defining the group of consolidated companies, they include detailed guidance on the reporting of financial information by those companies via the group reporting system HFM on a monthly, quarterly and year end basis. TUI’s accounting policies also include, for instance, specific instructions on the initiating, reconciling, accounting for and settlement of transactions between group companies or determination of the fair value of certain assets, especially goodwill. At Group level, specific controls to ensure proper and reliable (Group) accounting include the analysis and, where necessary, correction of the individual financial statements submitted by the Group companies, taking account of the reports prepared by the auditors and meetings to discuss the financial statements which involve both the auditors and local management. Any further content that requires adjusting can be isolated and processed downstream. The control mechanisms already established in the HFM consolidation system minimise the risk of processing erroneous financial statements. Certain parameters are determined at Group level and have to be applied by Group companies. This includes parameters applicable to the measurement of pension provisions or other provisions and the interest rates to be applied when cash flow models are used to calculate the fair value of certain assets. The central implementation of impairment tests for goodwill recognised in the financial statements secures the application of uniform and standardized evaluation criteria.

5. Disclaimer

With the organisational, control and monitoring structures established by the  Group, the internal control and risk management system enables company-specific facts to be captured, processed and recognised in full and properly presented in the Group’s accounts.

However, it lies in the very nature of the matter that discretionary decision-making, faulty checks, criminal acts and other circumstances, in particular, cannot be ruled out and will restrict the efficiency and reliability of the internal control and risk management systems, so that even Group-wide application of the systems cannot guarantee with absolute certainty the accurate, complete and timely recording of facts in the Group’s accounts.

Any statements made relate exclusively to  AG and to subsidiaries according to IFRS 10 included in  AG’s consolidated financial statements.Overall Assessment by the Executive Board
and Report on expected Developments

Actual business performance 2023 compared with our guidance

Overall, the operating and financial indicators showed a positive year-on-year development, as expected in our guidance.

In the period under review, revenue by  Group rose from € 16.5 bn to € 20.7 bn. The year-on-year growth of 25.8 % at constant currency thus matched the strong increase assumed in our guidance.

Likewise,  Group’s underlying EBIT rose by € 568.5 m to an operating profit of € 977.2 m in financial year 2023. This means that we achieved the expected considerable improvement in underlying EBIT.

The net income of € 22.1 m adjusted in the income statement in the period under review were outside the corridor we had expected, which included net costs of € 60 m to € 80 m. This is due in particular to the unplanned gain on disposal of € 91 m from the sale of the tour operator business by the equity method accounted company Sunwing Travel Group Inc., Ontario in the Northern Region segment.

Due to the significant recovery in underlying EBIT, ROIC and EVA also improved considerably in financial year 2023, as expected. In the period under review,  Group’s ROIC stood at 19.10 % (previous year 7.49 %). Taking account of the Group’s weighted cost of capital of 11.76 % (previous year 12.63 %), this resulted in positive Economic Value Added of € 375.6 m (previous year negative Economic Value Added of € 280.7 m).

In the period under review, the cash outflows from net capital expenditure on property, plant and equipment and financial investments of € 493.7 m (previous year net outflow of € 315.9 m) were withinh the expected range of € 450 m to € 500 m.

Our forecast had expected an almost stable development of the Group’s net debt, excluding the capital increase carried out in financial year 2023. Against the backdrop of the net cash inflows from the capital increase implemented in April 2023 and the redemption payments made to the Economic Stabilisation Fund, we had adjusted our guidance for the Group’s net debt to around € 2.4 bn as at the end of financial year 2023 in our Half-Year Financial Report. At € 2.1 bn, the Group’s net debt reported as at the end of financial year 2023 was significantly below the net debt of € 3.4 bn carried at the previous year’s reporting date and slightly below our updated guidance. The considerable decline reflected in particular the cash inflow from operating activities of € 1,637.3 m and the cash inflow from the capital increase effected in the period under review of € 1,760.9 m, less the payment of € 682.4 m made to redeem Silent Participation II to the Economic Stabilisation Fund. The improvement compared to the adjusted forecast was due in particular to higher cash and cash equivalents and positive effects from the translation of liabilities denominated in foreign currencies as at the balance sheet date.

For financial year 2023, we had expected a slight reduction in specific CO2 emissions as against financial year 2022. In the period under review, relative CO2 emissions of our airlines declined by 3.9 % from 6.36 to 6.11 kg / 100 pkm. The improvement was primarily driven by higher load factors as against 2022 and our fleet renewal programme, under which older aircraft are replaced with new, more carbon-efficient aircraft.

Projected development of global situation

Projected development of World Output

Var. %

2024

2023

World

+ 2.9

+ 3.0

Euro zone

+ 1.2

+ 0.7

Germany

+ 0.9

 0.5

France

+ 1.3

+ 1.0

UK

+ 0.6

+ 0.5

US

+ 1.5

+ 2.1

Russia

+ 1.1

+ 2.2

Japan

+ 1.0

+ 2.0

China

+ 4.2

+ 5.0

India

+ 6.3

+ 6.3

Source: Projections of International Monetary Fund (IMF), World Economic Outlook, October 2023

Macroeconomic situation and market development in tourism

Despite signs of economic resilience in calendar year 2023 and progress in reducing headline inflation, economic activities are still generally falling short of pre-pandemic projections, especially in emerging market and developing economies, amid widening growth divergences across regions. Several forces are holding back the recovery. Some reflect the long-term consequences of the pandemic, Russia’s war in Ukraine, and cyclical factors including the effects of monetary policy tightening necessary to reduce inflation. A central driver of the recent fall in headline inflation is declining international commodity prices (IMF, World Economic Outlook, October 2023).

Following a strong rebound in calendar year 2022, international tourism could climb close to pre-pandemic levels in 2023, driven by strong pent-up demand and the lifting of travel restrictions. Experts expect international arrivals in Europe to come close to their pre-pandemic levels after reaching 80 % in the previous year. Complete recovery of tourism remains subject to certain risks affecting global travel flows, like a potential economic slowdown in some regions, the loss of purchasing power amid high inflation and rapid interest hikes (UNWTO, World Tourism Barometer, September 2023).

Effects on TUI Group

As a global tourism provider,  Group depends on the political and legal framework and on consumer demand in the major source markets in which we operate with our hotel, cruise and tour operator brands. Our budget is based on IMF’s assumptions about the future development of the global economy and takes its guidance from UNWTO’s long-term forecast.

Expected development of Group earnings

TUI Group

The translation of the income statements of foreign subsidiaries in our consolidated financial statements is based on average monthly exchange rates.  Group generates a considerable proportion of consolidated revenue and substantial earnings and cash flow contributions in non-euro currencies, in particular the pound sterling, the US dollar and the Swedish krona. Taking account of the seasonality in tourism, the value of these currencies against the euro in the course of the year therefore exerts a major impact on the financial indicators displayed in  AG’s consolidated financial statements.

Our key financial performance indicators for our earnings position in financial year 2024 are revenue and underlying EBIT.

Definition of underlying EBIT in Value-oriented Group management on page 31.

Key performance indicators used for regular value analysis are Return On Invested Capital (ROIC) and Economic Value Added. ROIC for a given segment is compared with the segment-specific cost of capital.

For the financial year 2024 it is expected that customer volumes will reach 2019 levels. In the course of the financial year 2023  improved its financial position due to the recovery of its business, the capital increase and the prolongation of the credit facilities. Accordingly  has now far more options to hedge against changes in fuel prices or exchange rates. The further digitalisation of our business and the expansion of existing and new business areas are expected to take effect. Below we describe the key assumptions underlying the medium-term business planning in the segments.

In its business plan, Hotels Resorts expects to deliver further earnings growth due to capacity expansion, demand growth and increases in average selling prices.

For the Cruises segment further recovery of results in the financial year 2024 is expected as the winter season of the financial year 2023 was still affected by the comparative late recovery of demand in 2022. Furthermore, results will increase in financial year 2024 due to the expansion of the fleets of Marella and  Cruises. In Summer 2023 Marella took over one cruise ship from  Cruises. This ship will be operated all-season beginning with the financial year 2024.  Cruises will launch a new ship in Summer 2024. However, the results will be negatively impacted by new imposed regulatory measures with the aim to reduce climate-damaging emissions. For example the EU emission trading system will be introduced stepwise in the cruise sector beginning with 2024.

The future development of  Musement depends in part on the development of customer numbers in Markets Airlines.  Musement will also generate growth through the sale of tours, activities and tickets due to the expansion of its own / direct distribution via the internet and the app.

In Markets Airlines, beginning with the financial year 2024 it is expected that customer numbers will reach 2019 levels. Wider use of online distribution, the provision of dynamic production capacities for flights and accommodation and the investments in digitalisation are expected to further improve the results. In addition,  has now by far more options to hedge against changes in fuel prices and in exchange rates in comparison to financial year 2023. Otherwise will the emission trading system of the EU and Great Britain lead to higher expenses.

Below, we present  Group’s expected development in financial year 2024 based on the constant currency rates for financial year 2023.

Expected development of Group turnover and underlying EBIT

€ million

2023

2024*

Revenue

20,666

At least 10 % growth

Underlying EBIT

977

At least 25 % growth

Adjustments

 22

approx. € 25  35 m costs

* Variance year-on-year assuming constant foreign exchange rates are applied to the result in the current and prior period and within the framework of the macroeconomic and geopolitical uncertainties currently known, especially around the Middle East.

Revenue

 Group revenue totalled € 20.7 bn in the year under review. For financial year 2024, we expect  Group’s revenue to increase by at least 10 % year-on-year.

Underlying EBIT

 Group’s underlying EBIT in financial year 2023 amounted to € 977.2 m. For financial year 2024, we expect  Group’s underlying EBIT to improve by at least 25 % year-on-year.

Adjustments

For financial year 2024, we expect a net negative effect from adjustments in a range of € 25 m to € 35 m.

For details on objectives and strategies, see page 24 onwards; for details on risks, see Risk Report from page 35 onwards.

ROIC and Economic Value Added

Due to the expected improvement in our operating result, ROIC and Economic Value Added are also expected to improve strongly year-on-year, depending on how capital costs for  Group develop.

Expected development of financial position

To forecast the Group’s financial position in financial year 2024, we have defined the Group’s net capital expenditure and investments and its net financial position as key performance indicators.

Expected development of Group financial position

€ million

2023

2024

Net capex and investments

493.7

around € 475  525 m*

Net debt

2,106.2

slight decrease

* Excluding capital increase Peptoni S. A.

Net capex and investments

For financial year 2024, we expect net capex and investments in a range of € 475 m to € 525 m.

Net financial position

For financial year 2024, we expect the Group’s net debt to decrease slightly.

Sustainable development

Climate protection and emissions

We have identified specific carbon emissions (in g CO2 / pkm) from our aircraft fleet as the key non-financial performance indicator. For financial year 2024, we expect specific CO2 emissions to slightly fall in comparison with financial year 2023.

Overall Executive Board assessment of  Group’s current situation and expected development

At the date of preparation of the Management Report (4 December 2023), the Executive Board assumes that costumer volumes in 2024 will reach 2019 levels. Furthermore, in the course of the financial year 2023  improved its financial position due to the recovery of its business, the capital increase and the prolongation of the RCF. Accordingly  has now far more options to hedge against changes in fuel prices or exchange rates. The further digitalisation of our business and the expansion of existing and new business areas are expected to take effect.

For financial year 2024, we therefore expect  Group’s underlying EBIT to improve by at least 25 % year-on-year on a constant currency basis.

Outlook for  AG

The future business performance of  AG is essentially subject to the same factors as those impacting  Group. Due to the business ties between  AG and its Group companies, the outlook, opportunities and risks presented for  Group are largely mirrored by expectations for  AG. The comments made for  Group therefore also apply to  AG.

Opportunity Report

 Group’s opportunity management follows the Group strategy. Responsibility for systematically identifying and taking up opportunities rests with the operational management of the Hotels Resorts, Cruises and  Musement segments as well as our source markets. Market scenarios and critical success factors for the individual sectors are analysed and assessed in the framework of the Group-wide planning and control process. The core task of the Group’s Executive Board is to secure profitable growth for  Group again by optimising the shareholding portfolio and developing the Group structure over the long term.

Opportunities and risks arising from macro trends

In particular, a decline in fuel costs as well as a lower general price increase would have a positive impact on the  Group and its segments in financial year 2024.

Corporate strategy opportunities

Opportunities arise from accelerating the Group’s transformation into a digital platform business. We will expand hotel-only and flight-only products and broaden our dynamic packaging opportunities. We will prioritise the planned transformation of our digital platform in the  Musement segment.

Operational opportunities

We intend to operate as an asset-light organisation and see opportunities in the implementation of our asset-right strategy in our Hotels Resorts and Cruises businesses. We are reviewing unprofitable activities and will divest them as appropriate.

climate-related opportunities

As short to medium term opportunities, we identified more efficient aircraft and cruise ships as well as a shift to renewable energy sources at hotels resorts as a way to reduce operating costs in connection with CO2 emissions. We further see an opportunity to offer lower-emission air travel, cruise travel and hotel stays as a way to improve our competitive position. Providing alternative modes of transport including a move to high-speed rail is also seen as an opportunity for our business. We are examining how we can utilise these opportunities.

The summer season 2023 in Turkey and Greece for selected destinations has been expanded which has been well received by our customers. In the long term, we expect to see this more frequently and in more destinations following a shift in consumer preferences from peak seasons where heat waves may be imminent to shoulder seasons where the wheather is still very favourable for travel. In addition, our business model is flexible to offer new destinations based on changing weather conditions, e. g. more travel to destinations around the Baltic Sea. We continue to monitor these trends and embed them into our strategic and operational planning.

Business Review

Macroeconomic, Industry and Market Framework

Macroeconomic development

Development of World Output

Var. %

2023*

2022

World

+ 3.0

+ 3.5

Eurozone

+ 0.7

+ 3.3

Germany

 0.5

+ 1.8

France

+ 1.0

+ 2.5

UK

+ 0.5

+ 4.1

US

+ 2.1

+ 2.1

Russia

+ 2.2

 2.1

Japan

+ 2.0

+ 1.0

China

+ 5.0

+ 3.0

India

+ 6.3

+ 7.2

* Projection

Source: International Monetary Fund (IMF), World Economic Outlook, October 2023

Overall, the world economy has grown moderately so far in calendar year 2023. Widespread fears of recession among the world’s leading economies in the wake of monetary policy tightening largely look to be fading. Overall, the global recovery from the COVID-19 pandemic has remained slow and uneven, with major regional divergences, due to Russia’s invasion of Ukraine and the associated distortions in the energy and food markets. Economic activity in emerging markets and developing economies, in particular, has fallen substantially short of its pre-pandemic path (IMF, World Economic Outlook, October 2023).

Key exchange rates and commodity prices

 Group companies operate on a worldwide scale. This presents financial risks for  Group arising from changes in exchange rates and commodity prices. The essential financial transaction risks from operations concern euros and US dollars. They mainly result from foreign exchange items in the individual Group companies, for instance jet fuel and bunker oil or ship handling, or from sourcing transactions by hotels. The parity of sterling against the euro affects the translation of results generated in the UK market in TUI’s consolidated financial statements. Changes in commodity prices above all affect  Group when procuring fuels such as aircraft fuel and bunker oil. In Tourism, risks relating to changes in exchange rates and price risks from fuel sourcing are partly hedged by derivatives.

Information on hedging strategies and risk management as well as financial transactions and the scope of such transactions at the balance sheet date is provided in the sections Financial position and Risk report in the Management Report and the section Financial instruments in the Notes to the consolidated financial statements.

Financial position from page 74, Risk report from page 35, and Financial instruments in the Notes from page 249.

 

The exchange rate charts are presented on the basis of the indirect quotation format customary in the foreign exchange market. If the exchange rate falls, the foreign currency is appreciating against the euro. By contrast, if the exchange rate rises, the foreign currency is depreciating against the euro.


Industry overview

As a global leisure experiences provider, the development of the international tourism market has an impact on all business areas of the Group.

The key indicators used to measure the size of the tourism sector include the number of international tourist arrivals. According to the United Nations World Tourism Organization (UNWTO), the number of international tourist arrivals grew by an average of 5 % year-on-year from 2009 to 2019 (UNWTO, World Tourism Barometer, January 2020). This growth was driven by a number of factors: the relatively stable global economy, a growing middle class in the emerging economies, technological progress, and an easing of visa requirements.

With the outbreak and the global spread of the COVID-19 pandemic in the first quarter of calendar year 2020, almost all activities in the sector came to a standstill, and as a result, international tourist arrivals declined significantly. However, as travel restrictions eased and mobility was restored, tourism demand has rebounded. From January to July 2023, international tourist arrivals reached 84 % of 2019 levels globally, and 91 % in Europe, with the expectation that volumes will return closer to pre-pandemic levels by the end of the year (UNWTO, World Tourism Barometer, September 2023). In Summer 2023,  Group has seen volumes in its Markets Airlines business return almost fully back to 2019 levels.

Change of international tourist arrivals versus 2019 in %

Var. %

2023*
versus 2019

2022
versus 2019

World

 16

 34

Europe

 9

 20

Asia and the Pacific

 39

 72

Americas

 13

 29

Africa

 8

 33

Middle East

+ 20

 5

Source: UNWTO Tourism Dashboard and World Tourism Barometer, September 2023

* Period January till July

Travel intermediary market

A travel intermediary operates between a provider of tourism services, such as an airline or a hotel, and final customers, typically delivering distribution, packaging and / or related services. Their advantage compared with direct suppliers is generally related to their distribution and (in the case of tour operators) fulfilment and service capabilities. Travel intermediaries include tour operators, travel agents, and online travel agencies (OTAs). These business models vary substantially. All may offer their customers a component product (e. g. flight, accommodation) or a package product (comprising e. g. flight, hotel and transfers), usually through a combination of offline (i. e. travel agencies) and online channels (i.e. web and app). Booking preference has shifted to online over time, a trend which was further accelerated during the pandemic.

In order to secure flight and hotel capacity in advance, a tour operator may enter into a wholesale contract with the supplier, often involving some form of commitment to a certain amount of capacity at a specified price. Where the tour operator commits to capacity, they take on the risk of filling it; in return, they can expect the supplier to offer them a favourable rate and the opportunity to secure accommodation on an exclusive basis, as well as the ability to yield the capacity. Alternatively, tour operators can dynamically access flight and hotel supply, either direct with the supplier, or via a bedbank, or via a global distribution system. This does not involve taking risk, and provides additional choice and flexibility for the customer (for example, relating to choice of departure airport, time of flights and duration of holiday). OTAs, by contrast, typically do not commit to taking capacity, nor are they as deeply involved in the fulfilment and service of the holiday. Their offering to suppliers is a digital distribution platform with broad customer reach, generally without any exclusivity of offer.

Airline market

The airline industry was hit particularly hard by the COVID-19 crisis, as airlines around the world had to ground their aircraft and cancel flights due to global travel bans. In addition the European industry faced significant disruption in 2022, in particular due to shortage of staff in critical areas of operations (e. g. ground handling and airports), driven by delayed ramping up of staff after COVID 19 ramping down and due to shortages in the labour market. Despite this, air passenger traffic rebounded significantly in 2022, and has continued its recovery in 2023, with global revenue expected to reach 90 % of 2019 (IATA, Global Outlook for Air Transport, June 2023).

The airline industry, like many others, has been impacted by higher inflation, in particular in relation to jet fuel prices, driven up by energy shortages and the war in Ukraine, as well as rising interest rates and labour shortages. As a result of this, plus demand returning back to 2019 levels, average airfares have increased (IATA, Global Outlook for Air Transport, June 2023).

Climate change is a further challenge facing the industry. The industry is committed to achieve net zero emissions by 2050, meaning the current reliance on carbon offsetting will need to end. It is expected that Sustainable Aviation Fuel (SAF) will become the most important means for the industry to achieve its reduction targets, however, predicted demand is far in excess of current production (Skift State of Travel 2023, July 2023).

Hotel market

The COVID-19 pandemic had significant impacts on the hotel sector as travel and hotel restrictions imposed by governments in many countries resulted in the temporary closing of hotels and a significant decline in the number of bed nights. The recovery of the hotel market was initiated with the resumption of domestic travel. Following the lifting of governmental restrictions, international travel contributed to an increase in bed nights.

The hotel market comprises business and leisure hotels. Leisure hotels feature a number of characteristics distinguishing them from business hotels, including longer average lengths of stay and differences in location, room features and service offerings. From a demand perspective, the leisure hotel market in Europe comprises several smaller sub-markets catering to customers’ individual needs and preferences. The sub-markets comprise premium, comfort and budget hotels as well as family / apartment hotels and club or resort hotels. Hotel companies may offer a variety of hotels for different market segments, often defined by price segment, star rating, exclusivity or available facilities.

In Europe, in particular, there are many small, often family-run hotels, which are less upscale and have fewer financial resources. Most family-owned hotels are not branded.

Given the large number of ownership and operating models for leisure hotels and the fragmented competitive landscape which, at least in Europe, is not dominated by large hotel chains, the competitive environment differs greatly between locations. Despite this strong fragmentation, a structural change can be observed in the European hotel industry, as in nearly all regions in the world. The share held by hotel chains is increasing, as well as the focus on direct distribution and customer loyalty.

Sustainability and emissions reduction is strongly in focus for the hotels sector, with many major brands committing to emissions reduction targets and other goals including to energy efficiency, water conservation and waste reduction. Inflation is another key issue for the industry, driven by rising energy costs, higher interest rates, and labour shortages. Although hotel revenue (based on the major global brands) has been increasing, driven by the post-pandemic recovery and strong pricing, hotels may need to increase their efficiency in order to remain competitive (Skift State of Travel 2023, July 2023).

Cruise market

From the end of July 2022, nearly the entire global ocean-going cruise fleet was back in operation after the pandemic-induced suspension of operation. Sector forecasts regarding the pandemic impact and recovery project passenger volume to exceed the levels recorded in baseline year 2019 by the end of 2023 and recover in excess of 27 % above 2019 levels by the end of 2026 (CLIA, State of the Cruise Industry 2023).

In calendar year 2022, the largest source markets were North America, Western Europe, Asia and Australia /
New Zealand / Pacific. Based on passenger volume, the most popular destinations within that period were the Caribbean, Central and Western Mediterranean, Northern Europe, North America and Eastern Mediterranean (CLIA, State of the Cruise Industry 2023).

Similar to the airline and hotel sectors, emissions reduction and the path to net zero is strongly in focus for the cruise industry. In addition, new regulations are being introduced, with additional International Maritime Organisation (IMO) rules on carbon intensity and rating system having entered into force at the start of 2023, and the EU Emissions Trading Scheme (ETS) being phased in from 2024.

Experiences and attractions market

The market for experiences and attractions is a sizeable and rapidly growing tourism segment (based on  estimates). The market is diverse, complex and highly fragmented on the supplier side, and is predominantly operated offline. Intermediation and in-destination presence therefore play a key role. However, due to growing consolidation and digitalisation, the market is undergoing change. Online bookings have increased, and many operators took the chance during the pandemic to invest in websites, digital marketing and software. In addition, the growth of OTAs impacts how customers find and book experiences, and has prompted operators to improve their technology and digital marketing (Phocuswire news, October 2022).

Our brand

Our brand is symbolised by our smiling red logo and stands for our aim to create the moments that make customers lives richer. Our new vision ‘Excellence in Leisure Experiences’ is about making our ambition clear to the marketplace. We strive to do this at every point in the customer journey both in the physical and digital worlds. Our new brand world crystalises this with a clear brand purpose, identity and promise.

Pre-pandemic, we successfully migrated our local brands to a single global  brand. This established  as one of the best-known travel and leisure brands in our core markets in Europe (as measured by brand awareness and consideration in  brand performance tracking, conducted by Metrixlab). As we exited the pandemic, we sought to build on this success and support our growth ambitions, by broadening the  brand appeal into new customer segments and products.

Our Live Happy campaign, which launched at the end of 2021, has performed well across all markets and segments (based on quantitative testing comparing our campaign to external benchmarks). Having built emotional resonance with the brand through initial campaigns, we have deployed further advertising to drive reappraisal and sales for our new and exclusive products e. g. Cities and  Blue Hotels. Our modular approach to advertising flexes by channel and segment, across markets and products, through the whole marketing funnel. To attract future segments, we increasingly look to diversify our media channel mix to reflect media viewing trends (such as video on demand and social media). Despite tough competition, we remain in the top spot for brand awareness and consideration, and continue to build and increase resonance based on brand identification and Net Promoter Score (TUI Brand Pulse Tracking, July 2023).

We have also extended our brand beyond advertising – to all of the touchpoints we have with our customers, as well as to our people, directing them towards the same overarching goal of creating a sustainable and consistent customer journey. To do so, we use our customer centricity programme “Makers of Happy”, our values “Trusted”, “Unique” and “Inspiring” and our new employer brand “Let’s  It!”. All of this is intended to put  in a strong position.

Group Earnings

Comments on the consolidated income statement

In the financial year 2023  left behind the impacts of the COVID-19 pandemic. In the Holiday Experience division the complete product portfolio could be offered.  Group’s business volume was significantly higher than in financial year 2022, which was still impacted by travel restrictions to contain COVID-19, in particular in the first half. In aviation business disruptions did not occur unlike in the financial year 2022. The number of guests reached near pre crisis levels, revenues exceeded pre crisis levels. In contrast the financial year 2023 was still affected by the general increase in prices, especially for fuel, and by changes in exchange rates.  was insufficiently hedged against these changes due to limited access to relevant hedging instruments. However, overall all the segments increased their results in comparison to the financial year 2022.

Moreover,  Group’s performance is subject to seasonality due to the tourism business being characterised by the winter and summer travel months.  Group’s underlying EBIT improved significantly by € 568.5 m to € 977.2 m year-on-year, an improvement of € € 559.3 m on a constant currency basis.

Consolidated Income Statement of  AG for the period from 1 Oct 2022 to 30 Sep 2023

€ million

2023

2022

Var. %

Revenue

20,665.9

16,544.9

+ 24.9

Cost of sales

19,052.9

15,613.3

+ 22.0

Gross profit

1,613.0

931.7

+ 73.1

Administrative expenses

1,015.6

746.3

+ 36.1

Other income

37.6

52.2

 28.1

Other expenses

32.0

1.7

n. a.

Impairment of financial assets

18.4

7.3

+ 152.1

Financial income

87.6

35.9

+ 144.4

Financial expenses

533.6

509.5

+ 4.7

Share of result of investments accounted for using the equity method

407.2

100.7

+ 304.2

Impairment (+) / Reversals of impairment (–) of net investments in joint ventures and associates

 5.4

1.6

n. a.

Earnings before income taxes

551.2

 145.9

n. a.

Income taxes (expense [+], Income [–])

95.5

66.7

+ 43.1

Group profit / loss

455.7

 212.6

n. a.

Group profit / loss attributable to shareholders of  AG

305.8

 277.3

n. a.

Group profit attributable to non-controlling interest

149.9

64.6

+ 132.0

Revenue and cost of sales

Revenue

€ million

2023

2022
adjusted

Var. %

Hotels Resorts

1,032.5

806.2

+ 28.1

Cruises

656.0

331.5

+ 97.9

 Musement

770.0

578.4

+ 33.1

Holiday Experiences

2,458.5

1,716.0

+ 43.3

Northern Region

7,722.9

6,320.2

+ 22.2

Central Region

7,329.7

5,787.3

+ 26.7

Western Region

3,142.8

2,712.6

+ 15.9

Markets Airlines

18,195.4

14,820.1

+ 22.8

All other segments

11.9

8.8

+ 35.3

 Group

20,665.9

16,544.9

+ 24.9

 Group (at constant currency)

20,821.5

16,544.9

+ 25.8

In financial year 2023,  Group’s revenue increased by 24.9 % to € 20.7 bn. On a constant currency basis, revenue increased by 25.8 %. Revenue is presented alongside the cost of sales in the income statement, which increased by 22.0 % in the period under review.

Gross profit

The difference between revenue and the cost of sales increased as a result of the normalisation of the business by € 681.3 m year-on-year to a gross profit of € 1,613.0 m.

Administrative expenses

Administrative expenses increased by € 269.3 m year-on-year to € 1,015.6 m (previous year € 746.3 m). Administrative expenses increased due to the termination of state aid programmes as well as increased exchange rates.

Other income and other expenses

In financial year 2023 other income mainly reflects gains from the disposal of aircraft assets and income from emission certificates. In the previous year, other income included the gain on disposal of Nordhotel S. A. in October 2022 and also subsequent income relating to the disposal of Riu Hotels S. A. in financial year 2021.

In financial year 2023, other expenses result from portion of the goodwill allocated to the segment Northern Region was disposed with the transfer of the operational business of Sunwing. This portion was determined as the relative value of the operations of Sunwing disposed of in relation to the retained segment Northern Region. In the previous year, other expenses included in particular losses from the disposal of aircraft assets.

Financial result

The financial result in the 2023 financial year amounted to € – 445.9 m after € – 473.7 m in the previous year. The increase in financial income mainly resulted from higher interest income of € 76.9 m, up 192.4 % (previous year € 26.3 m). The increase in financial expenses was mainly due to 6.7 % higher interest expenses of  525.1 m (previous year € 492.1 m), in particular driven by liabilities to banks and lease liabilities, the unwinding of discount on provisions and the measurement of hedges. On the other hand, lower expenses were incurred for other interest and similar expenses, largely due to lower interest expenses.

Share of result of joint ventures and associates

The share of result from joint ventures and associates of € 407.2 m (previous year € 100.7 m) comprises the proportionate net profit for the year of these companies. The increase by € 306.4 m was in particular driven by the normalisation of the business. In addition, Sunwing realised a gain of € 110.3 m from the sale of its operating activities, which increased the share of result of joint ventures and associates.

Earnings before income taxes

In the period under review, earnings before income taxes totalled € 551.2 m, an improvement of € 697.1 m year-on-year. In the previous year, a loss of € – 145.9 m was recorded.

Group profit / loss

The Group profit for financial year 2023 totalled € 455.7 m, an increase of € 668.3 m year-on-year (previous year loss of € – 212.6 m).

Share in Group loss attributable to TUI AG shareholders

The share in Group loss attributable to  AG shareholders amounted to € 305.8 m in financial year 2023 (previous year € – 277.3 m).

Non-controlling interests

In the completed financial year, non-controlling interests in the Group result totalled € 149.9 m (previous year € 64.6 m. They mainly related to RIUSA II Group.

Earnings per share

The interest in the Group result attributable to  AG shareholders resulted in basic earnings per share of  0.80 (previous year € – 1.02) in financial year 2023. Earnings per share for all periods presented were adjusted for the effect of the capital reduction carried out in February 2023 at a ratio of 10:1 and the effect of the bonus component of subscription rights issued as part of the capital increase in March 2023.

Alternative Performance indicators

The Group’s main financial KPI is underlying EBIT. We define the EBIT in underlying EBIT as earnings before interest, income taxes and income and expenses for the measurement of the Group’s interest hedges. EBIT by definition includes goodwill impairments.

Underlying EBIT is adjusted by income and expense items impacting or distorting the assessment of the operating profitability of the segments and the Group due to their level and frequency. These items include gains on disposal from investments, major gains and losses from the sale of assets and major restructuring and integration expenses. In addition, adjustments are carried for all effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments. Adjustments made in the reconciliation to underlying EBIT include goodwill impairments.

Reconciliation to underlying EBIT of  Group

€ million

2023

2022

Var. %

Earnings before income taxes

551.2

 145.9

n. a.

plus: Net interest expense (excluding expense / income from measurement of interest hedges)

432.6

478.9

 9.7

plus: Expense / less income from measurement of interest hedges

15.6

 13.0

n. a.

EBIT

999.3

320.0

+ 212.3

Adjustments:

 

 

 

less / plus: Separately disclosed items

 45.8

58.7

n. a.

plus: Expense from purchase price allocation

23.7

30.1

 21.3

Underlying EBIT

977.2

408.7

+ 139.1

 Group’s EBIT increased by € 679.4 m to € 999.3 m in financial year 2023.

EBIT

€ million

2023

2022
adjusted

Var. %

Hotels Resorts

555.5

476.6

+ 16.6

Cruises

236.0

0.8

n. a.

 Musement

23.9

6.4

+ 274.9

Holiday Experiences

815.5

483.7

+ 68.6

Northern Region

151.8

 137.6

n. a.

Central Region

83.6

47.0

+ 77.7

Western Region

79.2

 29.3

n. a.

Markets Airlines

314.5

 119.9

n. a.

All other segments

 130.6

 43.9

 197.7

 Group

999.3

320.0

+ 212.3

 Group’s operating EBIT adjusted for one-off effects (underlying EBIT) improved by € 568.5 m to € 977.2 m in financial year 2023.

Underlying EBIT

€ million

2023

2022
adjusted

Var. %

Hotels Resorts

549.5

480.3

+ 14.4

Cruises

236.0

0.8

n. a.

 Musement

36.0

23.7

+ 51.7

Holiday Experiences

821.5

504.7

+ 62.8

Northern Region

71.5

 101.6

n. a.

Central Region

88.1

74.6

+ 18.1

Western Region

81.1

 31.5

n. a.

Markets Airlines

240.6

 58.6

n. a.

All other segments

 84.8

 37.4

 126.6

 Group

977.2

408.7

+ 139.1

 Group (at constant currency)

968.0

408.7

+ 136.8

In financial year 2023, net income were adjusted by € 45.8 m for one-off effects. For details, please refer to the Notes to the segment data.

For one-off effects, please see page 206.

Other segment indicators

Reconciliation to underlying EBITDA

€ million

2023

2022

Var. %

EBIT

999.3

320.0

+ 212.3

Amortisation and impairment (+) / reversals (–) of other intangible assets and depreciation and impairment (+) / reversals (–) of property, plants and equipment and right of use assets

859.1

883.4

 2.7

EBITDA

1,858.5

1,203.3

+ 54.4

Adjustments

 83.2

21.3

n. a.

EBITDA (underlying)

1,775.3

1,224.6

+ 45.0

 

EBITDA

€ million

2023

2022
adjusted

Var. %

Hotels Resorts

740.4

685.3

+ 8.0

Cruises

301.5

55.4

+ 444.2

 Musement

59.2

39.4

+ 50.3

Holiday Experiences

1,101.1

780.0

+ 41.2

Northern Region

447.8

190.5

+ 135.1

Central Region

180.8

158.2

+ 14.3

Western Region

221.4

115.3

+ 92.0

Markets Airlines

850.0

464.0

+ 83.2

All other segments

 92.7

 40.7

 127.8

 Group

1,858.5

1,203.3

+ 54.5

 

Underlying EBITDA

€ million

2023

2022
adjusted

Var. %

Hotels Resorts

734.4

651.1

+ 12.8

Cruises

301.5

55.4

+ 444.2

 Musement

62.9

49.2

+ 27.8

Holiday Experiences

1,098.7

755.6

+ 45.4

Northern Region

356.0

213.2

+ 67.0

Central Region

184.2

180.5

+ 2.0

Western Region

220.4

109.7

+ 100.9

Markets Airlines

760.8

503.5

+ 51.1

All other segments

 84.3

 34.5

 144.3

 Group

1,775.3

1,224.6

+ 45.0

Segmental Performance

Holiday Experiences

Holiday Experiences

€ million

2023

2022
adjusted

Var. %

Revenue

2,458.5

1,716.0

+ 43.3

Underlying EBIT

821.5

504.7

+ 62.8

Underlying EBIT (at constant currency)

836.7

504.7

+ 65.8

 

Hotels Resorts

€ million

2023

2022
adjusted

Var. %

Total revenue1

1,855.3

1,499.6

+ 23.7

Revenue

1,032.5

806.2

+ 28.1

Underlying EBIT

549.5

480.3

+ 14.4

Underlying EBIT (at constant currency)

556.8

480.3

+ 15.9

Available bed nights2 (in ’000)

38,521

37,761

+ 2.0

Riu

13,751

13,490

+ 1.9

Robinson

3,749

3,582

+ 4.7

Blue Diamond

6,036

5,432

+ 11.1

Occupancy3 (in %, variance in % points)

82

76

+ 6

Riu

90

82

+ 8

Robinson

71

66

+ 5

Blue Diamond

83

79

+ 5

Average daily rate4 (in €)

87

77

+ 12.6

Riu

78

69

+ 13.5

Robinson

106

103

+ 2.1

Blue Diamond

152

137

+ 10.9

Revenue includes fully consolidated companies, all other KPIs incl. companies measured at equity.

1 Total revenue includes intra-Group revenue.

2 Number of hotel days open multiplied by beds available (Group owned and leased hotels)

3 Occupied beds divided by available beds (Group owned and leased hotels)

4 Board and lodging revenue divided by occupied bed nights (Group owned and leased hotels)

Our Hotels Resorts segment with its diversified hotel portfolio of well recognized brands, surpassed the already strong operational performance in the previous year delivering an underlying EBIT of € 549.5 m, up € 69.2 m year-on-year (previous year: € 480.3 m) and above pre-pandemic levels of FY 2019. Results were driven by an improved operational performance supported in particular by higher occupancies and improved rates. Popular destinations proved to be Turkey, the Balearics and Greece as well as our year-round destinations in the Caribbean, the Canaries and Cape Verde.

The number of available bed nights on offer rose by 2.0 % year-on-year as we continued to expand our capacity in this segment. The average occupancy rate increased across all our brands by a total of 6 %pts to 82 % (previous year: 76 %). Average daily rate per bed increased by 12.6 % to € 87 (previous year: € 77) and were well ahead of the pre-pandemic levels, with Riu continuing to drive the strong performance.

On a brand by brand basis, Riu occupancy increased by 8 % pts to 90 % versus previous year (previous year: 82 %) and average daily rate improved 13.5 % to € 78 (previous year: € 69), with the Group once again delivering an improved operational performance in particular in the Caribbean market.

Robinson achieved an improved result across its portfolio of mainly four- and five star club hotels, supported by higher occupancy up 5 % pts to 71 % versus previous year (previous year: 66 %) and average daily rate up 2.1 % to € 106 (previous year: € 103).

Blue Diamond occupancy increased by 5 % pts to 83 % versus previous year (previous year: 79 %) and average daily rates were 10.9 % higher at € 152 (previous year: € 137), benefitting from higher demand to our Caribbean and Mexican properties.

Our other hotels which include popular brands such as  Blue,  Magic Life and  Suneo, profited from higher rates and occupancies.

In Hotels Resorts, product growth is being delivered by expanding our portfolio in new and existing destinations. In FY23 we added 41 new hotels to our pipeline. This growth is being achieved in accordance with our asset-right and scalable approach through our joint ventures. During the year we announced plans to further expand the  Blue portfolio, our brand focused on experience orientated lifestyle travellers. The expansion is driven by international partnerships in which  Blue hotels are operated either under management contracts or by franchises. In addition, we also announced the creation of a new off-balance sheet joint venture with Riu. This targets realising unique opportunities to invest into growth, whilst limiting the financial impact on TUI’s leverage and net investments. The global Hansainvest hotel fund, initiated by TUI, is successfully executing its first two hotel investments on Zanzibar and on Cape Verde. Here,  is providing hotel management and investment advisory services to support our asset-light growth development.

Cruises

€ million

2023

2022

Var. %

Revenue1

656.0

331.5

+ 97.9

Underlying EBIT

236.0

0.8

n. a.

Underlying EBIT (at constant currency)

235.7

0.8

n. a.

Available passenger cruise days2 (in ’000)

 

 

 

Mein Schiff

6,121

5,637

+ 8.6

Hapag-Lloyd Cruises

589

531

+ 11.0

Marella Cruises

2,789

2,073

+ 34.5

Occupancy3 (in %, variance in % points)

 

 

 

Mein Schiff

95

69

+ 26

Hapag-Lloyd Cruises

72

58

+ 14

Marella Cruises

96

70

+ 26

Average daily rate (in €)

 

 

 

Mein Schiff4

171

178

 4.0

Hapag-Lloyd Cruises4

735

653

+ 12.6

Marella Cruises5 (in £)

181

164

+ 10.6

1 No revenue is carried for Mein Schiff and Hapag-Lloyd Cruises as the joint venture  Cruises is consolidated at equity.

2 Number of operating days multiplied per berths available on the operated ships. This key figure has changed compared to previous periods.

3 Achieved passenger cruise days divided by available passenger cruise days

4 Ticket revenue divided by achieved passenger cruise days

5 Revenue (stay on ship inclusive of transfers, flights and hotels due to the integrated nature of Marella Cruises) divided by achieved passenger cruise days

The Cruises segment comprises the joint venture  Cruises in Germany, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises in UK. The segment operated a full fleet of 16 ships for the vast majority of the financial year against a more limited programme in the previous financial year, when full operations were only resumed in April 2022 following the COVID-19 restrictions during the winter months. In Spring 2023 Mein Schiff Herz transferred from  Cruises to Marella and after a period of refurbishment, the newly named Marella Voyager returned to service at the beginning of June for the summer season.

The segment continued its recovery throughout the year. As a result, underlying EBIT of € 236.0 m was up  235.3 m (previous year: € 0.8 m). All of our three Cruise brands contributed to the positive EBIT development boosted by increased volumes as well as higher occupancies. Occupancy rates continued to rise throughout the year ranging between 72 % and 96 % across our Cruises brands (previous year: between 58 % and 70 %), with rates for many itineraries achieving the peaks last seen in 2019.

Mein Schiff operated their full fleet of six ships during the summer season against seven ships during the winter season, following the transfer of Mein Schiff Herz to Marella Cruises in spring 2023. In the prior year the brand had only been able to operate its full fleet of seven ships from April 2022 following the lifting of the COVID-19 restrictions. The brand offered itineraries to the Canaries, the Caribbean, Central America, Asia and the Orient during the winter with an offering to the Mediterranean, Northern Europe and the Baltic Sea during the summer. With the return to normal operations, available passenger cruise days of 6,121 k were up 8.6 % (previous year: 5,637 k). Occupancy of 95 %, was 26 %pts higher versus previous year (previous year: 69 %) underlining the higher demand for our German language premium all-inclusive product. Mein Schiff average daily rate of 171€ was – 4.0 % versus previous year (previous year: € 178) but was virtually in line with pre-pandemic levels (FY 2019: € 174). Despite higher rates during the summer year-on-year, the overall lower rates against previous year were driven by the sale of a higher mix of premium cabins in the prior winter half-year when occupancies and capacity were significantly lower due to a more restricted programme.

Hapag-Lloyd Cruises, our luxury and expeditions brand, provided itineraries to Europe, Asia, the Americas and around the world with a full fleet of five ships able to operate again within a restriction-free environment. As a result, average passenger cruise days rose 11.0 % to 589 k (previous year: 531 k). Average daily rate of € 735 increased by 12.6 % versus previous year (previous year: € 653) and was well above pre-pandemic levels of € 641. Occupancy of 72 % rose by 14 %-pts versus previous year (previous year: 58 %) underlining the higher demand for these cruises.

Marella Cruises, our UK cruise brand, offered itineraries to the Mediterranean, the Canaries, Caribbean and North America during the year. The business was able to operate a full fleet with Marella Voyager complimenting the fleet of now five vessels during the summer season. Available passenger cruise days increased by 34.5 % to 2,789 k (previous year: 2,073 k) as a consequence and were also supported by a return to a full winter offering after the COVID-19 restrictions in the previous year. The average daily rate was £ 181, up 10.6 % year-on-year (previous year: £ 164) driven by itineraries to the Mediterranean and the expansion of the fleet. Occupancy also improved significantly to 96 %, up 26 % pts versus previous year (previous year: 70 %).

 Musement

€ million

2023

2022
adjusted

Var. %

Total revenue*

1,160.9

866.7

+ 34.0

Revenue

770.0

578.4

+ 33.1

Underlying EBIT

36.0

23.7

+ 51.7

Underlying EBIT (at constant currency)

44.3

23.7

+ 86.8

* Total revenue includes intragroup revenue.

 Musement, our tours and activities business, offers a wide range of experiences (excursions, activities and tickets), transfers and tours (multi-day tours) to both popular city and sun beach destinations. The digitalisation initiatives and the development of own differentiated products is well on track and continues to drive growth.

The business achieved an underlying EBIT of € 36.0 m, a notable increase of € 12.3 m compared to the previous year (previous year: € 23.7 m). This improvement was driven by the growth of the B2C experiences offering, increased B2B partnerships and higher transfer volumes from our Markets Airlines business.

As a result,  Musement reported 28.2 m tour operator guest transfers, a 17 % year-on-year increase (previous year: 24.0 m). Additionally, the business sold 9.4 m experiences across its global destinations, marking a 34 % growth from the previous year (previous year: 7.0 m).

Markets Airlines

Markets Airlines

€ million

2023

2022
adjusted

Var. %

Revenue

18,195.4

14,820.1

+ 22.8

Underlying EBIT

240.6

 58.6

n. a.

Underlying EBIT (at constant currency)

216.2

 58.6

n. a.

Direct distribution mix1 (in %, variance in % points)

76

78

 2

Online mix2 (in %, variance in % points)

51

54

 3

Customers (in ’000)

19,010

16,780

+ 13.3

1 Share of sales via own channels (retail and online)

2 Share of online sales

Our Markets Airlines business has continued its post COVID-19 recovery across the regions during the year within the framework of an improved booking environment. The winter half-year results in particular were impacted by inflationary pressures especially on energy, exchange rate volatility and the negative impact of valuation effects from ineffective hedge positions. The summer half-year benefitted from the non-repeat of the significant operational flight disruption costs experienced especially in UK in the previous year, following the unparalleled industry ramp-up after the COVID-19 pandemic. Results were impacted by € 25 m during the peak summer season due to the wildfires on Rhodes. Against this background, underlying EBIT for the segment of € 240.6 m, was up € 299.1 m on previous year (previous year: € – 58.6 m loss), supported by higher demand for our product offering at significantly higher prices.

A total of 19,010 k customers departed for their holidays during the financial year, up 13.3 % year-on-year (previous year: 16,780 k) with demand higher across all our source markets. Bookings taken for both the summer season and especially the winter season were well ahead of previous year.

Traditional short- and medium-haul destinations such as the Canaries and Egypt were again popular amongst customers during the winter season, whilst mainland Spain, Greece, Turkey, the Balearics and the Canaries were well sought after in the summer season. Also, destinations such as Mexico and the Dominican Republic proved to be in good demand throughout the financial year.

A key focus in the transformation of the segment is the strengthening and leveraging of our capabilities and market positions with growth delivered from new products and new customers, based on scalable common platforms. During the year we rolled-out our group-wide platforms for accommodation-only, flight-only and dynamic packaging to more markets and we are continuing to develop and enhance the capabilities of these platforms.

Northern Region

€ million

2023

2022

Var. %

Revenue

7,722.9

6,320.2

+ 22.2

Underlying EBIT

71.5

 101.6

n. a.

Underlying EBIT (at constant currency)

52.1

 101.6

n. a.

Direct distribution mix1 (in %, variance in % points)

94

94

Online mix2 (in %, variance in % points)

69

71

 2

Customers (in ’000)

7,360

6,475

+ 13.7

1 Share of sales via own channels (retail and online)

2 Share of online sales

Northern Region comprises the source markets UK and Nordics with our strategic tour operator venture in Canada being sold in April 2023.

Northern Region achieved a significantly improved underlying EBIT of € 71.5 m (previous year: € – 101.6 m loss) supported by higher margins as well as the absence of the level of flight disruptions witnessed in the previous year.

Customer volume increased significantly by 13.7 % to 7,360 k versus previous year (previous year: 6,475 k) with volumes recovering in particular in the UK to above pre-pandemic levels. Online distribution for the Region continued to be high at 69 %, down 2 %pts against previous year of 71 %, but up 2 %pts versus pre-pandemic levels (FY 2019: 67 %), The comparison against last year is limited due to lower volumes and longer retail shop closures resulting from the COVID-19 restrictions during the winter last year. Direct distribution at 94 % maintaining the high rate of both the previous year and pre-pandemic.

During the year we announced the expansion of our UK capacities for the financial year 2024 as part of our customer growth plans. These will provide customers with more flexibility and choice and also enhance our dynamic product offering. In September we also announced the re-launch of our First Choice brand in UK, which targets new and especially younger customers, to enlarge our appeal across more customer segments.

Central Region

€ million

2023

2022
adjusted

Var. %

Revenue

7,329.7

5,787.3

+ 26.7

Underlying EBIT

88.1

74.6

+ 18.1

Underlying EBIT (at constant currency)

85.0

74.6

+ 14.0

Direct distribution mix1 (in %, variance in % points)

56

58

 2

Online mix2 (in %, variance in % points)

29

30

 1

Customers (in ’000)

7,036

5,922

+ 18.8

1 Share of sales via own channels (retail and online)

2 Share of online sales

Central Region comprises Germany, Austria, Switzerland and Poland.

The segment reported underlying EBIT profit of € 88.1 m, an increase of € 13.5 m against the previous year’s € 74.6 m profit which included the benefit of a ~€ 50 m state compensation for the impact on business of the pandemic. The increase was driven in particular by an improved operational performance in the key Germany source market, supported by higher volumes and prices.

Customer numbers increased by 18.8 % to 7,036 k versus previous year (previous year: 5,922 k) in-line with the positive development of the Region post pandemic. All source markets contributed to this improvement, with Poland achieving more than one million guests for the first time. Online distribution for Central Region of 29 % maintained virtually the level of the previous year of 30 % whereby the comparison is limited due to lower volumes and longer retail shop closures due to the COVID-19 restrictions during the winter last year. Against pre-pandemic levels, online distribution continued to be significantly up by + 6 %pts. emphasising the development of our online offering in this region in line with consumer demand. Similarly, direct distribution of 56 % was also close to prior year (previous year: 58 %) and up 7 %pts against pre-pandemic levels of 50 %.

Western Region

€ million

2023

2022

Var. %

Revenue

3,142.8

2,712.6

+ 15.9

Underlying EBIT

81.1

 31.5

n. a.

Underlying EBIT (at constant currency)

79.1

 31.5

n. a.

Direct distribution mix1 (in %, variance in % points)

76

80

 4

Online mix2 (in %, variance in % points)

57

60

 3

Customers (in ’000)

4,614

4,383

+ 5.3

1 Share of sales via own channels (retail and online)

2 Share of online sales

Western Region comprises Belgium, Netherlands and France.

Western Region reported an underlying EBIT of € 81.1 m, up € 112.6 m versus previous year (previous year: € – 31.5 m loss). Results were driven by higher demand at improved prices as well as an improved airline operational performance with the non-repeat of the flight delay and cancellation costs due to operational disruptions in particular at Schiphol Airport, which affected the business in the previous year.

Customer volume rose by 5.3 % to 4,614 k year-on-year (previous year: 4,383 k) reflecting the improved booking environment. Online distribution for the region stood at 57 %, down 3 %pts (previous year: 60 %), but maintaining the pre-pandemic levels (FY 2019: 57 %). Again, the comparison to prior year is limited due to COVID-19 restrictions. Direct distribution of 76 % was 4 %pts down on previous year but maintained pre-pandemic levels.

All other segments

€ million

2023

2022
adjusted

Var. %

Revenue

11.9

8.8

+ 35.3

Underlying EBIT

 84.8

 37.4

 126.6

Underlying EBIT (at constant currency)

 84.9

 37.4

 126.7

All other segments’ includes the corporate centre functions of  AG and the interim holdings, the Group’s real estate companies and the Group’s key tourism functions. The previous period numbers have been adjusted following the re-segmentation of Future Markets to other segments within the Group.

The underlying EBIT loss for All other segments increased by € 47.4 m versus previous year, (previous year: € – 37.4 m loss). The devaluation of loans in particular contributed to the increase in the loss. The previous year’s result was also positively influenced by valuation effects, particularly from the reversal of provisions.

Net Assets

Development of the Group’s asset structure

€ million

30 Sep 2023

30 Sep 2022

Var. %

Fixed assets

10,929.1

10,636.0

+ 2.8

Non-current receivables

676.8

715.7

 5.4

Non-current assets

11,605.9

11,351.7

+ 2.2

Inventories

62.1

56.1

+ 10.8

Current receivables

2,355.4

2,108.1

+ 11.7

Cash and cash equivalents

2,060.3

1,736.9

+ 18.6

Assets held for sale

68.6

2.7

n. a.

Current assets

4,546.5

3,903.8

+ 16.5

Assets

16,152.4

15,255.5

+ 5.9

1,947.2

645.7

+ 201.5

Liabilities

14,205.2

14,609.7

 2.8

Equity and liabilities

16,152.4

15,255.5

+ 5.9

The Group’s balance sheet total increased by 5.9 % year-on-year to € 16.2 bn.

Vertical structural indicators

Non-current financial assets accounted for 71.9 % of total assets, compared with 74.4 % in the previous year. The capitalisation ratio (ratio of fixed assets to total assets) decreased from 69.7 % to 67.7 %.

Current assets accounted for 28.1 % of total assets, compared with 25.6 % in the previous year. The Group’s cash and cash equivalents increased by € 323.4 m to € 2,060.3 m. They thus accounted for 12.8 % of total assets, as against 11.4 % in the previous year.

Horizontal structural indicators

At the balance sheet date, the ratio of equity to non-current assets has been 16.8 %. At previous year’s balance sheet date this figure was 5.7 %. The ratio of equity plus non-current financial liabilities to fixed assets was 28.8 %, compared with 22.3 % in the previous year.

Development of the Group’s non-current assets

Structure of the Group’s non-current assets

€ million

30 Sep 2023

30 Sep 2022

Var. %

2,949.2

2,970.6

 0.7

Other intangible assets

538.0

507.6

+ 6.0

Property, plant and equipment

3,480.3

3,400.9

+ 2.3

Right-of-use assets

2,763.4

2,971.5

 7.0

Investments in joint ventures and associates

1,198.2

785.4

+ 52.6

Fixed assets

10,929.1

10,636.0

+ 2.8

Receivables and assets

366.2

493.7

 25.8

Deferred tax claims

310.6

222.0

+ 39.9

Non-current receivables

676.8

715.7

 5.4

Non-current assets

11,605.9

11,351.7

+ 2.2

Goodwill remained at previous year’s level of € 2,949.2 m.

For details, please refer to the section Goodwill in the Notes from page 217.

Property, plant and equipment

Property, plant and equipment totalled € 3,480.3 m at the balance sheet date, up by € 79.4 m year-on-year. Major additions to property, plant and equipment related to construction, acquisitions and renovations in the Hotels Resorts segment, refurbishment and maintenance work on cruise ships and investment in aircraft. The majority of the disposals related to the disposal of advance payments for the delivery of aircraft. In addition, tests of the carrying amounts led to impairments primarily on hotels including land.

Development of property, plant and equipment

€ million

30 Sep 2023

30 Sep 2022

Var. %

Real estate with hotels

1,936.3

1,800.9

+ 7.5

Other land

37.3

186.1

 80.0

Aircraft

341.5

342.3

 0.2

Ships

469.6

428.4

+ 9.6

Machinery and fixtures

384.8

360.8

+ 6.7

Assets under construction

151.9

170.7

 11.0

Payments on accounts

158.9

111.7

+ 42.3

Total

3,480.3

3,400.9

+ 2.3

Right-of-use assets

As a lessee,  recognises right-of-use assets and lease liabilities in the statement of financial position in accord-ance with IFRS 16. The right-of-use assets relate to moveable assets such as aircraft, vehicles and cruise ships, as well as property such as hotel buildings and land, office buildings and travel agencies.

Companies measured at equity

Twenty associated companies and 27 joint ventures were measured at equity. At € 1,198.2 m, their value decreased by 52.6 % year-on-year as at the balance sheet date.

Development of the Group’s current assets

Structure of the Group’s current assets

€ million

30 Sep 2023

30 Sep 2022

Var. %

Inventories

62.1

56.1

+ 10.8

Trade accounts receivable and other financial assets1

1,397.1

1,330.1

+ 5.0

Other non-financial assets2

917.3

755.0

+ 21.5

Current tax assets

41.0

23.1

+ 77.9

Cash and cash equivalents

2,060.3

1,736.9

+ 18.6

Assets held for sale

68.6

2.7

n. a.

Current assets

4,546.5

3,903.8

+ 16.5

1 Incl. receivables from derivative financial instruments

2 Incl. touristic prepayments

Financial Position of the Group

Principles and goals of financial management

Principles

 Group’s financial management is centrally operated by  AG, which acts as the Group’s internal bank. Financial management covers all Group companies in which  AG directly or indirectly holds an interest of more than 50 %. It is based on policies covering all cash flow-oriented aspects of the Group’s business activities. In implementing a cross-border organisation approach,  AG has outsourced some of its treasury activities to First Choice Holidays Finance Ltd, a British Group company. However, the treasury activities are carried out on a coordinated and centralised basis.

Goals

TUI’s financial management goals include ensuring sufficient liquidity for  AG and its subsidiaries and limiting financial risks from fluctuations in foreign exchange rates, commodity prices and interest rates as well as default risks associated with treasury activities.

Liquidity safeguards

The Group’s liquidity safeguards consist of two components:

  • In the course of the annual Group planning process,  Group draws up a multi-annual financial budget, from which long-term financing and refinancing requirements are derived. This information and financial market observation to identify refinancing opportunities create a basis for decision-making for concluding appropriate financing instruments for long-term corporate funding at an early stage.
  •  uses syndicated credit facilities and bilateral bank lines as well as its liquid funds to secure sufficient short-term cash reserves. Through intra-Group cash pooling, excess cash of individual Group companies is used to finance the cash requirements of other Group companies. A weekly rolling liquidity planning system is the basis for arrangements with banks.

Limiting financial risks

The Group companies operate on a worldwide scale.  Group is therefore exposed to financial risks from changes in exchange rates, commodity prices and interest rates.

The key operating financial transaction risks relate to the euro, US dollar, pound sterling and Swedish krona and to changing fuel prices. They mainly result from cost items in foreign currencies held by individual Group companies, e. g. hotel procurement, aircraft fuel and bunker oil invoices or ship handling costs.

The Group has entered into derivative hedges in various foreign currencies in order to limit its exposure to risks from changes in exchange rates. Changes in commodity prices affect  Group, in particular, in procuring fuels such as aircraft fuel and bunker oil. Some of these price risks related to fuel procurement are hedged by derivative instruments. Where price increases can be passed on to customers due to contractual agreements, this is also reflected in our hedging behaviour.

Hedging cover is taken out ahead of the markets’ customer booking profiles. This provides a degree of certainty over input costs when planning pricing and capacity.

In order to control risks related to changes in interest rates arising on funding in international money and capital markets and investments of liquid funds, derivative interest hedges are used on a case-by-case basis as part of the Group’s interest management system.

In order to limit default risks from settlement payments for derivatives as well as money market investments with banks,  AG and First Choice Holidays Finance Ltd have defined credit rating criteria for the selection of their counterparties. Trading and transaction limits are allocated to these counterparties on the basis of the credit ratings issued by the major rating agencies. The credit ratings and the corresponding limits are regularly reviewed. In the event of changes in the fair value of derivatives or rating changes, new business with these counterparties may temporarily be suspended until the limits can be applied appropriately again.

The use of derivative hedges is based on underlying transactions; the derivatives are not used for speculation purposes.

More detailed information on hedging strategies and risk management as well as financial transactions and the scope of such transactions at the balance sheet date is provided in the Risk Report and the section Financial instruments in the Notes to the consolidated financial statements.

See from page 35 ff. or 249 ff.

Capital structure

Capital structure of the Group

€ million

30 Sep 2023

30 Sep 2022

Var. %

Non-current assets

11,605.9

11,351.7

+ 2.2

Current assets

4,546.5

3,903.8

+ 16.5

Assets

16,152.4

15,255.5

+ 5.9

Subscribed capital

507.4

1,785.2

 71.6

Capital reserves

9,090.1

6,085.9

+ 49.4

Revenue reserves

 8,474.6

 8,432.7

 0.5

Silent participation

420.0

n. a.

Non-controlling interest

824.3

787.3

+ 4.7

1,947.2

645.7

+ 201.5

Non-current provisions

1,485.7

1,323.2

+ 12.3

Current provisions

366.7

574.2

 36.1

Provisions

1,852.4

1,897.4

 2.4

Non-current financial liabilities

1,198.5

1,731.4

 30.8

Current financial liabilities

98.5

319.9

 69.2

Financial liabilities (IFRS 16)

1,297.0

2,051.3

 36.8

Non-current lease liabilities

2,216.9

2,508.7

 11.6

Current lease liabilities

701.2

698.8

+ 0.3

Lease liabilities

2,918.1

3,207.5

 9.0

Other non-current liabilities

427.1

303.6

+ 40.7

Other current liabilities

7,708.9

7,149.8

+ 7.8

Other liabilities

8,136.0

7,453.4

+ 9.2

Debt related to assets held for sale

1.6

n. a.

Liabilities

16,152.4

15,255.5

+ 5.9

 

Capital ratios

€ million

30 Sep 2023

30 Sep 2022

Var. %

Non-current capital

7,275.5

6,512.8

+ 11.7

Non-current capital in relation to balance sheet total%

45.0

42.7

+ 2.4 *

Equity ratio%

12.1

4.2

+ 7.8 *

Equity and non-current financial liabilities

3,145.7

2,377.2

+ 32.3

Equity and non-current financial liabilities in relation to
balance sheet total%

19.5

15.6

+ 3.9 *

* Percentage points

Overall, non-current capital increased by 11.7 % to € 7,275.5 m. It accounted for 45.0 % (previous year 42.7 %) of the balance sheet total.

The equity ratio was 12.1 % (previous year 4.2 %). Equity and non-current financial liabilities accounted for 19.5 % (previous year 15.6 %) of the balance sheet total.

In the completed financial year, after three shares had been redeemed in order to achieve a rounded figure for the capital stock, the existing capital stock of the Company amounting to € 1,785,205,850.00, divided into 1,785,205,850 registered no-par value shares, each representing a pro rata amount of the capital stock of € 1.00, was reduced by € 1,606,685,265.00 to € 178,520,585.00 in accordance with the provisions on capital reduction pursuant to sections 222 et seq of the German Stock Corporation Act (AktG) in conjunction with section 7 (6) of the German Securities Trading Act (WStBG) for the purpose of transferring part of the capital stock to the Company’s capital reserve.

The reduction was effected by a ten-for-one reverse stock split, so that ten no-par value registered shares were consolidated into one no-par value registered share.

The capital reduction was related to a recapitalisation of the Company in line with section 22 WStBG. The reduction amount of € 1,606,685,265.00 was transferred to the Company’s non-distributable capital reserve in accordance with section 7 (6) sentence 5 WStBG.

Following the capital reduction, the Company’s capital stock of € 178,520,585.00, divided into 178,520,585 no-par value registered shares, was increased to € 507,431,033.00 by issuing 328,910,448 new no-par value registered shares with a pro rata amount of capital stock of € 1.00 per no-par value share, divided into 507,431,033 no-par value registered shares. This increase in capital stock of € 328.9 m was carried out entirely from authorised capital using the authorisations granted by the Annual General Meeting on 8 February 2022 to issue new registered shares against cash contributions worth a maximum of € 162.3 million (Authorised Capital 2022 / I) and to issue new shares against cash or non-cash contributions in the amount of € 626.9 m (Authorised Capital 2022 / II).

Silent ESF participations

The remaining Silent Participation I of € 420.0 m taken out by the ESFin financial year 2021, convertible into  AG shares at a conversion price of € 1.00 per share, was repaid in full in April 2023 following a capital increase without the ESF having exercised its conversion option.

Provisions

Provisions mainly comprise provisions for pension obligations, tax provisions and provisions for typical operating risks classified as current or non-current, depending on expected occurrence. At the balance sheet date, they accounted for a total of € 1,852.4 m, down by € 45.0 m year-on-year.

Financial and lease liabilities

Composition of financial liabilities and lease liabilities

€ million

30 Sep 2023

30 Sep 2022

Var. %

Bonds

542.7

580.5

 6.5

Liabilites to banks

718.8

1,382.6

 48.0

Other financial liabilities

35.5

88.2

 59.8

Financial liabilities

1,297.0

2,051.3

 36.8

Lease liabilities

2,918.1

3,207.5

 9.0

Our non-current financial liabilities declined by € 532.9 m to € 1,198.5 m year-on-year. The decline was primarily attributable to a reduction in liabilities to banks.

For more detailed information, please refer to the Notes to the consolidated financial statements.

See chapter Financial and lease liabilities, page 244.

Overview of TUI’s listed bond

The table below lists the maturities, nominal volumes and annual interest coupon of the listed convertible bond issued in 2021 with a nominal value of € 589.6 m and a seven-year term.

Listed bond

Capital measures

Issuance

Maturity

Amount
initial
€ million

Amount
outstanding
€ million

Interest rate
% p. a.

Convertible Bond 2021

April / July 2021

April 2028

590

590

5.000

2021 bonds

In March 2023, the conversion price of the convertible bonds issued in 2021 of € 589.6 m was adjusted to € 26.6707 per share due to the capital reduction and subsequent rights issue.

See Other notes from page 275.

ESF warrant bond

In April 2023, the remaining € 58.7 m of the warrant bond issued to the Economic Stabilisation Fund (ESF) in October 2020 was repurchased together with the outstanding 58.7 m warrants following a capital increase without the ESF having exercised its warrant rights.

Syndicated credit facilities of TUI AG

On the basis of a contractual agreement and due to proceeds from a capital increase,  AG’s syndicated credit facilities originally totalling around € 3.7 bn were reduced to around € 2.7 bn by cancelling an amount of € 1.05 bn of the undrawn KfW tranche previously amounting to € 2.1 bn.

In May 2023, ahead of the maturity date, an agreement was concluded with the lenders under  AG’s syndicated credit facilities totalling around € 2.7 bn, including a cash tranche by KfW of € 1.05 bn and a bank guarantee tranche of € 190.0 m, to extend the maturity of these facilities to July 2026.

The interest rate for cash drawdowns is variable and depends on the short-term interest rate level (EURIBOR or SONIA) and TUI’s credit rating plus a margin.

At the balance sheet date, no cash drawdowns had been made on the syndicated credit facilities.

2018 Schuldschein

In July 2023, the Schuldschein of € 425 m issued in 2018 was reduced to € 242 m by redeeming two tranches worth € 183 m.

Bank credits and lease liabilities

Liabilities to banks mainly relate to the Schuldschein worth of € 242 m of  AG and liabilities from the financing of aircraft and hotel facilities.

Lease liabilities essentially relate to aircraft funding and hotel leases. For more detailed information, in particular on the remaining terms, please refer to the section Financial and lease liabilities in the Notes to the consolidated financial statements.

See section Financial and lease liabilities, page 244.

Other liabilities

The combined figure for other liabilities mainly includes trade payables and customer deposits. At € 8,136.0 m, it was € 682.6 m up year-on-year.

Key credit facilities

Syndicated credit facilities of TUI AG

 AG’s syndicated credit facility of around € 2.7 bn included a tranche of € 190 m for bank guarantees. At the balance sheet date, no cash drawdowns had been made from this credit facility. An amount of € 109.2 m was drawn under this credit facility by utilising bank guarantees.

Bilateral guarantee facilities of TUI AG with banks

In October 2022,  AG concluded a guarantee facility of € 345.6 m with a bank in order to meet a regulatory obligation. At the balance sheet date, this guarantee facility was fully utilsed. In October 2023, this guarantee facility was replaced by a new guarantee facility and utilsed in exchange for a new guarantee worth € 386.0 m.

In addition,  AG concluded further bilateral guarantee facilities with banks with a total amount of € 19.8 m for the provision of bank guarantees in the framework of ordinary business activities. Some of the guarantees have a term of several years. The guarantees granted give rise to a commission in the form of a fixed percentage of the maximum guaranteed amount. At the balance sheet date, an amount of € 4.9 m of these facilities had been utilised.

Obligations from financing agreements

 AG’s Schuldschein worth nominal 242 m, the convertible bond worth nominal 589.6 m and the credit and guarantee facilities for  AG contain a number of obligations.

Under its syndicated credit facility worth € 2.7 bn,  AG has a duty to comply with certain financial covenants (as defined in the contract). These require (a) compliance with an EBITDAR-to-net interest expense ratio measuring  Group’s relative charge from the interest result and its lease and rental expenses; and (b) compliance with a net debt-to-EBITDA ratio, calculating  Group’s relative charge from financial liabilities. The EBITDAR-to-net interest expense ratio must have a coverage multiple of at least 2.5; net debt must not exceed 3.0 times EBITDA. The financial covenants are determined every six months, but the banks initially agreed to apply less tight financial covenants up until and including 31 March 2023. In addition, TUI’s scope for pledging or selling assets, acquiring other companies or shareholdings, or effecting mergers has been restricted.

 AG’s Schuldschein worth nominal 242 m, the convertible bond worth nominal 589.6 m and the credit and guarantee facilities for  AG also contain additional clauses typical of financing instruments of this type. Non-compliance with these obligations provide the lenders the right to terminate the facilities and terminate the financing arrangements for immediate repayment.

Ratings by Standard Poor’s and Moody’s

 AG ratings

 

2019

2020

2021

2022

2023

Outlook

Standard  Poor’s

BB

CCC+

CCC+

B–

B

positive

Moody’s

Ba2

Caa1

Caa1

B3

B2

positive

In the wake of the COVID-19 pandemic, both Standard Poor’s and Moody’s successively lowered TUI’s rating to CCC+ and Caa1, respectively, in 2020.

Following upgrades of their ratings to B- (Standard Poor’s) and B3 (Moody’s) in financial year 2022, the two rating agencies upgraded their ratings to “B (positive outlook)” (Standard Poor’s) and “B2 (positive outlook)” (Moody’s) in April and May 2023 due to a significant improvement in the business environment, the stronger balance sheet structure and the improved liquidity situation.

Financial stability targets

 is aiming for an improved credit rating to finance the further development of the company. With the temporary grounding of the Boeing 737 MAX aircraft type and subsequently due to the effects of the COVID-19 pandemic, the rating was downgraded from BB and Ba territory to CCC+ and Caa1 in 2020. In the 2022 financial year,  was upgraded to B territory again by both rating agencies. The improvements in key operating figures associated with the easing of the COVID-19 pandemic, the structural improvement in key debt figures, in particular as a result of the capital increase in April 2023, and the early extension of the syndicated credit facilities led to an improvement in the rating to B (Standard Poor’s) and B2 (Moody’s) in the 2023 financial year, each with a positive outlook. We are aiming to further improve our ratings in order to minimise our borrowing costs and stabilise our access to the debt capital markets. We achieved our financial stability target of a gross leverage ratio of below 3.0x in the 2023 financial year with a ratio of 2.6x.

From financial year 2024 onwards, we define the net-leverage ratio along the following basic lines:

Net Leverage Ratio

€ million

2023

2022

Financial liabilities

1,297.0

2,051.3

plus Lease liabilities

2,918.1

3,207.5

less Cash and cash equivalents

2,060.3

1,736.9

less Other current financial assets

48.6

85.8

Net Debt

2,106.2

3,436.1

EBITDA (underlying)

1,775.3

1,224.6

Net Leverage Ratio

1.2

2.8

Due to lower net debt and the improvement in our EBITDA (underlying) , our net-leverage ratio improved to 1.2x in the financial year 2023 (previous year: 2.8x). We are aiming for a net-leverage ratio of strongly less than 1.0x in the medium term.

See section Capital management, page 272.

Interest and financing environment

In financial year 2023, short-term interest rates for the key currencies have steadily risen, from low single digit percentage rates at the start of the period rising to medium single digit percentage rates towards the end of the period, as central banks raised rates to tackle rising inflation. inflation has now started to ease in the key currency areas. Interest rates are expected to be at, or close to, their peak, and no further significant interest rate increases by central banks are expected in the upcoming months. With the increase in short-term interest rates, both the income from money market investments and the reference interest rates for floating-rate debt have risen accordingly.

In the financial year under review, quoted credit margins (based on CDS levels) for corporates on sub-investment grades fell again, but remain at a level above the long-term average. Credit margins for  AG declined again in the course of the financial year under review but are still elevated. Due to the persistently difficult market environment in 2023, refinancing was not possible at acceptable terms and conditions.

Liquidity analysis

At the balance sheet date,  AG, the parent company of  Group, held cash and cash equivalents worth € 0.3 m.

Restrictions on the transfer of liquid funds

At the balance sheet date, there were restrictions worth around € 0.8 bn (previous year € 0.5 bn) on the transfer of liquid funds within the Group that might significantly impact the Group’s liquidity, such as restrictions on capital movements and restrictions due to credit agreements concluded.

Change of control

Significant agreements taking effect in the event of a change of control due to a takeover bid are outlined in the chapter on Information required under takeover law.

See chapter Information required under takeover law, page 107.

Cash flow statement

Summary cash flow statement

€ million

2023

2022

Net cash inflow from operating activities

+ 1,637.3

+ 2,077.8

Net cash outflow from investing activities

 492.2

 308.2

Net cash outflow from financing activities

 834.6

 1,630.9

Change in cash and cash equivalents with cash effects

+ 310.5

+ 138.6

The cash flow statement shows the flow of cash and cash equivalents on the basis of a separate presentation of cash inflows and outflows from operating, investing and financing activities. The effects of changes in the group of consolidated companies and of foreign currency translation are eliminated.

In the period under review, cash and cash equivalents increased by € 323.6 m to € 2,060.5 m.

Cash inflow from operating activities

In financial year 2023, the cash inflow from operating activities totalled € 1,637.3 m (previous year cash inflow of € 2,077.8 m). This amount includes interest payments received of € 54.9 m (previous year € 12.4 m) and dividends of € 24.1 m (previous year € 0.2 m). Income tax payments resulted in a cash outflow of € 106.9 m (previous year € 131.4 m).

Cash outflow from investing activities

In financial year 2023, the cash outflow from investing activities totalled € 492.2 m (previous year cash outflow of € 308.2 m). This amount includes a cash outflow for capital expenditure related to property, plant and equipment and intangible assets of € 666.2 m (previous year 515.7 m). The Group recorded a cash inflow of  142.9 m from the sale of property, plant and equipment and intangible assets (previous year € 180.7 m).  recorded a cash inflow of € 70.7 m from the earn-out payment in connection with sale of the stakes in RIU Hotels S. A. and € 3.0 m from the sale of Karisma Hotels Caribbean S.A., effected in financial year 2021. The  Group contributed € 73.5 m to the capital increase of Pep Toni Hotels and € 9.9 m to the capital increase of the  Global Hospitality Fund. A cash inflow of € 2.1 m resulted from the sale of money market funds, € 0.7 m was spent on the purchase.

Cash outflow from financing activities

The cash outflow from financing activities totalled € 834.6 m (previous year outflow of € 1,630.9 m).

Change in cash and cash equivalents

€ million

2023

2022

Cash and cash equivalents at the beginning of period

+ 1,736.9

+ 1,586.1

Changes due to changes in exchange rates

+ 13.1

+ 12.2

Cash changes

+ 310.5

+ 138.6

Cash and cash equivalents at the end of period

+ 2,060.5

+ 1,736.9

Cash and cash equivalents comprise all liquid assets, i.e. cash in hand, bank balances and cheques.

The detailed cash flow statement and additional explanations are provided in the consolidated financial statements and in the section Notes to the cash flow statement.

See page 186 and 274.

Analysis of investments

The development of fixed assets, including property, plant and equipment, intangible assets, shareholdings and other financial investments, is presented in the section on Net assets in the Management Report. Additional explanatory information is provided in the Notes to the consolidated financial statements.

Net capex and investments

€ million

2023

2022
adjusted

Var. %

Cash gross capex

 

 

 

Hotels Resorts

220.5

197.2

+ 11.8

Cruises

82.9

45.5

+ 82.2

 Musement

26.4

25.5

+ 3.5

Holiday Experiences

329.9

268.2

+ 23.0

Northern Region

30.2

26.2

+ 15.3

Central Region

15.1

13.5

+ 11.9

Western Region

24.1

7.5

+ 221.3

Markets Airlines*

100.6

115.5

 12.9

All other segments

147.5

102.3

+ 44.2

 Group

577.9

486.0

+ 18.9

Net pre delivery payments on aircraft

51.8

 126.5

n. a.

Financial investments

83.2

0.9

n. a.

Divestments

 219.2

 44.4

 393.4

Net capex and investments

493.7

315.9

+ 56.3

* Including gross capex of € 31.2 m for financial year 2023 (previous year € 68.3 m) for the aircraft leasing companies which – unlike income statement items – are allocated to Markets Airlines as a whole, but not to the individual segments Northern Region, Central Region and Western Region.

In the financial year under review,  Group’s gross capital expenditure on property, plant and equipment amounted to € 577.9 m, up 18.9 % year-on-year. This year-on-year increase was driven by the normalisation and expansion of our business activities after the pandemic subsided, which led to higher capital expenditure, in particular in Hotels Resorts and IT. The significant increase in capex in the Cruises segment was attributable to the refurbishment of the Mein Schiff Herz before the vessel was commissioned for the UK market by Marella Cruises. Net property, plant and equipment and investments amounted to € 493.7 m in the period under review, an increase of 56.3 % year-on-year. Investments include a contribution to the share capital of Pep Toni S. A., founded with the Riu family at the end of the financial year under review as a company that will own and operate hotels. Divestments include an inflow of around € 71 m from the sale of the shares in RIU Hotels S. A. in financial year 2021 and an inflow from the sale of the stake in the non-consolidated investment Peakwork AG, divested in Q3 2023. In the prior year, divestments related in particular to the sale of the stake in Nordotel S. A., fully consolidated in the Hotels Resorts segment, to Grupotel S. A., a joint venture of  Group. They also comprised a subsequent reduction in the selling price for the divestment of RIU Hotels S. A.

The table below shows a reconciliation of capital expenditure to additions to  Group’s other intangible assets and property, plant and equipment.

Reconciliation of capital expenditure

€ million

2023

2022

Cash gross capex

577.9

486.0

Additions right-of-use assets

7.7

12.3

Advance payments

88.4

29.7

Other non-cash changes

 9.7

66.9

Additions to other intangible assets and property, plant and equipment

664.2

594.9

Investment obligations

Order commitments

Due to agreements concluded in financial year 2023 or in prior years, order commitments for investments totalled € 2,172.5 m as at the balance sheet date. This total included an amount of € 1,070.9 m for scheduled investments in financial year 2024.

More detailed information is provided in the section Other financial commitments in the Notes to the consolidated financial statements.

Net debt

The net debt as of 30 September 2023 declined by € 1,330.0 m year-on-year to € 2,106.2 m.

Net debt

€ million

30 Sep 2023

30 Sep 2022

Var. %

Financial debt

1,297.0

2,051.3

 36.8

Lease liabilities

2,918.1

3,207.5

 9.0

Cash and cash equivalents

2,060.3

1,736.9

+ 18.6

Short-term interest-bearing investments

48.6

85.8

 43.3

Net debt

2,106.2

3,436.2

 38.7

Non-financial Group Declaration of TUI Group*

Page 81 About this Non-Financial Group Declaration

Page 81 Governance and sustainability management

Page 81  Sustainability Agenda

Page 81 People – Empowering to drive development

Page 81 Planet – Reduce our footprint

Page 81 Progress – Accelerate the transformation

Page 81 Our people

Page 81 Customer experience, security safety and crisis management

Page 81 Anti-corruption and anti-bribery

Page 81 Disclosures under the EU Taxonomy Regulation (EU) 2020 / 852


* Unaudited


About this Non-Financial Group Declaration

For  Group, sustainability covering all three areas of economic, environmental and social sustainability is a fundamental management principle. We firmly believe that sustainable development is critical to long-term economic success.

In the sections below,  AG presents a Non-Financial Group Declaration for  Group that combines aspects and reporting on the following key issues: environmental matters, employee matters, social matters, respecting human rights, and information on integrity and compliance. Pursuant to section 315b para. 1 sentence 3 of the German Commercial Code (HGB), we also refer, in a number of respects, to non-financial disclosures found in other parts of the Group Management Report. In addition to the Group’s fully consolidated subsidiaries, this non-financial statement also includes companies recognised at equity, in particular in the  Hotels Resorts sector and  Cruises.

A materiality assessment performed in the financial year under review generated insights into the risks and opportunities relating to sustainability. The ESG-related positions and views derived from a survey among internal experts were consolidated into a list of key topics. The findings did not give rise to any substantial changes in our reporting approach for the Non-Financial Group Declaration.

We identified the following aspects scoring highest in the Environment, Social and Governance categories:

  • Environment: emissions, creation of sustainable holiday products, energy sources and efficiency, sustainable procurement, destination development, waste and circularity
  • Social: human rights, diversity, equality and inclusion, talent acquisition, fair pay, occupational health and safety, positive employee experience
  • Governance: supply chain management, fair business relationships and integrity, corporate citizenship, crisis management, business continuity

Nevertheless, in developing our  Sustainability Agenda, we also include topics with lower materiality scores, so as, for instance, to reflect the future relevance of specific topics such as biodiversity management.

We describe our risk management system and the principal risks associated with our business activities, our business relationships and services as well as the principal sustainability risks in our Risk Report from page 35. Following a climate risk analysis carried out across the Group, our risk reporting was expanded to include more detailed information on the impact of climate change on TUI.

Applied standards and sustainability indices

Our reporting reflects the principles of the UN Global Compact, which  signed up to in 2014. Our sustainability activities are also aligned with the UN Sustainable Development Goals (SDGs).

In 2023,  participated in the CDP Climate Change Programme and in the S Dow Jones Sustainability Index Assessment and engaged in dialogue with other ESG researchers. For the first time,  AG’s rating was upgraded to ‘Prime Investment’ by ISS ESG.

Specific CO2 emissions of our airlines as a key non-financial performance indicator

We regard specific CO2 emissions (in g CO2 / rpk) of our aircraft fleet as a key non-financial performance indicator.

See page 86.

Disclosures pursuant to EU Taxonomy Regulation (2020 / 852)

This Group Declaration includes disclosures on whether and to what extent  Group’s operations include economic activities to be classified as Taxonomy-eligible or Taxonomie-aligned under the EU Taxonomy Regulation (2020 / 852).

Limited Assurance Engagement Attestation

The present Non-Financial Group Declaration was not included in the audit of the annual financial statements. It was subject to a limited assurance engagement in accordance with ISAE 3000 (revised).

See page 295.

Task Force on Climate-related Financial Disclosures (TCFD)

As a company listed in the Premium Segment of the Main Market of the London Stock Exchange, we are required pursuant to Listing Rule LR 9.8.6 to make disclosures in relation to the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

The section from page 134 summarises the extent to which  Group complies with the TCFD’s recommendations. These disclosures are not part of this Non-Financial Group Declaration.

Governance and sustainability management

For  Group, sustainability is a fundamental management principle and a cornerstone of our strategy for continually enhancing the value of our Company. Global responsibility for economic, environmental and social sustainability is at the core of our corporate culture.

Disclosures on the business model

 Group is an integrated tourism group operating globally.  Group’s business model is outlined in detail from pages 24 and 28 onwards in this Annual Report in accordance with section 315c para. 1 in conjunction with section 289c para. 1 HGB.

 Group has a governance structure in place that ensures that sustainability issues, along with climate-related risks and opportunities, are assessed and actioned at all levels. The Group Executive Committee (GEC) manages TUI’s business strategically, it sets the Group’s strategic direction and long-term objectives for sustainable development and signed off the Group’s Sustainability Agenda, published in February 2023. It defines the global framework for TUI’s sustainability activities.

A team of experienced sustainability professionals are working in close collaboration with management to ensure that TUI’s business and sustainability activities areas are closely aligned. The Group sustainability Director heads up the Group sustainability team, and reports to the Chief sustainability Officer (CSO) who sits on the GEC.

The role of our sustainability team is to drive implementation of the sustainability Agenda across  Group and along its supply chain. The GEC is regularly updated on our performance in delivering the Sustainability Agenda and tackling other key Sustainability issues. Regular meetings are also held with the Risk Oversight Committee (ROC) to review Sustainability risks.


 Sustainability Agenda

 Group’s Sustainability Agenda, developed in the past few reporting periods by TUI’s international sustainability team, was published in February 2023. New priorities and strategic directions for TUI’s global sustainability activities were drawn up in consultation with internal and external stakeholders, taking account of current challenges, global scenarios and mechanisms such as the EU Green Deal.

We engaged in direct dialogue with our stakeholders and participated in industry initiatives to discuss expectations as well as existing and future challenges in relation to sustainability issues, and these have been incorporated into our sustainability activities. The Supervisory Board, Executive Board, Group Executive Board and employee representatives were regularly involved in the development of the Agenda by means of individual and group presentations. We also discussed specific topics with associations and interested stakeholders. We have continued to foster this dialogue since publishing our Agenda in order to ensure that we focus on the most important issues and adopt relevant future topics at an early stage.

Our Sustainability Agenda builds on tourism as a force for good. Together with our partners we continue to promote the positive effects of tourism on local communities, reduce our ecological footprint and create more sustainable holiday products for our guests.

Our mission

“We are mindful of the importance of travel and tourism for many countries in the world and for the people living there. We partner with these countries and other stakeholders to actively shape a more sustainable future for tourism.”

TUI’s ambition is to actively shape a more sustainable future for tourism in all three dimensions of sustainability – social, environmental and economic. We use our scale and influence for the sustainable transformation of the tourism industry. We understand sustainable transformation as an opportunity.

Our Agenda is founded on three priorities: We aim to empower people in the destinations and  employees to drive the sustainable transformation actively (People). We aim to reduce TUI’s ecological footprint (Planet). We aim to partner with others to launch initiatives for the sustainable transformation of our sector (Progress). Our three P’s – People, Planet and Progress – are supported by 15 focus areas with key goals, objectives and initiatives. Our Sustainability Agenda seeks to address the major challenges we will face in the coming decades, in particular climate change. For more details on the three P’s, please refer to the table below.

Our targets include achieving net-zero emissions across our own operations and in the supply chain by 2050 at the latest, setting near-term science-based targets for emission reduction, becoming a circular business and enabling around 20 million customers a year to make sustainable holiday choices (from 2030).

Our Sustainability Agenda supports the United Nations’ Sustainable Development Goals (SDGs) 17 global goals to fight inequality, end poverty and protect our planet by 2030 – and defines appropriate measures to contribute to their achievement. The tourism value chain is closely linked with many different sectors. This enables us to influence progress on many SDGs, with a particular focus on 13 of these goals.

People – Empowering to drive development

In many parts of the world, tourism is one of the key driving forces for development and prosperity. It creates employment, provides education and drives social and environmental standards. We aim to ensure that local people and communities benefit from tourism and local supply chains. Our employees are empowered to play a crucial role in this because we offer the skills and knowledge they need for a sustainable transformation of the tourism industry.

Contribution to the SDGs

TUI Sustainability Academy and training programmes

We seek to provide our colleagues with the knowledge and skills required to become sustainability changemakers. One of our tools is the digital  Sustainability Academy learning platform. It offers insights into a wide range of Sustainability topics, from energy and fuels to social impacts and the circular economy. The launch of TUI’s Sustainability Agenda includes training sessions designed to familiarise our employees with the core content of the strategy so that they can apply it more easily to their respective areas of work. Some elements of the training courses are adapted to a specific business area and market, enhancing the relevance and integration. By 2025 we hope to deliver our employees 25,000 hours of training a year on sustainability issues. We intend to start our reporting in FY24.

German Supply Chain Due Diligence Act

Protecting human rights and environmental standards across supply chains is the focus of the new German Supply Chain Due Diligence Act (GSCA), which entered into force on 1 January 2023. For TUI, it applies to our own business,  suppliers and the wider supply chain, both in Germany and worldwide. An internal GSCA Steering Group has been established to manage the introduction and integration of the Act within the Company. In the financial year under review, the focus was on the development and implementation of risk analyses, training programmes, preventative and corrective measures and the adjustment and updating of policies and reporting processes. These activities build on the work already delivered by  to protect human rights and the environment and support preparations for the EU Due Diligence Directive.

More detailed information on TUI’s Human Rights Policy Statement at https://www.tuigroup.com/damfiles/default/tuigroup-15/en/sustainability/msa/msa-download-statements/TUI-Human-Rights-Policy-Statement-and-Framework_final.pdf-8d907708399b58b9232f73cf5224d1e0.pdf or https://www.tuigroup.com/damfiles/default/tuigroup-15/en/sustainability/msa/msa-download-statements/Policy-Statement_Human-Rights-Framework_TUI-Deutschland-GmbH_EN_signed.pdf-a123f16e1f2b3eedd31ded408f4d0d45.pdf

Respecting human rights

In accordance with applicable laws, conventions and regulations,  Group commits to respecting all internationally proclaimed human rights as specified in the International Bill of Human Rights and expects its suppliers and business partners to do so, too. We have a number of policies and initiatives in place to monitor, identify, mitigate and prevent human rights impacts in line with the UN Guiding Principles on Business and Human Rights, and will take remedial action where necessary.

  •  signed up to the UN Global Compact in 2014.  Group has thus committed to aligning its activities to principles in the fields of human rights, labour standards, environmental protection and anti-corruption.
  •  signed the UN World Tourism Organisation (UNWTO)’s Global Code of Ethics in 2012.
  • Our Global Employment Statement focusses on fair and respectful dealings with employees at all levels and compliance with applicable law and industry standards.
  • Our Employee Code of Conduct, the Integrity Passport, commits us to respect and observe human rights. Colleagues are encouraged to report any wrongdoing via the Speak Up Line.
  • Our Supplier Code of Conduct sets out the minimum standards we expect from our suppliers, covering human rights and labour laws, anti-bribery and anti-corruption, environmental impacts and support for local communities.
  • We expect our hotel partners to implement sustainability certifications recognised by the Global Sustainable Tourism Council (GSTC)* comprising standards for human rights, child protection and social welfare. We also apply the GSTC Criteria to our experiences programme. In FY22 we started certifications of the  Collection portfolio and extended this process in FY23 to further excursion programmes we offer.
  • Our in-house child protection policies include information for our colleagues on ‘voluntourism’.
  • Our Human Rights Policy Statement, published on TUI’s website, sets out our activities and measures implemented in our business operations and our supply chain to prevent human rights violations.
  • We continue to provide e-learning modules on human rights and child protection, which we regularly update to reflect changes in framework parameters. Airline crews in the UK, Nordics and Germany receive Vulnerable Children and Human Trafficking training programmes as part of their induction so that they can spot human trafficking and take action. All staff working for  Musement have to complete the Human Rights and Child Protection modules every two years. A global training programme for  employees was being rolled out in the period under review.

*  requirement for hotel partners with more than 80 rooms and  occupancy rate > 10 %.

Supporting the TUI Care Foundation

One of our initiatives aimed at making a difference in the destinations is the foundation set up by our Group, which draws on tourism as a force for good to improve the lives of young people, preserve the natural environment and support local communities in their development.

With over 40 projects in 25 countries, the  Care Foundation focuses on the special needs of individual destinations, supported by TUI’s customers. The foundation carries out projects in the fields of education, community empowerment, natural landscapes and marine conservation. Examples include projects for marine conservation in Bali, vocational training at the  Academy for disadvantaged young people in Cape Verde, campaigning against plastic waste in Cyprus and Zanzibar, and support for local communities in transitioning to sustainable, regenerative agriculture.

In June 2023, the government of Cape Verde,  Group and the  Care Foundation signed a Memorandum of Understanding entitled ‘Tourism for Development’ as a basis for cooperation between the parties in promoting the sustainable development of tourism in the Cape Verde islands. The focus is on strengthening local supply chains, expanding educational programmes about the environment and sustainable tourism, and promoting renewable energies.

For more information on the  Care Foundation, please refer to www.tuicarefoundation.com

Planet – Reduce our footprint

Contribution to the SDGs

We are working to reduce the ecological footprint of travel and increase environmental performance in our industry. We aim to achieve net-zero emissions in our operations and along our supply chain by 2050 and considerably reduce our environmental impact in the fields of water, energy and waste. We are also reporting the first strategic and operational steps taken in this context. In order to protect our planet, we are planning to change how we use natural resources and to become a circular business.

Voluntary climate commitments

Climate change is a pressing global challenge. For 30 years, we have been committed to reducing our environmental impacts. We are linking these activities closely to science-based findings.

We have therefore joined the Science Based Targets initiative (SBTi), committing to implement emission reductions on the basis of the latest findings in climate science. The SBTi is a global initiative enabling businesses to set ambitious emission reduction targets in line with the Paris Agreement goals to fight the effects of global climate change. The SBTi is a joint initiative of the Carbon Disclosure Project (CDP), the United Nations’ Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).

In accordance with the SBTi methods, emissions from  Group’s airline, cruises and hotels account for 99 % of our emissions. Roadmaps for a significant reduction in emissions have been drawn up for each of our three business areas.

The emission reduction targets for our own aircraft, cruise ships and hotels to be achieved by 2030 were submitted to the SBTi for final review and were officially recognised and validated by the SBTi. Intensity and absolute targets have been submitted:

  • Reduction of CO2e-Emissions per Revenue Passenger Kilometer from  Airline – 24 % by 20301
  • Reduction of absolute CO2e-Emissions from TUI’s cruise business – 27.5 % by 20301
  • Reduction of absolute CO2e-Emissions from  Hotels (owned) – 46.2 % by 20302

1 Base year 2019. Target level: well below 2°C. CO2e = CO2 equivalents. In addition to carbon dioxide (CO2), these take into account the other five climate-impacting greenhouse gases according to the Kyoto Protocol: Methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).  Group’s commitments to achieve science-based targets also include well-to-wake emissions for our aviation and cruise activities (emissions from aviation and marine fuels, Scope 1 and Scope 3, Category 3).

2 Base year 2019. target level: 1.5°C. For our hotels, the SBTi commitment includes emissions from all energy sources plus gases from refrigerants (Scope 1 and 2).


Airline, cruise and hotel GHG emissions figures published in the FY23 Non-Financial Group Declaration do not match the scope, boundaries or reporting methodology of our science-based targets. Therefore inferences of progress towards achieving SBTs based on figures in this or previous Non-Financial Group Declarations should not be made.

Activities at our business locations

We are committed to reducing the environmental impact of our administrative buildings. The  Campus in Hanover will be supplied with electricity generated by a photovoltaic system. The array und construction in FY23, which will occupy 7,350 m2 and have a maximum output of 1.6 megawatts , is a significant step towards reducing emissions on site. In addition, 40 e-charging stations were under construction in the financial year under review in order to promote sustainable mobility.

Our current footprint

In financial year 2023,  Group’s total absolute emissions were largely stable year-on-year at an increase of 1 %. In aviation, emission reductions were due to the sale of the stake in Sunwing in March 2023. We did not adjust the FY22 data. In Cruises, the increase was driven by the continued recovery of business after the COVID-19 pandemic and the inclusion of our river cruises segment in reporting. Scope 3 emissions reflect the expansion of the reporting framework, in particular due to the inclusion of WTT (well-to-tank) emissions from marine cruise fuel and jet fuel.

Carbon dioxide emissions (CO2)

tons

2023

2022

Var. %

Airlines

4,218,553

4,331,628

 2.6

Cruises

899,790

762,942

+ 17.9

Hotels

805,541

767,049 1

+ 5.0

Major premises / shops

14,890

14,251

+ 4.5

Ground transport

14,413

13,144

+ 9.7

Scope 3 (indirect emissions from TUI’s value chain)3

1,239,493

1,232,804 2

+ 0.5

Total

7,192,680

7,121,818

+ 1.0

1 Previous year adjusted due to inclusion of refrigerant gases

2 Previous year adjusted due to extended reporting scope

3 With reference to the Greenhouse Gas Protocol,  Group currently includes Scope 3 emissions from the production of office paper and printed brochures, well-to-tank emissions from fuel consumption of aircraft, ships, hotels and ground transport, the distribution of electricity (hotels), waste and water treatment (hotels), employee business travel with third-party airlines and rail, and employee commuting. The current scope of the reported Scope 3 emissions therefore does not yet fulfil all the requirements of the Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Energy usage by business area

MWh

2023

2022

Var. %

Airlines

17,202,638

17,655,179

 2.6

Cruises

3,507,396

2,962,423

+ 18.4

Hotels

1,762,992

1,599,057

+ 10.3

Major premises / shops

59,651

60,036

 0.6

Ground transport

61,087

55,311

+ 10.4

Total

22,593,764

22,332,006

+ 1.2

More efficient flying

We already operate one of Europe’s most carbon-efficient airlines and aim to continually enhance our environmental performance. Our airline emissions reduction targets by 2030 have been validated by the SBTi. Our emission reduction roadmap for our aircraft fleet comprises the following measures: additional capex on modern carbon-efficient aircraft, efficiency enhancement through operational measures and investments in sustainable aircraft fuels (SAF).

In order to reduce emissions,  Group has invested in state-of-the-art aircraft such as Boeing 787s and Boeing 737 Max aircraft. On average, these planes are 20 % (787) and 16 % (737 MAX) more fuel-efficient than the aircraft they replace in TUI’s fleet.

Moreover,  fly Belgium added Embraer E195-E2 aircraft, highly efficient planes in the category of up to 150 seats, to its fleet. The aircraft will operate on short- and medium-haul routes and reduce the carbon footprint by up to one third.

Environmental management systems and operational measures play a key role in implementing sustainability and further enhancing TUI’s climate efficiency. In financial year 2023, all  airlines were certified under the internationally recognised ISO 14001:2015 standard. All ISO 14001 management systems used by individual  airlines were transferred to one single management system in the period under review. The following examples illustrate the operational measures implemented to enhance efficiency:

  • Flight operations, for instance single engine taxiing in and out, wind uplinks and optimised climb speeds and profiles
  • Weight reduction, for instance carbon brakes and fly away kit (spare parts and tools)
  • Fight planning optimisation, for instance alternate distance and minimum fuel programme
  • Fuel management system to improve fuel analysis, identification of further savings potential and tracking of savings

Sustainable aviation fuels (SAF) play a crucial role in reducing aviation emissions and are hence a key part of our emission reduction roadmap to further improve airline carbon efficiency by 2030.  cooperates with a number of partners to secure supplies of SAF. Examples include the signing of a Memorandum of Understanding with the Spanish energy company CEPSA. The partnership with CEPSA will focus on SAF fuels generated from raw materials such as used cooking oils, non-food animal waste and biodegradable waste from various industries. This will make it possible to reduce aircraft emissions by up to 80 % compared to conventional jet fuel. An additional Memorandum of Understanding was signed with Shell.

In 2023, relative carbon emissions across our airlines decreased by 3.9 %. This improvement was largely due to higher load factors versus 2022 and our ongoing re-fleeting programme to replace older aircraft by new, more carbon-efficient aircraft.

Specific emissions are additionally shown in the form of CO2 equivalents (CO2e). Apart from carbon dioxide (CO2), these include the other five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).

 Airlines – Fuel consumption and CO2 emissions

 

 

2023

2022

Var. %

Specific fuel consumption

l / 100 rpk*

2.43

2.52

 3.9

Carbon dioxide (CO2) – total

t

4,218,553

4,053,745

+ 4.1

Carbon dioxide (CO2) – specific

kg / 100 rpk*

6.11

6.36

 3.9

* rpk=revenue passenger kilometer

 Airlines – Carbon intensity

g CO2 / rpk*

2023

2022

Var. %

g CO2e / rpk*

 Airline fleet

61.1

63.6

 3.9

61.7

 Airways

60.7

62.2

 2.5

61.3

 fly Belgium

66.3

70.7

 6.3

66.9

 fly Germany

60

64.4

 6.8

60.5

 fly Netherlands

59.6

59.8

 0.2

60.2

 fly Nordic

59.8

66.4

 9.9

60.4

* rpk=Revenue Passenger Kilometre

We commissioned Verifavia to provide assurance on the carbon intensity metrics for financial year 2023 as shown in the above
table ‘TUI Airlines – CO2 intensity’. The airline carbon data methodology document and the full assurance report are available
at www.tuigroup.com/en-en/responsibility/sustainability/reporting-downloads

More sustainable cruising

We continue to focus on reducing the emissions of our cruise ships, delivering progress by investing in state-of-the-art technology to reduce air emissions and in operational efficiency. Emission reduction roadmaps were drawn up for  Cruises, Hapag-Lloyd Cruises and Marella Cruises as part of our submission of 2030 targets for validation by the SBTi. Key levers include investments in fleet modernisation and efficiency enhancement with a focus on shore power, route optimisation, energy efficiency enhancement and switching to alternative fuels.

 Cruises with its Mein Schiff and Hapag-Lloyd Cruises brands continues to operate a modern and technologically advanced fleet. The newbuilds in the fleet are equipped with state-of-the-art technologies to minimise fuel consumption. A smart energy management system, efficient air conditioning, innovative lighting controls and the use of exhaust heat from the engines contribute to a significant reduction in the carbon footprint compared with vessels not equipped with those technologies.

In the period under review, essential steps were taken to reduce emissions generated by the Mein Schiff and Hapag-Lloyd Cruises fleet. The Company will successively install the equipment required for shore power connection on all ships of the Mein Schiff fleet. In the period under review, Mein Schiff 1 was retrofitted during her scheduled dock period. Mein Schiff 2 and Mein Schiff 5 will follow in November 2023 and in January 2024.

In summer 2023, both fleets successfully used shore power, e. g. in Kiel and Hamburg. During their scheduled dock periods, both ships, Mein Schiff 1 (in FY 2023) and Mein Schiff 6 (in FY 2022), obtained a new silicone coating to reduce resistance in the water so as to save fuel during the voyage.

In the period under review, the Company also successfully completed the first tests on the use of sustainable biofuels, with both Hanseatic Inspiration and Mein Schiff 4 successfully operating on biofuel blends on some voyages. The second-generation biofuel, which was bunkered for the first time, is purely plant-based and mainly consists of cooking oil residues. This fuel is virtually free from sulphur oxides and in its pure form offers a CO2 reduction of up to 90 % compared to fossil fuels.

Thanks to new exhaust gas treatment systems operated on all new vessels, the newbuilds in the Mein Schiff fleet also significantly reduce their sulphur and nitrogen emissions. Use of these advanced emission purification systems goes beyond regulatory requirements. They are, for instance, not only used in the designated emission control areas in the North and Baltic Seas, the English Channel and North America, but also in other regions sailed by Mein Schiff such as the Mediterranean, the Orient, the Caribbean and Central America.

The Mein Schiff fleet is also setting another milestone for sustainable growth. Mein Schiff 7 is currently under construction in the Meyer Turku shipyard in Finland. The focus is on compliance with high maritime environmental standards by optimising the design in terms of energy efficiency and the use of modern technologies to improve sustainability. The ship will feature equipment enabling her to run on green methanol in future. She is scheduled for commissioning in 2024.

The expedition ships in the Hapag-Lloyd Cruises fleet exclusively use low-sulphur marine gas oil with a sulphur content of 0.1 %. This reduces sulphur emissions from these vessels by up to 80 % and particulate and soot emissions by up to 30 % versus the use of heavy fuel oil. All Hapag-Lloyd Cruises ships have tributyltin-free underwater coatings, on-board seawater desalination systems to make drinking water and biological sewage treatment systems for wastewater. Waste is separated on board prior to disposal on land by specialised companies in accordance with international regulations (MARPOL).

In financial year 2023, relative CO2 emissions in the Cruises segment declined by around 24 %. This was due to a significant increase in load factors, as the previous year’s figures were more strongly impacted by the effects of the pandemic. The amount of waste per cruise passenger night decreased by around 23 % to 8 litres, with freshwater consumption up by around 24 % to 46 litres. Our reporting covers all ships operating under the Mein Schiff, Hapag-Lloyd Cruises. Marella and  River Cruises brands.

Cruises – Carbon intensity, fresh water and waste

 

2023

2022

Var. %

Carbon dioxide (CO2) – relative, kg / Cruise passenger night

101

132

 23.7

Fresh water – relative, litre / Cruise passenger night

46

37

+ 24.2

Total water – litre / Cruise passenger night

301

321

 6.1

Waste – relative, litre / Cruise passenger night

8.2

10.6

 22.9

Environmental protection in our hotels

Our hotels and hotel partners continue to focus on promoting the sustainability transformation across their operations. Each hotel plays an important role in managing the impacts on the local community, the economy and the environment. Emission reductions remain our key priority, and we have prepared comprehensive roadmaps and defined targets for 2030 for our Hotels Resorts segment. These targets have been validated by the SBTi.

Our hotel portfolio is still growing and many of our hotels use green technology in order to improve their sustainability performance. The generation of renewable energies from solar and wind power is a key element of the emission reduction roadmaps for our hotels, alongside efficiency measures delivered through hotel refurbishment and standard-setting for new buildings.

Sustainable construction is an important tool for saving energy and cutting carbon emissions from hotels. In the financial year under review, the Hotels Resorts segment published Green Building Guidelines for the first time. They provide specific recommendations to our own hotels and to our hotel partners for their construction and refurbishment projects. The Guidelines cover the key factors for reducing the ecological footprint of construction and refurbishment projects and paring back water and energy consumption. They also cover aspects such as monitoring systems, sustainability certifications and stakeholder communication. The Guidelines were reviewed by external experts from the Fraunhofer IAO Institute.

For more information on the topic, please refer to:  Green Building Guidelines (online version): https://mediacenter.tui-info.com/onlinekataloge/index.php?catalog=tui_greenbuildingguideline_gj2023_f#page_1

Our  Global Hotel Awards 2023 placed a particular emphasis on sustainability. The award included categories reflecting TUI’s Sustainability Agenda. The winners in these categories are selected by an external committee based on pre-defined criteria. In 2023,  also granted an award for sustainability innovation. Atlantica Hotels Resorts was recognised for introducing new, sustainable technologies. Examples of this commitment can be found on the Greek island of Rhodes, where the hotel company has invested in the latest solar panel technology, e-mobility for electric cars and a water desalination plant.

We continued to drive forward the use of photovoltaic systems in our hotels to promote sustainable power generation. In cooperation with our joint venture partners RIU, Grupotel and Atlantica, 19 PV systems with an output of almost 3,500 kWp were installed in Greece, Spain and the Cape Verde Islands in financial year 2023.

Our hotels made further inroads towards a better ecological footprint in terms of emissions, water consumption and waste production. This is the result of continual measures to improve our environmental performance alongside higher customer numbers and occupancy levels as the pandemic subsided.

Hotels – Carbon intensity, fresh water and waste

 

2023

2022

Var. %

Carbon dioxide (CO2) – relative kg / guest night

12.4

13.8 1

 9.8

Fresh water – litre / guest night

478

494

 3.4

Water2 – relative litre / guest night

617

652

 5.3

Waste – relative kg / guest night

1.7

1.9

 7.5

1 Previous year adjusted due to inclusion of refrigerant gases

2 Includes water for domestic, pool and irrigation purposes

Circular economy: Reduce, reuse, recycle

One of our core Planet targets is to work towards a circular business model. The concept of a circular economy is about how we generate, use and recycle products and services. The goal is to keep resources and materials in the loop for as long as possible and prevent waste from arising in the first place.

 has entered into Circular Economy Commitments focused on changing the way we operate and use resources. These commitments involve all areas of our business model.  cooperates with suppliers in order to capture relevant information about their sustainability performance so as to track and measure progress. As part of our efforts to become a circular business, we joined the Sustainable Transformation Group on Circular Economy, coordinated by the Antwerp Management School and part of the Ellen MacArthur Foundation community.

In the reporting period, for example, TUI’s cruise companies supported the circular economy and the careful and sustainable use of resources. Examples include the refurbishment of the bar on board Mein Schiff 6, where the focus was on sustainable design. The tables are made of 100 % recycled plastic or of the natural material cork, and the carpeting is certified according to the Cradle-to-Cradle standard. Furniture no longer used is donated to local aid organisations.

Circular processes were also taken into account for the  Campus project, the redesigned corporate headquarters in Hanover: sustainable carpet tiles will reduce future material consumption, and much of the furniture has been kept to avoid purchasing new items. Energy efficiency was an important factor in purchasing new electrical equipment.

At TUI, we have worked hard for many years to reduce plastic items in our business operations and identify alternatives.  Group is part of the Global Tourism Plastic Initiative and has signed up to the relevant commitments. The implementation of the initiative is headed by the UN World Tourism Organisation (UNWTO) and the United Nations’ Environmental Programme (UNEP) in cooperation with the Ellen MacArthur Foundation and is supported by an advisory council of which  Group is a member. As part of these efforts, we are committed to replacing all problematic and unnecessary plastic packaging by 2025 wherever possible.

Protecting biodiversity

We support the Nature Positive Vision for Travel and Tourism approach adopted by the World Travel Tourism Council (WTTC), promoting nature conservation in order to halt and reverse biodiversity loss by 2030. We invest in the protection and restoration of nature in the destinations. Apart from our existing focus on animal welfare in our supply chain, we intend to place further emphasis on biodiversity. To that end, we prepared a first action plan in the period under review.

 audits its suppliers in accordance with animal welfare guidelines. We continue to carry out our checks, which comply with the latest version of the ABTA (Global Animal Welfare Guidance for Animals in Tourism) guidelines. Wherever possible, we work with suppliers to implement improvements. A number of tenders have, however, been removed from our programme as they did not meet the required standards.

Progress – Accelerate the transformation

Contribution to the SDGs

By leveraging our scale, we aim to increase the positive social and environmental impact of the holiday experiences we offer. We strive to be sustainability leaders in everything we do. Together with our partners we will help shape the next-generation sustainable business model for the tourism industry. In this way, we can enable our customers to make sustainable holiday choices at every stage of the customer journey. Our goal for 2030 is to have 20 million customers per year choosing a Green Fair hotel or excursion that meets the strict criteria of the Global Sustainable Tourism Council.

Destination Co-Lab

 Group, the  Care Foundation and the government of the Southern Aegean region have launched a project called Destination Co-Lab Rhodes. Together with our partners are building the next-generation sustainable business model for the tourism industry in Rhodes.

The project has three strategic pillars: ‘Regenerate the natural environment’, ‘Strengthen social development and cultural heritage’ and ‘Foster inclusive economic development in the tourism business model’. The goal of the Co-Lab is to collaborate with the local tourism industry and international partners in developing specific solutions and implementing them in Rhodes. Examples include the provision of 30 e-bikes and 20 cargo bikes for short journeys by staff while looking after our customers. This cut the number of cars used from over 100 to 60.

Sustainable rail travel

Following the positive experience gained in the Netherlands,  increasingly offers rail travel to provide sustainable overnight trips to the holiday destinations. As a first step, the  City Express was launched for city connections to Prague in July 2023, while the  Ski Express will connect the Netherlands and Germany with the skiing regions in Austria from December 2023.

Promoting certification

 promotes social and environmental standards through certification. We expect our hotels and hotel partners to obtain sustainability certification from independent organisations.1 This process involved a third-party assessment to certify that the hotel complies with the criteria of the Global Sustainable Tourism Council (GSTC) and hence engages in good social and environmental practice. The GSTC criteria are the established global standard for sustainable tourism and cover four main aspects: effective sustainability planning, maximising social and economic benefits for local communities, valuing cultural heritage, and reducing negative impacts on the environment.

In financial year 2023, 10.5 m customers stayed in a contracted hotel2 certified to a GSTC-recognised standard, compared with 7.9 m in 2022. The number of certified contracted hotels3 rose by ca. 32 % year-on-year to 1,481. This increase was attributable to the fact that many of our key hotel partners have obtained sustainability certificates to honour their long-standing commitment.

Sustainability also plays a key role in our holiday experiences. To assess Sustainability, we were one of the first tourism companies to start applying the GSTC criteria to individual tours and activities within the  Collection experiences in financial year 2022. In financial year 2022, 180  Collection experiences were certified according to these criteria. In financial year 2023, the process was extended to other excursion categories such as National Geographic or Shorex. By the end of the financial year, a total of 1420 experiences had been certified in accordance with the GSTC criteria. We offer these tours under the “Green Fair” label.

1  requirement for hotel partners with hotels offering more than 80 rooms and a  occupancy rate above 10 %.

2 Number of hotels includes  Hotels Resorts and hotels  Group has a contract with and that are certified to a Global Sustainable Tourism Council (GSTC) recognised standard. Methodology changes apply in FY 23 to align with TUI’s FY.

3 Number includes hotels  Group has a contract with, that are certified to a according to a GSTC-recognised standard and had a minimum of 100  guests in FY 2023.  Hotels Resorts that do not have a contract with  Group are excluded from this figure.

Progress performance

 

2023

2022

Var. %

Number of customers (millions) staying at hotels with certifications1

10.5

7.9

+ 33.0

Number of hotels with certifications2

1,481

1,126

+ 31.5

% of  Hotels Resorts with certifications (variance in % points)

75

61

+ 14

Number of certified  Collection excursions3

1,420

180

+ 688.9

1 Number of hotels includes  Hotels Resorts and hotels  Group has a contract with and that are certified to a Global Sustainable Tourism Council (GSTC) recognised standard. Methodology changes apply in FY 23 to align with TUI’s FY.

2 Number includes hotels  Group has a contract with, that are certified to a according to a GSTC-recognised standard and had a minimum of 100  guests in FY 2023.  Hotels Resorts that do not have a contract with  Group are excluded from this figure.

3 Certification in accordance with GSTC, process of certifying several excursion categories (e.g.  Collection, National Geographic) was commenced in FY 2023.

Involving partners

We created TUIPartners.com to support our many partners (hotels; tour, activity and transport providers) in their transformation towards more sustainable tourism. It offers them information and guidance on current issues such as sustainability, health and workplace safety. The sustainability section of the platform serves in particular to share knowledge, experience and information on various matters, including successful sustainability certification.

Green IT Award

In 2023,  launched new awards to recognise the sustainability commitment of its more than 2,000 IT partners and suppliers. Three award winners convinced the jury with innovative approaches to carbon and energy savings and the promotion of global sustainability goals through technological solutions. Technology is an integral part of TUI’s Sustainability Agenda.

More sustainable customer decisions

Our goal is to enable customers to make more sustainable holiday choices. In addition to anchoring sustainability in our brand essence and providing a marketing toolkit on sustainability for our companies, we have created a label to identify more sustainable products. The Green Fair label provides guidance on the booking website to make it easier for our customers to select and book holidays certified to GSTC criteria.

Our people

Contribution to the SDGs

Our employees make a key contribution to TUI’s success. We aim to secure this success in the long run. In the financial year under review, we focused on continuing our strategic initiatives as defined in our People Strategy.

People Strategy

The world of work is continuing to undergo structural change. We offer hybrid working models in order to give our employees and future talents greater flexibility about where and when they work. One example of our flexible, hybrid working models is the  Campus, which opened in the financial year. Around 2,800 employees from eight  companies have been working under one roof at the Hanover site since the Campus was inaugurated. The offices have been redesigned and co-working spaces have been created.

Moreover, employees increasingly attach importance to diversity, a sense of belonging and greater wellbeing.  responds to these expectations in order to acquire and retain talent in a highly competitive labour market and provide a positive employee experience.

Against this backdrop, we have developed our People Strategy. Our vision is to be Digital, Engaging and Inclusive.

Digital: We use digital tools to ease the workload for our employees, promote innovation and enhance efficiency.

Engaging: We invest in the development of employees and empower our executives.

Inclusive: We acknowledge difference and bring global and local teams together.

In order to implement our strategy, we have adopted a mission defining our relevant areas of action. Our goal is to create a framework that empowers our employees to deliver their best performance and succeed as one team.

Simplification, harmonisation, focus

Our HR activities must be aligned to the principles of simplification, harmonisation and focus. Processes are being harmonised, standardised and transparently communicated across the globe so as to create synergies and avoid duplication.

We have also realigned our internal HR structure to match that principle. In addition to the existing HR Business Partner and HR Services structures, local teams were pooled in four global Centres of Expertise (CoEs) in the reporting period, established for the fields of Reward, HR Systems People Analytics, Talent Acquisition and Talent Management People Development. The goal of combining expertise in the cross-national CoEs is to define and implement global processes and establish a uniform and standardised IT landscape.

Digital transformation

Our People Strategy centres on the harmonisation and digitalisation of our HR systems. We are continually expanding our digital HR solutions to facilitate data-based decision-making.

In the period under review, the implementation of our single HR IT platform  People progressed further. This far, the platform has been used to operate Recruiting, Learning, Talent Management, Reward and master data administration. In the second quarter of the reporting period, the HR core system was rolled out to the  Musement segment. For Germany, the launch is scheduled for the beginning of the new financial year.

We also continued to introduce new functions in  People and to expand our desktop assistant, which offers our employees real-time step-by-step instructions for handling system functions.

Moreover, we rolled out the  eSafe to several companies in Germany during financial year 2023. This is an electronic safe for employees to which we send documents such as payroll slips, wage tax statements, etc. in digital form. The current utilisation rate of the  eSafe is around 91 %. Its successive global roll-out is scheduled for the next few financial years.

So that we can measure our performance, we present relevant HR metrics in dashboards and make them available to the operational units. Areas monitored by us include the global use of  WORKWIDE.

Enable growth

In order to retain our employees and recruit new people in a challenging labour market, we have initiated a range of measures to secure internal and external talent succession.

Our strategic focus includes succession planning and targeted career development. To ensure TUI’s ability to act at any time and secure the availability of human resources for business-relevant functions and key positions, succession planning and potential analysis are carried out on a regular basis. They extend to all members of TUI’s Executive Board, all top management functions, executives and business-critical roles. Succession planning takes account of short-, medium- and long-term changes and plays an essential role in the success of the Company. In addition, succession planning reports are submitted to the Executive Board at regular intervals.

In the completed financial year, we successfully introduced the first Group-wide Employer Value Proposition (EVP). The EVP describes TUI’s identity as an employer and sums up its key strengths and USPs. It offers us a research-based framework to retain and win our current employees and future talents and has a positive impact on perceptions of  in the labour market. This is achieved via the employer branding measures based on our EVP, which puts people first. Our EVP “Let’s  it” was initially introduced in-house to inform our employees about the relevance of the topic, promote employee retention and encourage people to recommend  as an employer. Subsequently, a number of initiatives were launched drawing on photographs and video clips taken by employees to provide authentic insights into working at TUI. We initiated an Employer Brand Ambassador programme, which forms the framework for all measures with which employees support TUI’s employer branding. More than 200 employees have volunteered to take part.

The campaign has created a high level of awareness in online channels. In the first few weeks after the launch, we reached out to an estimated 2.39 m people on LinkedIn. Our Employer Branding campaign has been nominated for various international awards and has already received a number of prizes in various countries.

As in the prior year, our career sites recorded nearly 1.5 m visits in the period under review. The number of job applications declined slightly from 295,000 to around 293,000.

Positive employee experience

We want to create an environment where people like to work. With the launch of the  Way of Working, we created the key conditions to achieve that goal. The  Way of Working is our joint vision for the future of work at  and how to organise it globally and adjust it to local needs. We are seeking to create a culture of trust, offering flexibility for our employees. The core statement of that vision is: work is what we live and do, not where we go.

 WORKWIDE is an innovative programme enabling people to work from abroad for up to 30 days per year. In the financial year under review, around 1,260 employees participated in  WORKWIDE with an average stay of 8 days.

We continued updating the new Employee Listening strategy. Our goal is to listen to our employees regularly, measuring their commitment and growing it in a sustained manner. The new TUIgether+ survey methods will facilitate a holistic approach to measuring and enhancing the employee experience. We focus on three different survey types, each tailored to the specific needs of different groups of participants. Apart from global surveys relating to engagement and other strategic topics, we also measure key moments in each employee’s life cycle and use business insight surveys to obtain their feedback on certain topics such as transformation. Based on the survey results, executives receive feedback on a regular basis to help them plan measures at all levels.

At the end of August 2023, we rolled out our new TUIgether+ survey, again giving our employees the opportunity to provide feedback to their employer. The goal of the employee survey is to capture the sentiment within  Group and transform the survey results into measures. The survey was open until the end of the period under review. It will be evaluated from the beginning of the new financial year.

Diversity, equity inclusion

Our goal is to support and promote the wellbeing of our employees. We want them to feel accepted and appreciated. This includes welcoming and leveraging diversity.

In the period under review, we developed our vision “Come as you are!”, defined the focus areas “People Culture”, “Leadership” and “Community” and agreed on specific measures to take.

People Culture: Our goal is to recruit and promote the best talents worldwide in order to have a diverse workforce.

Leadership: We create a work environment with trustworthy executives, where our employees are appreciated and empowered to deliver their top performance.

Community: We enter into global and external partnerships enabling us to be perceived as a diverse and inclusive brand, promoting diversity and inclusion beyond TUI.

We have forged additional external partnerships, like the one with Code Girls First. This collaboration aims to enhance the appeal of data science for female and diverse professionals. We also promote the diversity of internal networks with different interests, such as LGBTQI+ and Religion, within the framework of Diversity, Equity Inclusion.

Diversity-related content has been shared on TUI’s Intranet, in the  Learning Lounge and in our leadership programmes. Throughout the year, we also took part in various key events and special dates such as International Women’s Day and Pride Month.

In aviation our vision “Come as you are!” was the springboard for a new Uniform Policy, allowing our employees more flexibility in their choice of look and clothing.

With TUI’s Global Employment Statement and as a signatory to the UN Global Compact, we have made clear commitments: We do not accept any discrimination based on nationality or ethnicity, sex, gender identity, sexual orientation, marital status, religion, world view, disability, age or social origin. Decisions about hiring, salary, benefits, training opportunities, work assignments, advancement, discipline and termination must be based solely on objective grounds.

In financial year 2023 we monitored a number of diversity-related indicators. The proportion of women in the overall headcount matched the prior year’s level at around 56 %. The proportion of women in managerial functions increased year-on-year by four percentage points. The proportion of women on the Senior Leadership Team remained constant.

Proportion of women in managerial positions

in %

30 Sep 2023

30 Sep 2022

Target 2023

 AG

 

 

 

Supervisory Board

45

45

30

Executive Board

1 woman

1 woman

at least
1 woman

First management level below Executive Board

14

21

25

Second management level below Executive Board

30

24

30

 Deutschland

 

 

 

Supervisory Board

42

33

30

Executive Board

33

33

25

First management level below Executive Board

39

35

30

Second management level below Executive Board

41

43

40

 fly

 

 

 

Supervisory Board

42

25

30

Executive Board

0

0

20

First management level below Executive Board

0

0

30

Second management level below Executive Board

38

41

40

For Germany (TUI AG,  Deutschland,  fly), targets covering the period to 2023 had been fixed in financial year 2020 under a voluntary commitment adopted in accordance with the statutory provisions of the German Stock Corporation Act (AktG) and the German Limited Liability Companies Act (GmbHG).  Deutschland GmbH achieved all its targets for 2023.  AG met three of the four targets it had set itself and managed to increase the proportion of women in the second tier of management by six percentage points.  fly did not achieve all of the targets set.

The new targets 2026 will be set by the relevant committees in autumn 2023.

See declaration in the Corporate Governance Report on page 130.

Enable best performance

In order to be successful together at TUI, we are seeking to empower our employees to deliver their top performance. We are supporting our executives and promoting dialogue between managers and employees.

In the financial year under review, we revised our feedback and target agreement process Great Place to Grow, placing the focus on continuous development targets and extended feedback. Four target categories were defined: Transformation; Growth, Profitability Cash Generation; Employee Customer Engagement; ESG / Sustainability. Great Place to Grow ensures regular dialogue between executives and employees to discuss development targets and performance.

Depending on their development targets, our employees can choose from a broad range of development and learning formats. Overall, the active users of our learning platform  People completed, similar to prior year, an average of more than two hours of training per month in financial year 2023. We also offered a range of programmes in the  Learning Lounge, such as the Sustainability Academy.

Our program for:ward focuses on further training in the IT sector and was continued in financial year 2023 with a third cohort. A total of 23 employees participated in this cohort.

Our executives have access to various development programmes. How2 is our global four-month programme conveying key leadership fundamentals to new executives starting their leadership role. In financial year 2023, 373 employees from across  Group completed the programme. The number of participants last year was 194. We also resumed our leadership programmes Horizons and Perspectives after they had been suspended due to the pandemic. A total of 46 executives were selected to take part – 20 participants for the Horizons programme and 26 for Perspectives. The focus was on leadership skills for global teams as well as strategy communication and implementation.

Our International Graduate Programme was reactivated after the end of the pandemic in financial year 2023. The two-year programme familiarises participants with commercial and head office functions within TUI.

Outlook

Our People Strategy is our targeted, strategic approach to promoting strong leadership and supporting the development of our employees. We consistently pursue the strategy of a Group-wide core HR system. To facilitate data-based decision-making, we are continually expanding and harmonising our digital systems. A key focus is on Diversity, Equity Inclusion (DEI) and the launch and implementation of a global DEI strategy, covering many different aspects of diversity.

Employee representatives

 Group historically features a strong co-determination landscape. It embraces the Supervisory Board at corporate level, the Group Works Council at Group level and many local works councils at company level.

In the period under review, many topics were jointly updated, continued or initiated in constructive talks. The focus was on the revision of the feedback and target agreement process Great Place to Grow, the introduction of TUIgether+ and our digitalisation projects, including the implementation of our single core HR system in  People.

At the European level, the  Europe Forum as an information and consultation body represents the interests of employees working in companies outside Germany and thus plays an important role as a facilitator and integrator in the European framework. With the joint revision of the basic agreement about the composition, tasks and rights of the  Europe Forum, TUI’s Executive Board has endorsed the effective involvement of European employees to ensure that harmonisation and transformation programmes within the Group are effected on the basis of socially acceptable solutions.

Employee health

 promotes the physical and mental health of all employees. The Group-wide body of health officers regularly deals with best practices, ongoing projects and the plans presented to it for health-promoting activities. Against the backdrop of global challenges, especially in relation to mental health, an even stronger focus will be placed in future on aligning activities to common targets and establishing stringent processes.

In the course of the year, health-promoting activities and presentations were offered across the Group. While some of the offerings, such as the company sports programmes in Germany, were resumed post-COVID-19, digital alternatives continue to complement the range of activities on offer.

Employee indicators

As at 30 September 2023, staff numbers had increased by 7.1 % to 65,413. The expansion of business operations following the COVID-19 pandemic resulted in a significant increase in overall staff numbers. Due to the re-segmentation of Future Markets from All other segments to the segments Central Region and  Musement in financial year 2023, previous year’s figures have been adjusted.

Personnel by segment

 

30 Sep 2023

30 Sep 2022
adjusted

Var. %

Hotels Resorts

28,621

27,234

+ 5.1

Cruises*

73

72

+ 1.4

 Musement

10,484

9,061

+ 15.7

Holiday Experiences

39,178

36,367

+ 7.7

Northern Region

11,031

10,423

+ 5.8

Central Region

7,266

7,120

+ 2.1

Western Region

5,519

5,141

+ 7.4

Markets Airlines

23,816

22,684

+ 5.0

All other segments

2,419

2,040

+ 18.6

 Group

65,413

61,091

+ 7.1

* Excludes  Cruises (JV) employees. Cruises employees are primarily hired by external crew management agencies.

Hotels Resorts

Due to an increase in business operations at Hotels Resorts, the headcount grew by a total of 5.1 % from 27,234 to 28,621. Robinson recorded a 2.7 % increase in staff numbers from 5,141 to 5,278. The headcount numbers reported by  Blue remained basically flat year-on-year. Riu recorded a growth in staff numbers by 11.9 % from 12,691 to 14,195, driven by an increase in occupancy. Northern Hotels reported a slight decrease in the headcount.

Cruises

The headcount in the Cruises segment increased slightly year-on-year by 1.4 % to 73.

TUI Musement

In financial year 2023, the headcount in  Musement rose by 15.7 % from 9,061 to 10,484. The increase was driven by the growing business in destinations such as Spain, Greece, and North and South America.

Northern Region

Northern Region recorded a year-on-year headcount increase of 5.8 % from 10,423 to 11,031. In the UK, staff numbers in the Retail, Tour Operator and Airline sectors rose by 5.6 % year-on-year from 9,666 to 10,207. In the Nordics, staff numbers in Tour Operator and Airline grew by a total of 8.9 % from 757 to 824.

Central Region

In Central Region, the headcount grew by 2.1 % year-on-year from 7,120 to 7,266. In Germany, staff numbers were more or less flat year-on-year at 5,521. In Austria, staff numbers rose slightly by 7.3 % from 464 to 498. In Switzerland, the headcount increased slightly by 1.9 % from 366 to 373. In Poland, the headcount grew by 13.2 % from 720 to 815. Future Markets recorded a decline in its headcount.

Western Region

The headcount in Western Region increase by 7.4 % year-on-year from 5,141 to 5,519. This was driven by higher staff numbers in the Retail and Tour Operator sectors in Belgium and the Netherlands. The number of employees in the Airline sector in the Netherlands rose by 10.9 % from 750 to 832. In France, staff numbers grew by 17.6 % from 636 to 748.

All other segments

Overall staff numbers rose by 18.6 % year-on-year from 2,040 to 2,419. The number of employees working for Head Office functions increased by 18.7 % from 1,079 to 1,281, including 262 employees working for  AG. The headcount in IT rose by 18.4 % year-on-year from 961 to 1,138.

Personnel costs

€ million

2023

2022

Var. %

Wages and salaries

1,954.6

1,732.3

+ 12.8

Social security contributions

294.9

300.4

 1.8

Pension costs

108.8

109.2

 0.4

Total

2,358.3

2,141.9

+ 10.1

In the period under review,  Group’s personnel costs increased from € 2.1 bn to € 2.4 bn year-on-year. The year-on-year increase in wages and salaries and social security contributions in financial year 2023 mainly results from the 11.4 % growth in average staff numbers.

For further details, please refer to page 212.

The pay package offered by  Group consists of various components, reflecting the framework conditions in different countries and companies and the appropriateness of compensation and customary market rates. Depending on the function concerned, a fixed salary may go hand in hand with variable components, honouring individual performance and promoting the sustainable participation of employees in the Company’s long-term targets. In addition, the Senior Leadership Team can participate in a long-term share-based compensation programme based on the allocation of virtual shares.

Many  Group companies offer their employees pension schemes in the form of direct benefits or through an occupational providence fund, or else by paying in additional employer contributions to pension insurance, in some cases beyond the statutory minimum required. In Germany, collective contracts have been concluded with an insurance undertaking in order to meet the legal entitlement to deferred compensation.

Customer experience, security safety and crisis management*

We place our guests and their individual wishes and needs at the center of our organisation in order to offer them differentiated and consistent experiences. In this way, we aim to increase customer loyalty and tap into new customer segments, as satisfied guests are a decisive factor for the  Group’s long-term growth. Our goal is to continuously adapt the customer experience to individual needs and to further personalise it. The more flexible and personalised design of our products and services is supported by the expansion of our product portfolio and our digital platform.

* As part of social matters

Our integrated business model allows us to accompany our guests through the entire travel experience from booking, arrival, hotel stay and cruise to local activities and excursions – digitally and personally. The digital travel experience is complemented by the personal support of our employees, which our guests experience in our travel agencies, aircraft and hotels, on our ships and in the destination.

The travel experience is about relaxing and winding down, or discovering and exploring something new. However, the travel experience can also entail a wide range of risks. As far as possible, our activities aim to minimise these risks for customers and employees. The business takes a risk based approach to prevent intentional risks to the well-being of our customers, such as crime or terror (Security) and offer all customers a travel experience within the most Security and safety, even in relation to unintentional risks (Health Safety), for all services booked in the framework of their trips (e. g. flight, transfer to the hotel, hotel stay and excursions).  continually monitors and analyses safety-critical developments in destinations and discusses response measures with the markets and other involved business areas.

Safety

Throughout this financial year, Group Safety Risk have continued to oversee and deliver our safety management programme, supporting the Group’s businesses with a resumption to normal operations after the COVID 19-pandemic and the delivery of strategic growth plans.

The Safety Risk team’s focus is on the principal safety risks associated with accommodation, transfers, excursions, activities and tours supporting our tour operators in the source markets,  Musement and  Hotels Resorts.

In addition to the continuous monitoring approach of key risk areas taken in  Hotels Resorts,  have conducted multiple safety assessments across our third-party providers using a multi-layered assessment approach.

The continued development of our data-led, risk-based approach to Safety Risk Management with third party hoteliers is increasing our operational efficiency and enabling an improved approach to safety risk management. This approach includes the use of data sharing portals, in partnership with several technical safety specialist providers conducting safety monitoring / management programs with hoteliers globally.

Group Safety Risk continues to support the strategic direction of the business and ensuring that  remains a brand that can be trusted.

Following the review of security activities in 2022, recruitment of a new Head of Global Security lead and Intelligence lead was completed in February 2023. Since March 2023 the function has worked to complete a discovery phase, reviewing the whole security operation. This culminated with the creation of a new six pillar strategy that not only is completely in accord with  Safety, but also reflects  today and its risk based approach to SHS services and engagement.

This new strategy will be delivered in two stages over three years, the first 18 months will be the creation of, or amendment to manuals, policies and guidelines related to our security specialisms. All infrastructure will be made available to all via  partners and we will seek ISO9001 accreditation to officially cement our expertise. Strategic delivery is via a cyclical security system and this approach has been presented to various elements of the business during operational activities and presentations.

Crisis management and business continuity

 operates Group wide crisis and business continuity protocols and governance modules. Regular update calls between Group function and business areas take place on a weekly or monthly basis, depending on the area, and are established to share strategic and operational topics including best practice. Data is aggregated and analysed, the frame works ascertain when guests and / or employees are affected and what support or actions at what moment is need.

Experienced crisis managers work within a team to cover areas such as customer, commercial, communications and insurance management. These experts across the Group facilitate a fast, flexible response to levels of crisis. Appropriate reporting and coordination within  ensures that management is updated on all key incidents and developments and can immediately take decisions if necessary.

The Group wide crisis management system software for monitoring, escalation and managing of day-to-day incidents gives the ability to work individually within our businesses or together as a group when needed.

Anti-corruption and anti-bribery

Details of  Group’s anti-corruption and anti-bribery measures are presented in the Corporate Governance section on Integrity Compliance from page 154 in this Report.

Disclosures under the EU Taxonomy Regulation (EU) 2020 / 852

Pursuant to Article 8 of the Regulation (EU) 2020 / 852 of 18 June 2020 on the Establishment of a Framework to Facilitate Sustainable Investment,  AG is publishing its report in accordance with the Taxonomy Regulation. Compared with 2022, an extended reporting obligation applies for financial year 2023. Undertakings have to disclose information on the proportion of turnover, capital expenditure and operating expenditure as defined in the EU Regulation that is associated with economic activities described in EU Regulations and Delegated Acts and hence taxonomy-eligible. In addition, undertakings have to disclose information on the degree to which these KPIs qualify as environmentally sustainable or taxonomy-aligned under Articles 3 and 9 of the Taxonomy Regulation.

Environmental sustainability is analysed on the basis of technical screening criteria for the following six environmental objectives:

  • Climate change mitigation,
  • Climate change adaptation,
  • The sustainable use and protection of water and marine resources,
  • The transition to a circular economy,
  • Pollution prevention and control,
  • The protection and restoration of biodiversity and ecosystems.

An economic activity qualifies as environmentally sustainable or taxonomy-aligned if it demonstrably makes a substantial contribution to one of the six environmental objectives while doing no significant harm to any of the remaining environmental objectives. The economic activity also has to meet minimum standards on human rights as well as social and labour standards, anti-corruption, fair competition and taxation.

The regulations on the EU Taxonomy are still under development.  has a financial year which ends at 30 September. Accordingly, for financial year 2023, economic activities defined by regulations only related to the environmental objectives of climate change mitigation and climate change adaptation. As of 1 January 2024, additional economic activities will also be defined for other environmental objectives. Furthermore, technical screening criteria for economic activities already defined will be adjusted. These regulations did not apply in financial year 2023. Due to the larger number of defined economic activities, generally taxonomy-eligible revenue, capital expenditure and operating expenditure are expected to increase from financial year 2024. Moreover, some of the terms and definitions used in the EU Taxonomy regulations are still unclear in terms of their meaning and interpretation. To clarify these terms, the EU regularly publishes statements (FAQs). Due to this unclarity and the changes in regulations,  faces the risk of facing a different future interpretation of these indicators and having to change its reporting accordingly. In its reporting as at 30 September 2023,  reflects the status of the FAQs as at 20 October 2023.

Determination of generally taxonomy-eligible economic activities

As a first step,  analysed its economic activities, taking into account both activities generating external turnover and activities serving the Company’s own needs. TUI’s main activities, flight operation and the delivery of accommodation services in hotels, are not currently listed in the EU Taxonomy. Therefore, only a small portion of the indicators mentioned above related to taxonomy-eligible activities in the period under review.  does not report any economic activities serving the environmental objective of climate change adaptation.

The second step was to determine indicators relating to these economic activities. Where an indicator relates to several activities at once, it was broken down based on appropriated indicator, usually based on the direct costs incurred for the activity in question. The reported numbers only include the turnover, capital expenditure and operating expenditure of companies fully included in the consolidated financial statements.

Checking technical screening criteria

Compliance with the relevant technical screening criteria is determined on the basis of queries to the respective Group companies or by means of a screening based on higher-level processes and within the framework of national or EU regulations. Where it was not possible to check compliance with technical screening criteria for lack of data or evidence and the economic activity concerned is not material for TUI, no screening was carried out and the economic activity was classified as non-compliant with the taxonomy according to the Comission Notice C / 2023 / 305 dated 20 October 2023 No. 13. The results are described in the following sections on revenue, capital expenditure and operating expenditure.

Checking minimum protection criteria

 ensures compliance with the minimum protection criteria through Group-wide policies, training programmes, codes of conduct and risk management systems, which also cover our suppliers and the impact of the services we provide. With regard to compliance with human rights, we refer to the Non-Financial Group Declaration. Regarding anti-corruption and fair competition, we refer to the Corporate Governance Report.  has also implemented a tax strategy aiming to ensure taxation in line with our business, preventing aggressive or artificial tax planning, ensuring cooperation with local tax authorities and centrally managing and reviewing tax risks. In this context, please refer to the publication of our tax strategy at Our Tax Strategy and Governance (tuigroup.com). At the reporting date, no relevant litigation was pending in this context.

Revenue

Total revenue is the revenue determined in accordance with international accounting standards and carried as revenue in the Notes. In the  Musement segment, customer transport in the destination, e. g. in the framework of excursions or transfers from the airport to the hotel, was allocated to economic activity 6.3 “Urban and suburban transport, road passenger transport”. The revenue numbers were taken from our internal reporting system. Where this revenue also related to other economic activities, e. g. in the case of excursions involving not only transport but also guided tours, it was allocated on the basis of direct costs of the respective economic activity. Revenue from coach transport services provided by third parties is only recognised if this revenue meets the definitions of international accounting standards and if  controls the underlying processes. The revenue generated in the Cruises segment is allocated to economic activity 6.11 “Sea and coastal passenger water transport”. Revenue in the Northern Region segment includes revenue from economic activity 6.7 “Inland passenger water transport”. The revenue is regularly generated from sales of package tours consisting, for example, of a flight, transport to the destination and overnight accommodation on a ship. For the purposes of the EU Taxonomy, these revenues are broken down in line with the direct costs of the respective economic activity so as to determine the revenue attributable to passenger transport by ship. As TUI’s key economic activities currently do not fall under the EU Taxonomy, taxonomy-eligible revenue only accounts for 3.0 % (previous year 2.0 %) of total revenue. In addition, technical screening criteria relate partially to regulations exclusively applicable in the EU or to ship newbuilds so that taxonomy-aligned revenues could not be identified.

Capital expenditure

Capital expenditure summarises the additions to the relevant assets mentioned in the Notes in the sections “Goodwill”, “Other intangible assets”, “Property, plant and equipment” and “Rights of use”. In financial year 2023, there were no additions from mergers.

Total capital expenditure of € 974.8 m is broken down as follows for financial year 2023:

Other intangible assets € 180.9 m

Property, plant and equipment € 483.3 m

Right of use assets € 310.6 m

As a rule, capital expenditure is allocated to individual economic activities on the basis of our internal project controlling. Alongside the economic activities already mentioned in the Revenue section, capital expenditure are particularly attributable to economic activities in connection with the construction and renovation of buildings in the Hotels Resorts segment, as well as the installation of renewable energy technologies. Overall, taxonomy-eligible capital expenditure accounts for 44.7 % (previous year 31.0 %) of total capital expenditure. The increase year on year is mainly related to the addition of one cruise ship. Due to the lack of well-founded threshold values for hotels and administrative buildings and unclear transferability of technical screening criteria based on EU regulations to non-EU countries, taxonomy-aligned capital expenditure accounts for a very low proportion at under 1 %.

Operating expenditure

TUI’s operating expenditure includes building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment, other intangible assets and right of use assets. Where necessary, operating expenditure is allocated to an economic activity on a cost basis. The review of the taxonomy eligibility and alignment of operating expenditure follows the review of the respective property, plant and equipment, other intangible assets or right-of-use assets to which they can be allocated. Taxonomy-eligible operating expenditure thus accounts for 25.1 % (previous year 25.0 %) of total operating expenditure.

Revenue 2023

 

 

Substantial conribution criteria

DNSH (‘Does not significant harm’)

Portion of taxonomy-aligned or taxonomy-eligible turnover, 2022 (14)
in %

Category (enabling activity) (15)
Yes / No

Category (transitional activity) (16)
Yes / No

Economic activities (1)

Code (2)

Revenue (3)
in € million

Proportion of revenue 2023 (4)
in %

Climate change
mitigation (5)
in %

Climate change adaption (6)
in %

Climate change mitigation (7)
Yes / No

Climate change adaption (8)
Yes / No

Water and marine resources (9)
Yes / No

Circular
economy (10)
Yes / No

Pollution (11)
Yes / No

Biodiversity and ecosystems (12)
Yes / No

Minimum safeguards (13)
Yes / No

A. Taxonomy-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A.1. Environmentally sustainable activities
(taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues environmentally sustainable activities (taxonomy-aligned) (A.1)

 

0.0

0.0

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

Thereof enabling activities

 

0.0

0.0

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

Thereof transitional activities

 

0.0

0.0

0.0

 

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

N / A

A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urban and suburban transport, road passenger transport

CCM 6.3

123.8

0.6

 

 

 

 

 

 

 

 

 

 

 

 

Inland passenger water transport

CCM 6.7

26.2

0.1

 

 

 

 

 

 

 

 

 

 

 

 

Sea and coastal passenger water transport

CCM 6.11

477.8

2.3

 

 

 

 

 

 

 

 

 

 

 

 

Revenues taxonomy-eligible but not environmentally sustainable activities (non-taxonomy-aligned activities) (A.2)

 

627.8

3.0

3.0

0.0

 

 

 

 

 

 

 

2.0

 

 

A. Revenues of taxonomy-eligible activities (A.1+A.2)

 

627.8

3.0

3.0

0.0

 

 

 

 

 

 

 

2.0

 

 

B. Taxonomy-non-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from taxonomy-non-eligible activities

 

20,038.1

97.0

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

20,665.9

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditure (CapEx) 2023

 

 

Substantial conribution criteria

DNSH (‘Does not significantly harm’)

Portion of taxonomy-aligned or taxonomy-eligible CapEx, 2022 (14)
in %

Category (enabling activity) (15)
Yes / No

Category (transitional activity) (16)
Yes / No

Economic activities (1)

Code (2)

CapEx (3)
in € million

Proportion of CapEx (4)
in %

Climate change mitigation (5)
in %

Climate change adaption (6)
in %

Climate change mitigation (7)
Yes / No

Climate change adaption (8)
Yes / No

Water and marine resources (9)
Yes / No

Circular
economy (10)
Yes / No

Pollution (11)
Yes / No

Biodiversity and ecosystems (12)
Yes / No

Minimum safeguards (13)
Yes / No

A. Taxonomy-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A.1. Environmentally sustainable activities
(taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Installation, maintenance and repair of renewable
energy technologies

CCM 7.6

2.2

0.2

100

 

Yes

Yes

N / A

N / A

N / A

N / A

Yes

N / A

E

 

CapEx environmentally sustainable activities (taxonomy-aligned) (A.1)

 

2.2

0.2

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

Thereof enabling activities

 

2.2

0.2

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

E

 

Thereof transitional activities

 

0.0

0.0

0.0

 

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urban and suburban transport, road passenger transport

CCM 6.3

7.1

 

0.7

 

 

 

 

 

 

 

 

 

 

 

 

Sea and coastal passenger water transport

CCM 6.11

226.5

23.2

 

 

 

 

 

 

 

 

 

 

 

 

Construction of new buildings

CCM 7.1

62.3

6.4

 

 

 

 

 

 

 

 

 

 

 

 

Renovation of existing buildings

CCM 7.2

136.4

14.0

 

 

 

 

 

 

 

 

 

 

 

 

Installation, maintenance and repair of renewable
energy technologies

CCM 7.6

1.3

0.1

 

 

 

 

 

 

 

 

 

 

 

 

CapEx taxonomy-eligible but not environmentally sustainable activities (non-taxonomy-aligned activities) (A.2)

 

433.6

44.5

100

 

 

 

 

 

 

 

31.0

 

 

A. CapEx taxonomy-eligible activities (A.1+A.2)

 

435.8

44.7

100

 

 

 

 

 

 

 

31.0

 

 

B. Taxonomy-non-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures on taxonomy-non-eligible activities

 

539.1

55.3

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

974.9

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenditures (OpEx) 2023

 

 

Substantial conribution criteria

DNSH (‘Does not significantly harm’)

Portion of taxonomy-aligned or taxonomy-eligible OpEx, 2022 (14)
in %

Category (enabling activity) (15)
Yes / No

Category (transitional activity) (16)
Yes / No

Economic activities (1)

Code (2)

OpEx (3)
in € million

Proportion of OpEx (4)
in %

Climate change mitigation (5)
in %

Climate change adaption (6)
in %

Climate change mitigation (7)
Yes / No

Climate change adaption (8)
Yes / No

Water and marine resources (9)
Yes / No

Circular
economy (10)
Yes / No

Pollution (11)
Yes / No

Biodiversity and ecosystems (12)
Yes / No

Minimum safeguards (13)
Yes / No

A. Taxonomy-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A.1. Environmentally sustainable activities
(taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OpEx environmentally sustainable activities (taxonomy-aligned) (A.1)

 

0.0

0.0

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

Thereof enabling activities

 

0.0

0.0

0.0

0.0

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

Thereof transitional activities

 

0.0

0.0

0.0

 

N / A

N / A

N / A

N / A

N / A

N / A

N / A

N / A

 

 

A.2. Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urban and suburban transport, road passenger transport

CCM 6.3

11.2

 

1.6

 

 

 

 

 

 

 

 

 

 

 

 

Sea and coastal passenger water transport

CCM 6.11

48.1

6.9

 

 

 

 

 

 

 

 

 

 

 

 

Renovation of existing buildings

CCM 7.2

110.7

16.0

 

 

 

 

 

 

 

 

 

 

 

 

Data processing, hosting and related activities

CCM 8.1

4.0

0.6

 

 

 

 

 

 

 

 

 

 

 

 

OpEx taxonomy-eligible but not environmentally sustainable activities (non-taxonomy-aligned activities) (A.2)

 

174.0

25.1

 

 

 

 

 

 

 

 

 

25.0

 

 

A. OpEx taxonomy-eligible activities (A.1+A.2)

 

174.0

25.1

 

 

 

 

 

 

 

 

 

25.0

 

 

B. Taxonomy-non-eligible activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenditures for taxonomy-non-eligible activities

 

518.1

74.9

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

692.1

100.0

 

 

 

 

 

 

 

 

 

 

 

 

Annual financial Statements of TUI AG

The annual financial statements of  AG were prepared in accordance with the provisions of the German Commercial Code (HGB), taking account of the complementary provisions of the German Stock Corporation Act (AktG), and audited by Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hanover. They are published in the German Unternehmensregister (www.unternehmensregister.de). The annual financial statements have been made permanently available on the Internet at www.tuigroup.com.

In the present Annual Report, the Management Report of  AG has been combined with the Management Report of  Group.

Earnings position of  AG

Income statement of  AG

€ million

2023

2022

Var. %

Revenue

158.4

89.8

+ 76.4

Other operating income

411.9

491.7

 16.2

Cost of materials

14.5

16.4

 11.6

Personnel costs

53.4

57.5

 7.1

Depreciation

1.4

1.6

 12.5

Other operating expenses

228.7

332.6

 31.2

Net income from investments

 13.5

 205.2

+ 93.4

Write-downs of investments

444.5

380.0

+ 17.0

Net interest

 327.3

 121.1

 170.3

Income taxes (expense (+), Income (–))

2.7

 3.8

n. a.

Loss after taxes

 515.7

 529.1

+ 2.5

Other taxes

1.9

1.8

+ 5.6

Net result for the year

 517.6

 530.9

+ 2.5

The earnings position of  AG, the Group’s parent company, is primarily determined by the appropriation of profits from its Group companies, either directly associated with  AG via profit and loss transfer agreements or distributing their profits to  AG based on relevant resolutions, and by the measurement of financial investments and the funding of  Group.

Revenue and other operating income

The increase in revenue in financial year 2023 resulted mainly from a higher income from licence fees with subsidiaries. Other operating income in the period under review was characterised in particular by the reversal of impairments on receivables and income from intra-Group cost transfers. This income was offset by expenses for intercompany charging of service costs to  AG, carried in Other operating expenses. The year-on-year decline in Other operating expenses was partly driven by lower income from the reversal of provisions and significantly lower income from write-ups on investments and lower income from exchange gains. On the other hand, expenses were incurred for exchange losses, carried in Other operating expenses.

Expenses

The year-on-year decrease in personnel costs resulted essentially from lower pension expenses due to lower transfers to pension provisions. An opposite effect was driven by lower expenses for the formation of personnel provisions for Executive Board members.

Other operating expenses comprised in particular expenses for exchange losses, the cost of financial and monetary transactions, fees, charges, capital procurements costs, services, transfers to impairments, other administrative costs as well as expenses for intra-Group cost transfers. While there was a decline in expenses for exchange losses and a considerable fall in impairments on receivables, expenses for intra-Group cost transfers rose. Overall, this resulted in a substantial decline in Other operating expenses.

Net income from investments

The year-on-year increase in net income from investments was driven by a decline in expenses for loss transfers and a significant increase in income from profit transfers. The positive development was also attributable to an increase in dividend income from investments. The loss transfers were mainly related to Leibniz-Service GmbH. The income from profit transfers generated in financial year 2023 resulted primarily from companies allocated to Central Operations.

Write-downs of investments

In the period under review, write-downs of investments were mainly related to Tour Operator subsidiaries. In particular due to the inclusion of climate-related costs in the valuation, write-downs were significantly higher than in 2022.

Interest result

In financial year 2023, the movement in the interest result mainly reflected expenses incurred in connection with the redemption of Silent Participation I and the repayment of the remaining warrant bond issued to the Economic Stabilisation Fund (ESF).

Taxes

Income taxes and expenses for other taxes mainly resulted from the regular reassessment of tax provisions. Expenses for Income taxes also rose due to expenses for withholding taxes on dividend payments from subsidiaries. Income taxes did not include any deferred taxes.

Net result for the year

For financial year 2023,  AG posted a net result of € – 517.6 m.

Net assets and financial position of  AG

 AG’s net assets and financial position as well as its balance sheet structure reflect its function as  Group’s parent company. In financial year 2023, the balance sheet total increased slightly year-on-year to € 10,144.4 m.

Abbreviated balance sheet of  AG (financial statement according to German Commercial Code)

€ million

30 Sep 2023

30 Sep 2022

Var. %

Intangible assets / property, plant and equipment

17.6

4.6

+ 282.6

Investments

7,824.3

7,753.6

+ 0.9

Fixed assets

7,841.9

7,758.2

+ 1.1

Receivables

1,981.8

1,781.1

+ 11.3

Marketable Securities

0.3

n. a.

Cash and cash equivalents

319.4

473.0

 32.5

Current assets

2,301.5

2,254.1

+ 2.1

Prepaid expenses

1.0

9.8

 89.8

Total Assets

10,144.4

10,022.1

+ 1.2

5,298.6

4,044.3

+ 31.0

Special non-taxed items

Provisions

307.9

323.3

 4.8

Bonds

589.6

648.3

 9.1

Other liabilities

3,948.3

5,006.2

 21.1

Liabilities

4,537.9

5,654.5

 19.7

Total Liabilities

10,144.4

10,022.1

+ 1.2

Fixed assets

At the balance sheet date, fixed assets almost exclusively consisted of investments. The movement in financial assets was affected by the capital increases carried out in subsidiaries and, in particular, by unscheduled write-downs, which more than offset the capital increases effected in the period under review. The write-downs mainly related to shares in Group companies in tour operation. Due to the issuance of new non-current loans and write-ups of shares in Group companies and participations, in particular in Hotels Resorts, fixed assets rose slightly overall year-on-year in the completed financial year.

Current assets

The moderate rise in current assets of 2.1 % to € 2,301.5 m was driven by an increase in receivables, which more than offset the decrease in cash and cash equivalents. The increase in receivables was primarily attributable to the development of claims and obligations from profit and loss transfer agreements as well as the short- and medium-term financing of Group companies. The rise in receivables and corresponding fall in cash and cash equivalents was also driven by a further cash deposit for the regulatory hedging of customer deposits for package tours.

 AG’s capital structure

 AG’s equity increase by 31.0 % to € 5,298.6 m. This was primarily driven by the capital increase carried out in April of the financial year under review.

The loss for the year totalled € – 517.6 m. Including a loss carried forward of € – 831.5 m, net loss totalled € – 1,349.1 m. The equity ratio rose to 52.2 % in the financial year under review (previous year 40.4 %).

Provisions

Provisions decreased by € 15.4 m to € 307.9 m. They consisted of pension provisions worth € 160.8 m (previous year € 164.0 m), tax provisions worth € 25.1 m (previous year € 30.1 m), and other provisions worth € 122.0 m (previous year € 129.2 m).

In financial year 2023, the decline in pension provisions was primarily attributable to a change in parameters. Other provisions declined, in particular due to the reversal of provisions for investment hedges. Moreover, use was made of the provision formed in connection with the early redemption of Silent Participation II. An opposite effect was driven by the slight increase in personnel provision.

Liabilities

As at 30 September 2023,  AG’s liabilities totalled € 4,537.9 m, a decline of € 1,116.6 m or 19.7 %.

In order to strengthen its balance sheet ratios and fund the state aid granted,  AG carried out a capital increase of around € 1.8 bn in April 2023. As a result,  AG was able to refinance the repayment of a Silent Participation obtained from the ESF with a nominal amount of € 420.0 m and implement the early repayment of a warrant bond with a nominal amount of € 58.7 m plus the warrants worth 58.7 m for the purchase of shares in  AG that were acquired and subsequently cancelled.

Furthermore, bank liabilities under the syndicated credit facility were significantly reduced. In addition, an amount of € 1,050.0 m of the undrawn KfW tranche of € 2.1 bn granted by the German government was cancelled, reducing the tranche to € 1,050.0 m. The credit line of the syndicated credit facility from the two tranches available for cash drawdowns thus amounted to € 2,504.4 m. As before, the amount of the tranche available for the use of bank guarantees totalled € 190.0 m in the period under review.

In May 2023, an agreement was reached with the banks to extend the term of the syndicated credit facility from July 2024 to July 2026.

As at 30 September 2023, there had been no cash drawdown under the syndicated credit facility (previous year: € 562.0 m). Drawdowns from this credit facility by means of bank guarantees amounted to € 109.2 m as at 30 September 2023.

The considerable decrease in liabilities to banks and other liabilities was partly offset by the increase in liabilities to Group companies. Due to the increase in operating activities, Tour Operator companies, in particular, transferred monies to  AG.

The net financial position (cash and cash equivalents minus liabilities to banks, bonds and Schuldschein) totalled € – 517.3 m in the completed financial year (previous year: € – 1,170.9 m).

Capital authorisation resolutions

Information on new and existing capital authorisation resolutions, adopted by the Annual General Meetings, is provided in the next chapter on Information required under takeover law.

Information required under Takeover Law

Pursuant to sections 289a and 315a of the German Commercial Code (HGB) and explanatory report

Subscribed capital

The subscribed capital of  AG consists of no-par value shares, each representing an equal share of the capital stock. As a proportion of the capital stock, the value of each share is around € 1.00.

The subscribed capital of  AG, registered in the commercial registers of the district courts of Berlin-Charlottenburg and Hanover, consisted of 507,431,033 shares at the end of financial year 2023 (previous year 1,785,205,853 shares) and correspondingly totalled € 507,431,033.00. Each share confers one vote at the Annual General Meeting.

Restrictions on voting rights or share transfers

The Executive Board assumes that it is currently impossible to transfer the shares it considers attributable to Alexey Mordashov or to exercise the voting rights from these shares.

Equity interests exceeding 10% of the voting shares

The Executive Board of  AG has been notified of the following direct or indirect equity interests amounting to 10 % or more of the voting rights:

* As a result of the capital increase in spring 2023, in which Alexey A. Mordashov (Moscow, Russian Federation) has not been allowed to participate due to his sanction since 28 February 2022, his shareholding has decreased significantly. According to the voting rights notifications of the German Federal Financial Supervisory Authority (BaFin) dated 16 May 2023, 10.87 % shares in  AG have been indirectly attributable to Alexey A. Mordashov since 19 April 2023.

At the end of financial year 2023, around 89 % of  shares were in free float. Around 33 % of all  shares were held by private shareholders, around 55 % by institutional investors and financial institutes, and around 12 % by strategic investors.

The current shareholder structure and voting rights notifications according to section 33 of the Securities Trading Act (WpHG) are available online at:
www.tuigroup.com/en-en/investors/share/shareholder-structure and www.tuigroup.com/en-en/investors/news

Shares with special rights conferring powers of control

No shares with special rights conferring powers of control have been issued.

System of voting right control of any employee share scheme where control rights are not exercised directly by the employees

Where  AG grants shares to employees under its employee share programme, the shares are directly transferred to the employees (sometimes with a lock-up period). Beneficiaries are free to exercise the control rights to which employee shares entitle them directly, in just the same way as other shareholders, in line with statutory requirements and the Articles of Association.

Appointment and removal of Executive Board members and amendments to the Articles of Association

The appointment and removal of Executive Board members is based on Sections 84 et seq. of the German Stock Corporation Act in combination with Section 31 of the German Co-Determination Act. Amendments to the Articles of Association are based on the provisions of Sections 179 et seq. of the German Stock Corporation Act in combination with Section 24 of the Articles of Association of  AG.

Powers of the Executive Board to issue shares

The Annual General Meeting on 9 February 2016 adopted a resolution to create conditional capital of € 150.0 m for the issue of bonds. The authorisation to issue bonds with conversion options or warrants as well as profit-sharing rights and income bonds (with or without fixed terms) of up to a nominal amount of € 2.0 bn expired on 8 February 2021. With the issuance of a bond with warrants worth € 150 m to the German Economic Stabilisation Fund (ESF) in October 2020, this authorisation was fully used. The bonds and warrants outstanding were repaid in full on 27 April 2023 without the ESF having exercised its option rights.

The Annual General Meeting on 13 February 2018 adopted a resolution to create authorised capital for the issue of employee shares worth € 30.0 m. The Executive Board of  AG was empowered to use this authorised capital by 12 February 2023 in one or several transactions by issuing employee shares against cash contributions. In the completed financial year, no new employee shares were issued.

The Extraordinary General Meeting on 5 January 2021 resolved to create conditional capital of € 420.0 m in order to grant the ESF the right to convert ESF’s asset contribution in the form of a silent participation of € 420.0 m (‘Silent Participation I’) at any time (in a single or several transactions) in full or in part into up to 420 m new registered no-par value shares, each representing a proportionate share in the capital stock of € 1.00 per no-par value share. The new shares will be issued at the minimum issue price of € 1.00. Silent Participation I was repaid in full on 27 April 2023 without the ESF having exercised its conversion right.

The Annual General Meeting on 25 March 2021 resolved to create conditional capital for the issuance of bonds totalling € 109.9 m. The authorisation to issue bonds with conversion options or warrants as well as profit-sharing rights and income bonds (with or without fixed terms) is limited to a nominal amount of  2.0 bn and expires on 24 March 2026. This authorisation was nearly fully used with the issuance of a convertible bond worth € 589.6 m in April and July 2021. As at the balance sheet date, no shares had yet been issued to service the convertible bond.

The Annual General Meeting on 8 February 2022 resolved to create an authorisation to use new registered shares against cash contribution for up to a maximum of € 162.3 m (Authorised Capital 2022 / I). This authorisation will expire on 7 February 2027.

The Annual General Meeting on 8 February 2022 also resolved to create authorised capital for the issuance of new shares against cash or non-cash contribution of € 626.9 m (Authorised Capital 2022 / II). The issuance of new shares against non-cash contribution is limited to € 162.3 m. This authorisation will expire on 7 February 2027.

In the completed financial year, the capital stock was increased by € 328.9 m, utilising a part of the two last-mentioned authorisations. Authorised Capital 2022 / I worth Proceeds of € 140.4 m were used from Authorised Capital 2022 / I, primarily to repay in full the state aid provided by the German government for stabilisation measures, while Authorised Capital 2022 / II worth proceeds of € 188.5 m were used from Authorised Capital 2022 / I to reduce the credit lines under the KfW facility. The further use of the not yet used authorized capital is subject to the binding declaration of commitment of the Executive Board from February 2023.

The Annual General Meeting on 8 February 2022 resolved to create two additional amounts of capital for the issue of bonds worth € 162.3 m and € 81.1 m. The authorisations to issue bonds with conversion options or war-rants as well as profit-sharing rights and income bonds (with or without fixed terms) are limited to a nominal amount of € 2.0 bn and will expire on 7 February 2027.

See the section on Subscribed capital in the Notes to the consolidated financial statements on page 235 and the section on Subscribed capital in the annual financial statements of  AG (disclosure pursuant to Section 160 (1) no. 2 of the German Stock Corporation Act).

Significant agreements taking effect in the event of a change of control of the Company following a takeover bid, and the resulting effects

Some of  AG’s outstanding financing instruments contain change of control clauses. A change of control occurs in particular if a third partly directly or indirectly acquires control over at least 50 % or the majority of the voting shares in  AG.

In the event of a change of control, the holders of the Schuldschein worth € 242.0 m, and the convertible bond worth € 589.6 m must be offered a buyback. For the syndicated credit facilities worth € 2.7 bn (including bank guarantees), of which 0.0 m (via cash) and € 109.2 m (via bank guarantees) had been used as at the balance sheet date, a right of termination by the lenders has been agreed in the event of a change of control.

Beyond this, there are no agreements in guarantee, leasing, option or other financing contracts that might cause material early redemption obligations that would be of significant relevance for the Group’s liquidity.

Apart from the above-mentioned financing instruments, a framework agreement between the Riu family and  AG includes a change of control clause effective in the event of a change of control. Accordingly, a change of control occurs if a shareholder group represents a predefined majority of AGM attendees or if one third of the shareholder representatives on the Supervisory Board are attributable to a group of shareholders. In the event of a change of control, the Riu family is entitled to acquire at least 20 % and at most all shares held by  in RIUSA II S. A. at the share value determined by an internationally recognised auditing company. Since  AG’s Annual General Meeting of 25 March 2021, the conditions had been met for Unifirm to represent a majority of AGM attendees, so that the entitlement arose for the Riu family to acquire shares within certain time windows in 2021, 2022 and 2023. The Riu family dispensed with exercising its acquisition right within all the time windows mentioned above.

A similar agreement concerning a change of control at  AG has been concluded with El Chiaty Group. Here, too, a change of control occurs if a shareholder group represents a predefined majority of AGM attendees or if one third of the shareholder representatives on the Supervisory Board are attributable to a shareholder group. In that case, El Chiaty Group is entitled to acquire at least 15 % and at most all shares held by  in each of the joint hotel companies in Egypt and the United Arab Emirates during three periods following the change of control at a share value determined by an internationally recognised auditing company. As the stake in  AG held by Unifirm increased following the capital increase of 2 November 2021, here, too, a change of control was triggered due to a majority of AGM attendees. The final period for El Chiaty Group to exercise its acquisition right is from 16 November to 16 December 2023.

A change of control agreement has likewise been concluded for the joint venture  Cruises between Royal Caribbean Cruises Ltd. and  AG in the event of a change of control in  AG whereby more than 50 % of voting rights are acquired by an individual or group. The agreement in this case gives the partner the right to demand termination of the joint venture and to purchase the stake held by  AG at a price which is lower than the selling price of their own stake under certain circumstances.

Compensation agreements effective in the event of a takeover bid have not been concluded between the Company and its Executive Board members or employees.

TUI Share1

 share price significantly impacted by economic uncertainty, persistent energy crisis and inflation, and interest rate increases

In financial year 2023, the  share showed at times significant share price volatility, primarily driven by uncertainty about the course of inflation, above all energy prices, and continued monetary tightening by the central banks. Global growth concerns also remained at the forefront. The International Monetary Fund revised its growth forecasts for gross domestic product downward for 2023 and 2024. Overall, the value of the  share, with an entry price adjusted for share consolidation and the capital increase with subscription rights of € 7.172,3 declined by around 27 %, closing at € 5.222,3 on 30 September.

At the beginning of the financial year, sentiment in the capital markets benefited from the persistent post-COVID recovery in demand, despite economic uncertainties. In addition, in mid-December 2022,  concluded an agreement with the Economic Stabilisation Fund (‘WSF’) on the repayment of corona state aids received during the pandemic, hence reducing debt and interest costs. In subsequent weeks, TUI’s share price rose significantly to its annual high of € 12.57 2, 3 on 18 January 2023. In February,  carried out a capital decrease by means of a ten-for-one reverse stock split, previously approved by the Annual General Meeting and subsequently implemented in accordance with the repayment agreement as the final condition for the capital increase scheduled for March. On 18 April 2023,  completed the rights issue of approximately  1.8 bn, and issued around 329 million new shares. The proceeds were used to repay TUI’s remaining WSF state aid including interest and for another major reduction to its KfW credit line.  thus strengthened its balance sheet, is benefiting from lower interest payments and has gained greater financial and entrepreneurial flexibility for the implementation of its strategy.

Furthermore,  successfully extended the existing syndicated credit lines totalling € 2.7 bn in May. The syndicated credit facility from 20 banks (€ 1.65 bn) and the credit line from KfW (€ 1.05 bn) will now mature in July 2026. In future, the interest terms and conditions under that revolving credit facility will also be linked to achieving the Group’s emissions reduction targets confirmed by the Science Based Targets initiative. The capital increase and the extension of the credit facilities were key measures to improve TUI’s credit metrics, also reflected in improved credit ratings from S (B3 to B2) and Moody’s (B- to B). This progress, and the gratifying development of bookings in the summer months, supported by higher prices, facilitated the recovery of the  share up until mid-July.

Despite the positive booking momentum, which continued into Winter 2023 / 24, the tense macro-economic environment led to uncertainty in the stock markets in the final months of the financial year. With several members of OPEC+ (Organization of Petroleum Exporting Countries) continuing to cut back production, oil prices rose substantially, in particular towards the end of the financial year under review which put additional pressure on the  share price.

Driven by these economic uncertainties, higher interest rates, persistent inflation and its potential impact on booking behaviour in tourism, the  share recorded its financial year low of € 5.01 2, 3 on 26 September and closed at € 5.22 2, 3 on 30 September.

1 The contents presented in this chapter are unaudited and voluntary.

2 Source: Reuters, Xetra closing prices

3 Historical prices adjusted for the effect of the capital reduction through share consolidation and capital increase
with subscription rights

 share data

30 September 2023

 

WKN

TUAG50

ISIN

DE000TUAG505

Stock exchange centres

London, Xetra, Hanover

Reuters / Bloomberg

TU1n.DE/TU1.GR (Xetra); TUIT.L/TUI:LN (London)

Stock category

Registered ordinary shares

Capital stock

507,431,033.00

Number of shares

507,431,033

Market capitalisationbn 

2.6

Market capitalisationbn £

2.3

 

Long-term development of the  share (Xetra)1, 2

2019

2020

2021

2022

2023

High

51.23

39.19

25.86

20.37

12.57

Low

24.35

8.94

9.29

7.17

5.01

Year-end share price

32.99

10.02

18.52

7.17

5.22

1 Source: Reuters, Xetra closing prices

2 Historical prices adjusted for the effect of the capital reduction through share consolidation and capital increase with subscription rights

Quotations, indices, and trading

The  share has its primary listing in the Premium segment of the Main Market of the London Stock Exchange and is included in FTSE’s UK Index Series. It also has a secondary listing at the Frankfurt Stock Exchange and the Hanover Stock Exchange and is admitted to the electronic trading system Xetra.

As  shares are also admitted to trading in a regulated market in Germany apart from their listing at the London Stock Exchange,  falls within the scope of the German Securities Acquisition and Takeover Act and is monitored by the Federal Financial Supervisory Authority and the Financial Conduct Authority in this respect.

In financial year 2023, the average daily trading volume at the London Stock Exchange was around 839 thousand shares, while about 2.5 million shares were traded on Xetra per day. Across all trading platforms, the daily trading volume in the UK amounted to around 1.8 million shares, with around 6.2 million shares traded in the euro line. Both the sterling and the euro lines thus delivered strong liquidity for trading by institutional and retail investors.

Analyst recommendations

Analyses and recommendations by financial analysts serve as a decision-making basis for institutional and private investors. In the financial year under review, around 20 analysts regularly published studies on  Group. In September 2023, 32 % of analysts recommended to ‘buy’ the  share, with 58 % recommending ‘hold’ and 10 % of analysts recommending ‘sell’.

Shareholder structure

* As a result of the capital increase in spring 2023, in which Alexey A. Mordashov (Moscow, Russian Federation) has not been allowed to participate due to his sanction since 28 February 2022, his shareholding has decreased significantly. According to the voting rights notifications of the German Federal Financial Supervisory Authority (BaFin) dated 16 May 2023, 10.87 % shares in  AG have been indirectly attributable to Alexey A. Mordashov since 19 April 2023.

At the end of financial year 2023, around 89 % of  shares were in free float. Around 33 % of all  shares were held by private shareholders, around 55 % by institutional investors and financial institutes, and around 12 % by strategic investors.

The current shareholder structure and the voting right notifications pursuant to Section 33 of the German Securities Trading Act are available online at:
https://www.tuigroup.com/en-en/investors/share/shareholder-structure and www.tuigroup.com/en-en/investors/news

Dividend policy

Development of dividends and earnings of the  share

2019

2020

2021

2022

2023

Earnings per share

+ 0.71

 5.34

 2.58

 1.02 1

0.80

0.54

1 Earnings per share adjusted for the capital reduction through share consolidation

In connection with the COVID-19 crisis,  agreed on three stabilisation packages with the federal German government. Conditions attached to the support include a de facto dividend holiday, which will remain in force over the term of the loans and the duration of the investment made by the Economic Stabilisation Fund.  used the proceeds from the rights issue in financial year 2023 to repay the remaining financial aid from the Economic Stabilisation Fund including interest and to reduce the (undrawn) credit line from KfW to € 1.05 bn, extending it to July 2026.

Investor Relations

Open and continuous dialogue and transparent communication with our private shareholders, institutional investors, equity and credit analysts and lenders form the basis for our Investor Relations engagement. Many discussions were held, centring on the Group strategy, business performance in the individual segments, the strong operative Summer business post-COVID-19, the financing measures and the impact of inflation as well as the energy crisis. The goal of this dialogue is to ensure transparent communication so as to enable stakeholders to make a realistic assessment of the future performance of the  share.

In financial year 2023, dialogue with investors primarily focused on the following topics:

  • Demand for travel, capacity development and booking numbers for the Summer and Winter seasons
  • Operational and financial implications of heat waves and wildfires in Europe and the impact of these events on customers’ booking behaviour
  • Impacts of cost inflation on prices and margins and on customers’ booking behaviour
  • Repayment of the remaining WSF state aid: reduction in the KfW credit line as well as extension of the credit facilities
  • Strategic priorities: expansion of our  Musement segment for tours and activities, our dynamic packaging as well as hotel-only and flight-only offering, and further growth of our hotel portfolio and ship fleet through asset-right financing structures such as joint ventures
  • Meeting expectations for financial year 2023 and future growth
  • New  Sustainability Agenda ‘People, Planet, Progress’ and the Group’s emissions reduction targets confirmed by the Science Based Targets initiative (SBTi)

TUI’s management team sought dialogue with investors at physical and virtual roadshows and conferences in New York, London, Frankfurt, Düsseldorf, Munich, Warsaw, Zurich and Paris. The management also met investors from other financial hubs in Europe, North America, Asia, South Africa and Australia.

TUI’s Investor Relations team also makes every effort to engage in direct contact with private investors, with IR staff presenting  Group at events held by shareholder associations and answering questions asked by that target group.  also offers a broad range of information for analysts, investors and private shareholders on its website. All conference calls dealing with financial results were transmitted live.

Supervisory Board and Executive Board

 AG Supervisory Board

Name

Function / Occupation

Location

Initial
Appointments

Appointed until AGM

Other Board Memberships2

Number of
 AG shares

Dr Dieter Zetsche

Chairman of the Supervisory Board of  AG

Stuttgart

13.2.2018

2027

 

b) Veta Health LLC
Wallbox N. V.


37,460

Frank Jakobi1

Deputy Chairman of the Supervisory Board of  AG
Chairman of Group Works Council of  AG

Hamburg

15.8.2007

2026

 

 

1,068

Ingrid-Helen Arnold

Member of the Executive Board, Südzucker AG

Dreieich

11.2.2020

2024

 

 

0

Sonja Austermühle 1

Trade union secretary of ver.di –
Vereinte Dienstleistungsgewerkschaft and Lawyer

Berlin

1.4.2022

2026

 

 

0

Christian Baier

Member of the Management Board (CFO)
Covestro AG (since October 2023)

Dusseldorf

31.5.2022

2027

 

 

0

Andreas Barczewski 1

Aircraft Captain, TUIfly GmbH

Grethem
(OT Buechten)

10.5.2006

2026

a) TUIfly GmbH 4
20.09.2023; Court appointment
as of 19.10.2023)

 

14,450

Peter Bremme 1

Regional Head of the Special Service Division
of ver.di – Vereinte Dienstleistungsgewerkschaft

Hamburg

2.7.2014

2026

a) TÜV Nord AG

 

0

Dr Jutta A. Dönges

Member of the Executive Board (CFO),
Uniper SE

Frankfurt am Main

25.3.2021

2025

a) Commerzbank AG

 

0

Prof Dr Edgar Ernst

Member of supervisory bodies in different companies

Bonn

9.2.2011

2025

a) Metro AG

 

0

Wolfgang Flintermann 1

Group Director Financial Accounting Reporting,  AG

Großburgwedel

13.6.2016

2026

a) Deutscher Reisepreis-Sicherungsverein VVaG

b) RIUSA II S. A.
 Netherland N. V.

3,201

María Garaña Corces

Member of the Management Board
Forterro UK Ltd. (since October 2023)

Madrid

11.2.2020

2024

 

b) Alantra Partners S. A.

0

Stefan Heinemann 1

Technology Team Lead Airline Platform Services,
Airline IT,  InfoTec GmbH

Nordstemmen

21.7.2020

2026

 

 

3,906

Janina Kugel

Supervisory Board Member Senior Advisor

Munich

25.3.2021

2025

 

b) Kyndryl Inc.
thinkproject Deutschland GmbH

0

 

 AG Supervisory Board

Name

Function / Occupation

Location

Initial
Appointments

Appointed until AGM

Other Board Memberships2

Number of
 AG shares

Coline McConville

Member of supervisory bodies in different companies

London

11.12.2014

2024

 

b) 3i Group PLC
Fevertree Drinks PLC
Travis Perkins PLC

0

Helena Murano

Senior Advisor to Arcano Partners

Palma de Mallorca

31.5.2022

2027

 

 

0

Mark Muratovic 1

Chairman of Works Council Tour Operator,
 Deutschland GmbH

Langenhagen

25.3.2021

2026

a)  Deutschland GmbH
MER – Pensionskasse V. V. a. G.

 

1,252

Anette Strempel 1

Chairman of Works Council,
 Customer Operations GmbH

Hemmingen

2.1.2009

2026

 

 

3,357

Joan Trían Riu

 

Executive Board Member of Riu Hotels Resorts

 

Palma de Mallorca

 

12.2.2019

 

2024

 



 

b) Ahungalla Resorts Ltd.
Hotel San Francisco S. A.
Pep Toni Hotels S. A.
RIUSA II S. A.
Riu Hotels S. A.

0

 

Tanja Viehl 1

Lawyer (in-house lawyer), Vereinigung Cockpit e.V.

Woelfersheim

25.3.2021

2026

 

 

0

Stefan Weinhofer 1

International Employee Relations Coordinator at  AG

Vienna

9.2.2016

2026

 

b)  Austria Holding GmbH

0

1 Representative of the employees

2 Information refers to 30 September 2023 or date of resignation from the Supervisory Board of  AG in financial year 2023.

3 Chairman

4 Deputy Chairman

a) Membership in supervisory boards within the meaning of section 125 of the German Stock Corporation Act (AktG).
b) Membership in comparable German and non-German bodies of companies within the meaning of section 125 of the German Stock Corporation Act (AktG).

 AG Executive Board

Name

Department

Other Board Memberships

Number of  AG shares
(direct and indirect)1

Sebastian Ebel
(Age: 60)
Member of the Executive Board since
December 2014
CEO since October 2022
Current appointment until September 2025

Chairman


 

a) BRW Beteiligungs AG
Eves Information Technology AG2
Compass Group Deutschland GmbH
 

b) Midnight Canada Inc.
RIUSA II S. A.2

 

33,258


 

David Burling
(Age: 55)
Member of the Executive Board since June 2015
Current appointment until May 2026





 

CEO Markets Airlines








 

a)  Deutschland GmbH








 

b) First Choice Holidays Ltd.
First Choice Holidays Flights Ltd.
First Choice Olympic Ltd.
Midnight Canada Inc.
Sunwing Vacations Inc.
 Northern Europe Ltd.
 Nordic Holdings Sweden AB
 Travel Group Management Services Ltd.
 Travel Holdings Ltd.
 Travel Ltd.
 Travel Overseas Holdings Ltd.
Vacation Express USA Corp

16,426








 

Mathias Kiep
(Age: 48)
Member of the Executive Board since
October 2022
Current appointment until September 2025

CFO

 

a)  Deutschland GmbH2

 

b)  Canada Holdings Inc.

 

3,990

 

Peter Krueger
(Age: 47)
Member of the Executive Board since
January 2021
Current appointment until December 2026

CSO  CEO HEX



 





 

b) Midnight Canada Inc.
Midnight International Holdings Ltd
Old Court Management Limited
Pep Toni Hotels S. A.
RIUSA II S. A.
 Canada Holdings Inc.
1000476378 Ontario Inc.

44,059



 

Sybille Reiss
(Age: 47)
Member of the Executive Board since July 2021
Current appointment until June 2027

CPO/Labour Director
 

a)  Deutschland GmbH
 


 

3,315
 

Frank Rosenberger
(Age: 55)
Member of the Executive Board since
January 2017
Appointment until October 2022

CIO

 

a) Peakwork AG3

 



 

1,374

 

1 Information refers to 30 September 2023 or date of resignation from the Excecutive Board in financial year 2023.

2 Chairman

3 As of 31 October 2022


a) Membership in Supervisory Boards required by law within the meaning of section 125 of the German Stock Corporation Act (AktG)

b) Membership in comparable Boards of domestic and foreign companies within the meaning of section 125 of the German Stock Corporation Act (AktG)

Corporate Governance Report*

* As part of the combined Management Report

The actions of  AG´s management and oversight bodies are determined by the principles of good and responsible corporate governance.

The Executive Board and the Supervisory Board discussed Corporate Governance issues in financial year 2023. In this chapter, the Executive Board provides – also for the Supervisory Board – the report on Corporate Governance in the Company pursuant to Principle 23 of the German Corporate Governance Code in the version dated 28 April 2022 (GCGC) and section 289a of the German Commercial Code (HGB) as well as Disclosure and Transparency Rule (DTR) 7.2 and Listing Rule (LR) 9.8.7R.

Declaration of Compliance pursuant to section 161 of the German Stock Corporation Act (AktG)

As a stock corporation company under German law,  AG’s Executive Board and Supervisory Board are obliged to submit a declaration of compliance with the GCGC pursuant to section 161 of the German Stock Corporation Act.

https://www.dcgk.de/en/code//foreword.html

Wording of the Declaration of Compliance for 2023

‘In accordance with section 161 of the German Stock Corporation Act, the Executive Board and Supervisory Board hereby declare:

Since the last declaration of compliance was submitted in August 2023, the recommendations of the German Corporate Governance Code in its applicable version have been and will be fully observed.’

Place of publication:

www.tuigroup.com/en-en/investors/corporate-governance

Declaration of Compliance pursuant to DTR 7.2 and LR 9.8.7R

As an overseas company with a premium listing on the London Stock Exchange,  AG’s Executive Board and Supervisory Board are obliged pursuant to No. 7.2 DTR and LR 9.8.7R to make a statement on the application of the UK Corporate Governance Code (UK CGC). Since the German Corporate Governance Code also applies to  AG as a stock corporation under German law,  AG had announced at the time of its merger with  Travel PLC that it would also comply with the UK CGC to the extent practicable.

https://media.frc.org.uk/documents/UK_Corporate_Governance_Code_2018.pdf

In many respects, the requirements of the GCGC and the UK CGC are similar and have continued to converge in recent years. However, there are certain aspects that are not compatible, which are explained below. Therefore, some deviations from Code requirements and best practice in the UK have been necessary.

Under the German Stock Corporation Act, the legislation applicable to  AG, a two-tier board system is mandatory, according to which the Executive Board of the company manages the business under its own responsibility and the Supervisory Board, as independent body, supervises the management of the company (see below section ‘Functioning of the Executive and Supervisory Board’ on page 124). The two-tier board structure is different to the UK unitary board structure on which the UK CGC is based. Some of the principles of composition and operation of the boards of a German stock corporation also differ from those of a UK company (for example, the function of a Company Secretary does not exist in the GCGC). For this reason, the Executive Board and the Supervisory Board have set out below in which areas the UK CGC is not complied with and explained the reasons for the deviations. In addition, the Executive Board and the Supervisory Board have also explained those instances where they consider  AG not to be compliant with the UK CGC in the literal sense but where it lives up to the spirit and meaning of the respective regulation.

Sub-headings refer to sections of the UK CGC for ease of reference for investors.

Wording of the UK Corporate Governance Statement 2023

‘Executive Board and Supervisory Board declare pursuant to DTR 7.2 and LR 9.8.7R:

Throughout the reporting period,  AG has complied with the provisions of the UK Corporate Governance Code in the version of July 2018, including its main principles, except as set out and explained below. Further information on compliance with the UK Corporate Governance Code can be found in various parts of the Annual Report.’

Place of publication:

www.tuigroup.com/en-en/investors/corporate-governance

Dialogue with shareholders (Provision 3)

It is still not widespread practice in German companies for Supervisory Board committee chairs to make themselves available for meetings with shareholders. The German Corporate Governance Code stipulates in the Suggestion A.3 that the Chairman of the Supervisory Board should be available – within reasonable limits – to discuss Supervisory Board-related issues with investors.

The table below provides an overview of all appointments of the Executive Board with shareholders, in some of which also employees of Investor Relations participated.

Dialogue with shareholders

Date

Meeting

Participants

December 2022

FY22 Results Presentation, London

SE, MK

Roadshow UK, virtual

SE, MK

January 2023

Commerzbank  ODDO BHF German Investment Seminar, New York City

MK

UniCredit / Kepler Cheuvreux 22nd German Corporate Conference, Frankfurt

MK

February 2023

FY23 Q1 Results Presentation, virtual

SE, MK

Annual General Meeting, virtual

SE, MK

March 2023

Capital Raise Roadshow, virtual

SE, MK

May 2023
 

FY23 Q2 / H1 Results Presentation, London

SE, MK

Roadshow UK, London

SE, MK

Roadshow Frankfurt, virtual

SE, MK

Roadshow Zurich, virtual

MK

June 2023

dbAccess German Corporate Conference, Frankfurt

MK

Roadshow Paris, virtual

MK

August 2023

FY23 Q3 / 9M Results Presentation, virtual

SE, MK

Stifel 7th Transportation, Business Services Leisure Conference, virtual

MK

September 2023

Morgan Stanley CFO Fireside Chat, virtual

MK

Berenberg Goldman Sachs Twelfth German Corporate Conference, Munich

MK

Bernstein’s 20th Pan European Annual Strategic Decisions Conference, London

SE

Key: Sebastian Ebel (SE), Mathias Kiep (MK)

The Supervisory Board receives feedback from the Chairman and Executive Board members following meetings with major shareholders or investors. Additionally, a monthly Investor Relations Report and event-driven assessments of brokers are forwarded to the Executive Board and the Supervisory Board. They contain updates on the share price development, analyses of the shareholder structure as well as purchases and sales of shares and feedback and assessments from investors. The Executive Board and the Supervisory Board consider that  AG lives up to the spirit and meaning of the UK CGC.

Independence of Supervisory Board members (Provision 10)

Under the UK CGC, the Board must identify in the annual report each non-executive director it considers to be ‘independent’ for the purposes of the UK CGC. Based on the responsibilities assigned to the Supervisory Board by the German Stock Corporation Act, the members of the Supervisory Board are considered to be non-executive directors for the purposes of the UK CGC. Under the UK CGC, persons are ‘independent’ if they are independent in character and judgement and if there are no relationships or circumstances which are likely to affect, or could appear to affect, their judgement.  AG does not, however, extend its independence disclosures to its 10 employee representatives on the Supervisory Board. Due to the number of employees, the Supervisory Board of  AG is subject to the German Co-Determination Act. Accordingly, the Supervisory Board of  AG consists of ten members who are elected by shareholders at the Annual General Meeting (the ‘Shareholder Representatives’) and ten members who represent the employees of  AG (the ‘Employee Representatives’). This differs from UK practice where only those board members representing major shareholders are typically referred to as ‘Shareholder Representatives’ and are not considered as independent under the UK CGC because of their link to a significant shareholder.

Assessment of the independence of the shareholder representatives

The Supervisory Board has determined that seven of its nine shareholder representatives (the Chairman is not taken into account according to the UK CGC) are independent for the purposes of the UK CGC. The shareholder representatives considered to be independent are: Ms Ingrid-Helen Arnold, Mr Christian Baier, Prof. Dr Edgar Ernst, Ms María Garaña Corces, Ms Janina Kugel, Ms Coline McConville and Ms Helena Murano. Additionally, the Chairman, Dr Dieter Zetsche, was independent on his re-election in 2019 and is still considered independent (Dr Dieter Zetsche also was independent when he was elected to the Supervisory Board in February 2018).

In its assessment, the Supervisory Board considered in particular the aspects set out below:

Prof. Dr Ernst has been a member of the Supervisory Board of  AG since 9 February 2011. According to the UK CGC, it is an indication of a lack of independence if a member has been on the Supervisory Board for more than nine years. According to the GCGC, it is an indication of a lack of independence from the Executive Board and the Company if a member has been on the Supervisory Board for more than twelve years. In view of this, the shareholder representatives on the Supervisory Board have taken a close look at how they assess Prof. Dr Ernst’s independence. In particular in view of Prof. Dr Ernst’s professional career, the shareholder representatives have come to the conclusion that Prof. Dr Ernst – also taking into account his membership on the Supervisory Board of  AG of over twelve years – provides as before the necessary critical distance from the Executive Board and the Company and therefore consider him to be independent. In addition, due to the personnel changes on  AG’s Executive Board, particularly on the position of the CFO, in recent years, Prof. Dr Ernst’s independence from the Executive Board is strengthened. Prof. Dr Ernst also ensures continuity in the proper performance of the tasks of the Audit Committee, which has also seen personnel changes in recent years. Prof. Dr Ernst has continually exhibited his critical distance from the Executive Board and the Company in the past, especially in his position as Chairman of the Audit Committee. Against this background, the Annual General Meeting 2021 has re-elected Prof. Dr Ernst with a large majority.

As of the balance sheet date, according to the UK CGC (and also the GCGC), Dr Jutta Dönges is qualified as non-independent. However, Dr Dönges will be assessed as independent by the Supervisory Board from 1 November 2023.

On 31 October 2022, Dr Jutta Dönges ceased her position as Managing Director of the Finance Agency of the Federal Republic of Germany (Finanzagentur GmbH der Bundesrepublik Deutschland). On 4 January 2021,  AG entered into a Framework Agreement with the Economic Stabilisation Fund (WSF) represented by Finance Agency GmbH regarding a silent participation of the WSF and further measures under the stabilisation package. Dr Dönges was nominated by the WSF for membership of the Supervisory Board of  AG and elected to the Supervisory Board by the shareholders with effect from the Annual General Meeting (AGM) 2021. On 27 April 2023,  AG repaid the WSF financial aid in full. In view of the above information, the Supervisory Board has come to the conclusion that the factors previously indicating the dependence of Dr Dönges no longer apply. However, as the Supervisory Board has decided to apply a one-year cooling-off period according to recommendation C.7 (paragraph 2, indent 2) of the GCGC in this case, Dr Dönges will only be assessed as independent from the Company and its Executive Board from 1 November 2023, i. e. after one year from the termination of her position as Managing Director of the Finance Agency of the Federal Republic of Germany. The Supervisory Board considers the shorter cooling-off period compared to the UK CGC (1 year according to the GCGC, 3 years according to the UK CGC to be appropriate.

At  AG, Mr Joan Trían Riu (Riu Hotels S. A., approx. 1.1 % of the voting rights as of 30 September 2023) is linked to a major shareholder. In this context, he is considered a non-independent under the UK CGC.

Assessment of the independence of employee representatives

Seven of the ten employee representatives of the Supervisory Board are elected by the employees of  Group entitled to vote. Three employee representatives are nominated by a German trade union.

Under the UK CGC, directors who are or have been employees of the Group in the last five years or who participate in the Group’s pension arrangements would generally not be considered independent. In the UK, directors with an employment relationship are normally current or former executives. By contrast, under German law, employee representatives of the Supervisory Board must be employees of the Group, and must be elected by the employees without any involvement of the Executive or Supervisory Boards. Furthermore, the employment contract of employee representatives may only be terminated in exceptional cases.

The employee representatives may also participate in Group pension schemes as is normal for employees and in their capacity as employees.

Trade union representatives are nominated and employed by the trade union but are still classified as employee representatives. They can only be removed from the Supervisory Board by their respective union and neither the Executive nor the Supervisory Board has any role in their appointment or removal.

Half the Board should be independent Non-executive Directors (Provision 11)

As mentioned above,  AG’s Supervisory Board consists of ten employee and ten shareholder representatives. As the employee representatives are not considered independent under the UK CGC,  AG’s Supervisory Board comprises seven (excluding the Chairman of the Supervisory Board) independent shareholder representatives.

Identification of Senior Independent Director (Provision 12)

Under German law and the GCGC, there is no concept of a ‘Senior Independent Director’. Instead, shareholders may raise any issues at the AGM. In this forum, the Executive Board and the Chairman of the Supervisory Board are available to address any issues and are legally obliged to provide adequate responses.

Outside the AGM, shareholders may approach the Executive Board, in particular the CEO or the CFO, or, for topics relating to Supervisory Board matters, the Chairman of the Supervisory Board or his Deputy. Mr Frank Jakobi, as employee representative, is Deputy Chairman of the Supervisory Board in accordance with the German Co-Determination Act.

Division of responsibilities – Chairman Chief Executive (Provision 14)

The separation of the roles of the Chairman of the Supervisory Board (Dr Dieter Zetsche) and the CEO (Mr Sebastian Ebel) is clearly defined under German law as part of the two-tier board structure. Therefore, no further division of their responsibilities as well as responsibilities of the Executive Board and the Supervisory Board is required or even possible. In addition, the division of responsibilities within the Executive Board and the Supervisory Board as well as its committees also results directly from legislation and the respective terms of reference. Therefore, the Executive Board and the Supervisory Board consider that  AG lives up to the spirit and meaning of the UK CGC.

Advice and service of the Company Secretary (Provision 16)

There is no specific role of Company Secretary in German companies. However, Executive and Supervisory Board members have access to the Board Office of  AG if they need any advice on all governance matters or other services. The Board Office acts as an interface in corporate matters for the Executive and Supervisory Board members and is responsible for ensuring that the requisite processes and procedures are in place governing all Executive and Supervisory Board meetings (i. e. preparation of agendas, minuting of meetings and ensuring compliance with German and UK law, as appropriate, and with recommendations for corporate governance). The Board Office also supports the Chairman of the Supervisory Board, the CEO, the CFO and the Chairmen of the Audit and the Strategy Committees. Executive and Supervisory Board members also have access to legal advice via the Group Director Legal, Compliance Board Office and via the Board Office. The Supervisory Board can also approach the Executive Board directly for specific advice on any matters. Accordingly, the Executive Board and the Supervisory Board consider that  AG lives up to the spirit and meaning of the UK CGC.

Nomination Committee – Composition and responsibilities (Provision 17)

The role of the Nomination Committee in a typical UK company is fulfilled in  AG by two Committees of the Supervisory Board:

Under the Terms of Reference for the Supervisory Board and its Committees (which are equivalent to the Terms of Reference of a British corporation) the Nomination Committee considers and proposes suitable candidates as shareholder representatives to the Supervisory Board for its election proposals to the AGM. The Presiding Committee determines the requirements and remuneration for any new appointments to the Executive Board and recommends suitable candidates to the Supervisory Board. On that basis, the Supervisory Board appoints Executive Board members. This approach is different from the UK where all director appointments are approved by shareholders at the AGM. Succession planning for management levels below Executive Board is carried out by the Executive Board.

However, as is common practice in Germany, at each AGM shareholders are asked to decide whether they approve the actions of the Executive Board and Supervisory Board members during the past financial year. Since the AGM 2015, in the light of UK practice,  AG has changed its procedure to allow a separate vote on each individual Executive Board and Supervisory Board member, as it is customary in the UK.

 AG intends to continue this practice. Accordingly, the Supervisory Board considers that  AG lives up to the spirit and meaning of the UK CGC to the extent practicable.

In addition to Prof. Dr Ernst, the Nomination Committee also consists of Dr Zetsche as Committee Chairman and Dr Dönges, who is considered non-independent until 30 October 2023. In this context, the majority of the members of the Nomination Committee are assessed by the Supervisory Board to be independent.

Annual re-election by shareholders at the AGM (Provision 18)

None of the Executive or Supervisory Board members is re-elected annually. However, as noted above, in light of the UK CGC and UK best practice,  AG voluntarily puts individual resolutions approving the actions of each Executive and Supervisory Board member to the AGM resolving on the annual financial statements for the previous year.  AG intends to continue this practice.

The end of appointment periods for Supervisory Board members are disclosed in the table from page 115.

Current curricula vitae of all Executive and Supervisory Board members are published at www.tuigroup.com/en-en/investors/corporate-governance.

Board performance evaluation (Principle L and Provision 21)

The performance of each individual Executive Board member is evaluated annually by the Supervisory Board for the annual performance-based remuneration. In this context, the Supervisory Board also reviews the individual member’s overall performance as part of the Executive Board. However, no external performance evaluation is done for the Executive Board.

The efficiency of the Supervisory Board is reviewed regularly, but not annually. Each Supervisory Board member can give feedback to the Chairman, the Deputy Chairman or the Supervisory Board as a whole as and when appropriate or required.

The last self-assessment was conducted internally at the end of September 2020. For this purpose, a questionnaire was distributed to all members, in which they could give their assessment of the effectiveness of the working methods of the Supervisory Board and its committees. The Presiding Committee and the Supervisory Board have subsequently dealt with the results and derived measures from them. These primarily concerned the work of the Supervisory Board, the organisation of the meetings and the main topics that the Supervisory Board dealt with in more detail. The next self-assessment is planned for the beginning of 2024 and is accompanied externally by the consulting company ECBE (European Center for Board Effectiveness GmbH) since September 2023. The Company is not aware of any other relationships between ECBE and the Company or its directors.

Nomination Committee – Section in the Annual Report (Provision 23)

For the activities of the Nomination Committee, see page 16 which is part of the Supervisory Board Chairman’s letter to shareholders. The succession planning approach is outlined on page 131. The policy on diversity and inclusion can be found on page 132. For evaluation of the performance of the Board, see above.

Composition of the Audit Committee (Provision 24)

Neither German law nor the German Corporate Governance Code stipulates that the Chairman of the Supervisory Board should not be a member of the Audit Committee and that the Audit Committee may only consist of independent members. The Audit Committee consists of Dr Zetsche as Chairman of the Supervisory Board and Dr Dönges, who is not considered to be independent until 30 October 2023.  AG therefore does not fully meet the requirements of the UK CGC, but is of the opinion that the current composition of the Audit Committee ensures reliable work based on experience.

Fair, balanced and understandable Annual Report Accounts (Provision 27)

In a German stock corporation the Executive Board is responsible for drafting the Annual Report Accounts (ARA). According to section 243 (2) of the German Commercial Act (HGB) the ARA must be clearly arranged and should present a realistic picture of the Company’s economic situation. This is equivalent to the UK Code requirement for the ARA to be fair, balanced and understandable. Although this assessment has not been delegated to the Audit Committee, the Executive Board is convinced that this ARA satisfies both requirements.

Established and operation of Remuneration Committee (Provision 32, 34 and 41)

In the German governance structure there is no separate Remuneration Committee. The remuneration of the Executive Board is under involvement of the employee representatives monitored and agreed by the Supervisory Board based on recommendations from the Presiding Committee, which is governed by the Supervisory Board Terms of Reference.

The remuneration of the members of the Supervisory Board and the members of the Supervisory Board Committees is governed by the Articles of Association as resolved on by the shareholders at the AGM.

See the Directors’ Remuneration Report from page 157 for full details on Executive and Supervisory Board member´s remuneration.

Policy for post-employment shareholding requirements (Provision 36)

Neither German law nor the German Corporate Governance Code requires the company to implement a policy for post-employment shareholding requirements. According to the remuneration system approved by the Annual General Meeting in 2021, no policy is provided for post-employment shareholding requirements.

Notice periods for Executive Directors (Provision 39)

In accordance with the customary practice in Germany members of the Executive Board are generally appointed for a term of three to five years. This is not yet fully in line with the UK CGC recommendation that notice periods or contract terms should be set at one year or less. However, the contracts include maximum limits on the amounts payable on termination.

See Remuneration Report from page 157.

Further information on Corporate Governance

Functioning of the Executive and Supervisory Boards

 AG is a company under German law. One of the fundamental principles of German stock corporation law is the dual management system involving two bodies, the Executive Board in charge of managing the company and the Supervisory Board in charge of monitoring the management of the company.  AG’s Executive Board and Supervisory Board cooperate closely and in a spirit of trust, with strict separation between the two bodies in terms of their membership and competences. Both bodies are obliged to ensure the continued existence of the Company and sustainable creation of added value in harmony with the principles of the social market economy.

 AG’s Executive Board comprised five members as at the closing date 30 September 2023. The Executive Board is responsible for managing the Company’s business operations in the interests of the Company. The Executive Board works on the basis of terms of reference issued by the Supervisory Board. The allocation of functions and responsibilities to individual Board members is presented in a separate section.

For functions, see tables ‘Supervisory Board and Executive Board’ on page 115 et seq.

In accordance with the law and the Articles of Association, the Supervisory Board had 20 members at the balance sheet date, i. e. 30 September 2023. As the oversight body, the Supervisory Board provided on-going advice and supervision for the Executive Board in managing the Company in financial year 2023, as required by the law, the Articles of Association and its own Terms of Reference. The Supervisory Board is involved in strategic and planning decisions and all decisions of fundamental importance to the Company. When the Executive Board takes decisions on major transactions, such as the annual budget, major acquisitions or divestments, it is required by its terms of reference to seek the approval of the Supervisory Board. The Chairman of the Supervisory Board coordinates the work in the Supervisory Board, chairs its meetings and represents the concerns of the body externally. The Supervisory Board and the Audit Committee have adopted terms of reference for their own work. The Terms of Reference of the Supervisory Board are available on the company’s website.

For further details, please refer to the Report of the Supervisory Board on page 11.

 AG has taken out a D insurance policy for all members of the Executive Board and Supervisory Board, providing for a deductible for Executive Board members in accordance with the statutory requirements of the German Stock Corporation Act. The deductible amounts to 10 % of the loss up to the amount of one and a half times the fixed annual compensation.

Competence Profile and the Qualification Matrix of the Supervisory Board

 AG falls within the scope of the German Industrial Co-Determination Act (MitbestG). The Supervisory Board is therefore composed of an equal number of shareholder representatives and employee representatives. Employee representatives within the meaning of the Act include a senior manager (section 5 (3) of the German Works Constitution Act) and three trade union representatives. In financial year 2022, the Supervisory Board updated its competence profile for the composition of the entire body.

The competence profile of the Supervisory Board is published at https://www.tuigroup.com/damfiles/default/tuigroup-15/de/ueber-uns/management/Kompetenzprofil/Kompetenzprofil_V03-13-12-2022_EN-FINAL.pdf-473db0556f8dff912a59b1b37696a1df.pdf.

Qualification Matrix of the Supervisory Board

The following individualized qualification matrix is based on the targets for the composition of the Supervisory Board. The competences shown are based on a self-assessment by the Supervisory Board members. Competence is deemed to exist if at least basic knowledge is available and thus the ability to understand the relevant facts well and to make informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the context of the activity as a supervisory board member, or the further training measures regularly attended by all Supervisory Board members.

Individualised qualification matrix of the Supervisory Board of  AG (as of 30 September 2023)

 

Dr Dieter Zetsche

Frank
Jakobi

Ingrid-Helen
Arnold

Sonja
Austermühle

Christian
Baier

Andreas
Barczewski

Peter
Bremme

Dr Jutta
Dönges

Prof. Dr 
Edgar Ernst

Wolfgang
Flintermann


Membership

 

 

 

 

 

 

 

 

 

 

First appointment

2018

2007

2020

2022

2022

2006

2014

2021

2011

2016

Current appointment until

2027

2026

2024

2026

2027

2026

2026

2025

2025

2026

Duration of membership (in years, as of 30.9.2023)

5

16

3

1

1

17

9

2

12

7

Position

Chairman

Deputy Chairman

SHR

ER

SHR

ER

ER

SHR

SHR

ER

Committee membership:

 

 

 

 

 

 

 

 

 

 

Presiding Committee

yes

yes

 

 

 

 

yes

yes

yes

 

Audit Committee

yes

yes

 

 

yes

 

 

yes

yes

 

Nomination Committee

yes

 

 

 

 

 

 

yes

yes

 

Diversity

 

 

 

 

 

 

 

 

 

 

Gender

m

m

f

f

m

m

m

f

m

m

Birth year

5.5.1953

18.2.1962

5.10.1968

27.2.1978

6.11.1976

15.8.1967

15.3.1960

9.5.1973

10.1.1952

4.12.1969

Age (on 30.9.2023)

70

61

54

45

46

56

63

50

71

53

Nationality

German

German

German

German

German

German

German

German

German

German

International experience

yes

no

yes

no

yes

yes

yes

yes

yes

yes

Personal qualification

 

 

 

 

 

 

 

 

 

 

Independence 1

yes / yes

N / A

yes / yes

N / A

yes / yes

N / A

N / A

no / no3

yes / yes

N / A

No overboarding 2

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

Integrity, commitment, engagement

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

Professional qualification

 

 

 

 

 

 

 

 

 

 

1. Tourism

 

 

 

 

 

 

 

 

 

 

2. Strategy, innovation

 

 

 

 

 

 

 

 

 

 

3. IT, digitalisation

 

 

 

 

 

 

 

 

 

 

4. Accounting, auditing, sustainability reporting

 

 

 

 

 

 

 

 

 

 

5. Auditing

 

 

 

 

 

 

 

 

 

 

6. Sustainability

 

 

 

 

 

 

 

 

 

 

7. Capital market

 

 

 

 

 

 

 

 

 

 

8. Risk management

 

 

 

 

 

 

 

 

 

 

9. Internal control system

 

 

 

 

 

 

 

 

 

 

10. Compliance

 

 

 

 

 

 

 

 

 

 

11. Human resources

 

 

 

 

 

 

 

 

 

 

12. Sustainability

 

 

 

 

 

 

 

 

 

 

Table continues on next page

1 In accordance with the GCGC and the UK Code, based on the assessment of the shareholder representatives on
 AG’s Supervisory Board

2 Within the meaning of Recommendation C.4 and C.5 of the GCGC

3 Will be assessed as independent as from 1 November 2023

Individualised qualification matrix of the Supervisory Board of  AG (as of 30 September 2023)

 

María Garaña
Corces

Stefan Heinemann

Janina
Kugel

Coline
McConville

Helena
Murano

Mark
Muratovic

Anette
Strempel

Continued from previous page

Joan
Trían Riu

Tanja
Viehl

Stefan
Weinhofer


Membership

 

 

 

 

 

 

 

 

 

 

First appointment

2020

2020

2021

2014

2022

2021

2009

2019

2021

2016

Current appointment until

2024

2026

2025

2024

2027

2026

2026

2024

2026

2026

Duration of membership (in years, as of 30.9.2023)

3

3

2

8

1

2

14

4

2

7

Position

SHR

ER

SHR

SHR

SHR

ER

ER

SHR

ER

ER

Committee membership:

 

 

 

 

 

 

 

 

 

 

Presiding Committee

 

 

 

 

 

 

yes

 

 

 

Audit Committee

 

yes

 

 

 

yes

 

 

 

yes

Nomination Committee

 

 

 

 

 

 

 

 

 

 

Diversity

 

 

 

 

 

 

 

 

 

 

Gender

f

m

f

f

f

m

f

m

f

m

Birth year

4.3.1970

14.4.1979

12.1.1970

21.7.1964

12.7.1966

29.6.1973

28.11.1966

10.7.1983

24.3.1986

31.8.1974

Age (on 30.9.2023)

53

44

53

59

57

50

56

40

37

49

Nationality

Spanish

German

German

Australian

Spanish

German

German

Spanish

German

Austrian

International experience

yes

yes

yes

yes

yes

yes

no

yes

yes

yes

Personal qualification

 

 

 

 

 

 

 

 

 

 

Independence1

yes / yes

N / A

yes / yes

yes / yes

yes / yes

N / A

N / A

no / no

N / A

N / A

No overboarding2

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

Integrity, commitment, engagement

yes

yes

yes

yes

yes

yes

yes

yes

yes

yes

Professional qualification

 

 

 

 

 

 

 

 

 

 

1. Tourism

 

 

 

 

 

 

 

 

 

 

2. Strategy, innovation

 

 

 

 

 

 

 

 

 

 

3. IT, digitalisation

 

 

 

 

 

 

 

 

 

 

4. Accounting, auditing, sustainability reporting

 

 

 

 

 

 

 

 

 

 

5. Auditing

 

 

 

 

 

 

 

 

 

 

6. Sustainability

 

 

 

 

 

 

 

 

 

 

7. Capital market

 

 

 

 

 

 

 

 

 

 

8. Risk management

 

 

 

 

 

 

 

 

 

 

9. Internal control system

 

 

 

 

 

 

 

 

 

 

10. Compliance

 

 

 

 

 

 

 

 

 

 

11. Human resources

 

 

 

 

 

 

 

 

 

 

12. Sustainability

 

 

 

 

 

 

 

 

 

 

1 In accordance with the GCGC and the UK Code, based on the assessment of the shareholder representatives on
 AG’s Supervisory Board

2 Within the meaning of Recommendation C.4 and C.5 of the GCGC

3 Will be assessed as independent as from 1 November 2023

Independence of the Supervisory Board members

As of the balance sheet date, the Supervisory Board on the shareholder side has eight independent members according to their assessment. The names of these members are listed in the qualification matrix. Further information on the aspects taken into account in the assessment of independence can be found on page 121.

The company has no controlling shareholder.

Members of TUI AG’s Audit Committee with expertise in accounting and auditing (Recommendation D.3 of the GCGC)

Prof. Dr Edgar Ernst has, among other things, expertise in the field of accounting and in the field of auditing due to his activities as Chief Financial Officer of Deutsche Post AG, as President of the German Financial Reporting Enforcement Panel and due to his memberships in domestic supervisory boards. Further information, in particular on his activities in these areas, can be found in his curriculum vitae on the Company’s website (https://www.tuigroup.com/damfiles/default/tuigroup-15/de/ueber-uns/management/lebenslaeufe-de0/
lebenslaufe-de-neu/aufsichtsrat-de-neu/Ernst_Edgar-Lebenslauf-de_en/Ernst_SB_Curriculum-Vitae_
04.10.2023.pdf-af2cdbb09cda997cc2549359db92a68f.pdf).

His expertise in the field of accounting also includes, in particular, knowledge and experience in the application of accounting principles and internal control and risk management systems. His expertise in the field of auditing also includes, in particular, knowledge and experience in auditing of financial statements. Accounting and auditing also include sustainability reporting and its auditing.

With regard to the Chairman of the Audit Committee, Prof. Dr Edgar Ernst, the Supervisory Board is of the opinion that he is independent from the Company and the Executive Board (for the independence of the other members of the Audit Committee, see page 121).

Mr Christian Baier has expertise in the field of accounting and in the field of auditing due to his professional career and in particular due to his function as Chief Financial Officer of Metro AG (until July 2023). Further information, in particular on his activities in these areas, can be found in his curriculum vitae on the Company’s website (https://www.tuigroup.com/damfiles/default/tuigroup-15/en/about-us/management/lebenslauefe-
en/aufsichtsrat-en/Baier_SB_Curriculum-Vitae_31.05.2022.pdf-e56d4eedf2399c6c8f58ca8cb0854609.pdf).

His expertise in the field of accounting also includes, in particular, knowledge and experience in the application of accounting principles and internal control and risk management systems. His expertise in the field of auditing also includes, in particular, knowledge and experience in the auditing of financial statements.

Since Metro AG has also been publishing a non-financial statement for several years, which is prepared taking into account the Global Reporting Initiative (GRI) standards on sustainability reporting and the UN Global Compact, his expertise in the field of auditing also includes sustainability reporting and its audit.

Dr Jutta Dönges has expertise in the field of accounting and in the field of auditing due to her professional career and in particular because of her function as CFO at Uniper SE as well as managing director of the Federal Republic of Germany – Finance Agency GmbH (until 31 October 2022) as well as due to her several years of membership in domestic supervisory boards. Further information, in particular on her activities in these areas, can be found in her curriculum vitae on the Company’s website (https://www.tuigroup.com/damfiles/default/tuigroup-15/en/about-us/management/lebenslaufe-en-neu/aufsichtsrat-en-neu/Do-nges_SB_Curriculum-Vitae_05.12.2022.pdf-70e9299c9ba0a333f8c6452cb23ad30d.pdf).

Her expertise in the field of accounting also includes, in particular, knowledge and experience in the application of accounting principles and internal control and risk management systems. Her expertise in the field of auditing includes, in particular, knowledge and experience in the auditing of financial statements. This includes sustainability reporting and its audit, whereby this is oriented, among other things, to the standards of the Global Reporting Initiative (GRI).

Training and professional development measures

The members of the Supervisory Board take responsibility for undertaking any training or professional development measures necessary to fulfil their duties, for example on issues of corporate governance or changes in the legal framework and they receive support in this respect from the company. The company regularly informs its members about current changes in the legislation as well as about relevant topics relating to the company. New members of the Supervisory Board are given the opportunity to be introduced in detail to key issues of the Supervisory Board as part of the onboarding programme. In addition, they have meetings with members of the Executive Board in order to receive further information on their respective areas of responsibility.

Conflicts of interest

Executive and Supervisory Board members are bound to observe the  AG’s best interests. In addition, Executive Board members are subject to comprehensive non-compete clauses throughout the duration of their appointment. In the completed financial year 2023, there were no conflicts of interest requiring disclosure to the Chairman of the Supervisory Board or the Executive Board. None of the Executive Board or Supervisory Board members have a board role or a consultancy contract with one of TUI’s competitors.

As a precautionary measure, Mr Joan Trían Riu abstained from the vote of the Supervisory Board in its meeting of 4 July 2023 on the resolution to establish a joint venture with the Riu Family.

Moreover, no current member of the Executive Board has been appointed and no member of the Supervisory Board has been elected pursuant to any arrangement or understanding with major shareholders, customers, suppliers or others. There are no family relationships between any current members of the Executive Board or Supervisory Board.

Specifications pursuant to sections 76 (3a) and (4), 96 (2), 111 (5) of the German Stock Corporation Act

45 % of the Supervisory Board members were women and 55 % were men at the balance sheet date. The Supervisory Board was therefore compliant with section 96 (2) sentence 1 of the German Stock Corporation Act. Neither the shareholder nor the employee representatives of the Supervisory Board have objected with regard to overall compliance in accordance with section 96 (2) sentence 2 of the German Stock Corporation Act.

In August 2021, the Second Management Positions Act – FüPoG II – came into force. According to this law, at least one woman and at least one man must be a member of the Executive Board of a listed company with equal co-determination and with more than three members on the Executive Board. The company has already complied with this requirement in the reporting period with the membership of Ms Sybille Reiss.

The Executive Board resolved, in line with section 76 (4) of the German Stock Corporation Act, that women should account for 25 % of executives at the level immediately below the Executive Board and 30 % at the second level below the Executive Board. The cut-off date for both was 30 September 2023. For this reason,  AG has implemented various measures aimed at increasing the proportion of women on a long-term and sustainable basis over the past years. This includes, among other things, the promotion of women in talent programmes and specifically addressing them in the recruitment process. In addition, at least one female should be on the shortlist in the recruitment process for positions in the Senior Leadership Team. Despite all the measures taken, the suitability and qualification of candidates for filling vacant positions are still of primary importance. With a 30 % proportion of women in the second management level, these measures are already having an effect and have led to the target for FY23 being met. The target of 25 % in the first management level below the Executive Board was not achieved at 14 %. As a new target for the period up to 30 September 2026, the Executive Board has decided that the proportion of women in the first management level below the Executive Board should now be 30 % instead of the previous 25 % and that the proportion of women in the second management level below the Executive Board should remain at 30 %.

Shareholders and Annual General Meeting

 AG shareholders exercise their co-determination and monitoring rights at the AGM, which takes place at least once a year. The AGM takes decisions on all statutory matters, and these are binding on all shareholders and the Company. For voting on resolutions, each share confers one vote.

All shareholders registering in due time are entitled to participate in the AGM. Shareholders who are not able to attend the AGM in person are entitled to have their voting rights exercised by a shareholder association, one of the representatives provided by  AG and acting on the shareholders’ behalf in accordance with their instructions, or some other proxy of their own choosing. Shareholders also have the opportunity of authorising the representative provided by  AG via the web or by postal vote in the run-up to the AGM. Shareholders can, moreover, register for electronic dispatch of the AGM documents.

The invitation to the AGM and the reports and information required for voting are published in accordance with the provisions of the German Stock Corporation Act and provided in German and English on  AG’s website. During the AGM, the presentations by the Chairman of the Supervisory Board and the Executive Board members can be followed live over the Internet.

Statement pursuant to Provision 4 UK CGC

At the AGM of  AG on 14 February 2023, no resolution received 20 % or more against votes.

Risk management

Good corporate governance entails the responsible handling of commercial risks. The Executive Board of  AG and the management of the  Group have comprehensive general and company-specific reporting and monitoring systems available to identify, assess and manage these risks. These systems are continually developed, adjusted to match changes in overall conditions and reviewed by the auditors. The Executive Board regularly informs the Supervisory Board about existing risks and changes to these risks. The Audit Committee deals in particular with monitoring the accounting process, including reporting, the effectiveness of the internal control and risk management systems and the internal auditing system, compliance and audit of the annual financial statements. The chairman of the Audit Committee reports to the Supervisory Board on the work of the committee at the next Supervisory Board meeting at the latest.

More detailed information about risk management in the  Group is presented in the Risk Report. It also contains the report on the accounting-related internal control and risk management system required in accordance with the German Commercial Code (sections 289 (5), 315 (2) no. 5 HGB).

Risk Report see page 35.

Transparency

 provides immediate, regular and up-to-date information about the Group’s economic situation and new developments to capital market participants and the interested public. The Annual Report and the Interim Reports are published within the applicable timeframes. The Company publishes press releases and ad hoc announcements, if required, on topical events and any new developments. Moreover, the company website at www.tuigroup.com provides comprehensive information on  Group and the  share.

The scheduled dates for the principal regular events and publications – such as the AGM, Annual Report and Interim Reports – are set out in a financial calendar. The calendar is published well in advance and made permanently accessible to the public on  AG’s website.

Directors’ dealings

The Company was informed by Mr Andreas Barczewski, Mr David Burling, Mr Sebastian Ebel, Mr Wolfgang Flintermann, Mr Stefan Heinemann, Mr Frank Jakobi, Mr Mathias Kiep, Mr Peter Krueger, Ms Sybille Reiss, Ms Anette Strempel und Dr Dieter Zetsche of notifiable purchase and sale transactions of  AG shares or related financial instruments by directors (directors’ dealings or managers’ transactions) concerning financial year 2023. Details are provided on the Company’s website. It should be noted that there are different thresholds for reporting requirements in Germany and the UK of 20,000 € (Germany) and 5,000 € (UK).

Purchase and sales transactions by members of the boards are governed by the Group Manual Share Dealings by Restricted Persons, approved by the Executive Board and the Supervisory Board, alongside corresponding statutory provisions. The Group Manual Share Dealings by Restricted Persons stipulates above all an obligation to receive a clearance to deal for transactions with  AG’s financial instruments.

Accounting and auditing

 AG prepares its consolidated financial statements and consolidated interim financial statements in accordance with the provisions of the International Financial Reporting Standards (IFRS) as applicable in the European Union. The statutory annual financial statements of  AG, which form the basis for the dividend payment, are prepared in accordance with the German Commercial Code (HGB). The consolidated financial statements are prepared by the Executive Board, audited by the auditors and approved by the Supervisory Board. The interim report is discussed between the Audit Committee and the Executive Board prior to publication. The consolidated financial statements and the financial statements of  AG were audited by Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hanover, the auditors elected by the 2023 Annual General Meeting. The audit was based on German auditing rules, taking account of the generally accepted auditing standards issued by the German Auditors’ Institute as well as the International Standards on Auditing. It also covered the risk detection system. A review pursuant to Listing Rule 9.8.10 R (1) and (2) was carried out.

See audit opinion by the auditors on page 288.

The condensed consolidated interim financial statement and management report as of 31 March 2023 was reviewed by the auditors. In addition, a contractual agreement was concluded with the auditors to the effect that the auditors will immediately inform the Supervisory Board or the Audit Committee about all findings and issues of importance for its tasks which come to the knowledge of the auditors during the performance of the audit. Furthermore, it was agreed with the auditors that they inform the Supervisory Board or the Audit Committee and note in the audit report if during the performance of the audit, any facts were identified that indicate an inaccuracy in the Declaration of Compliance regarding the recommendations of the GCGC issued by the Executive Board and Supervisory Board. There were no grounds to provide such information in the framework of the audit of financial year 2023.

Engagement with our stakeholders

Under the UK CGC,  AG is required to provide information on how it complies with the requirements of section 172 of the Companies Act 2006, including how it takes into account the interests of key stakeholders in discussions and decisions.

The Company considers key stakeholders to be customers, employees, shareholders and other financial stakeholders, suppliers and Non-governmental organisations.

Further details on how the company engages with particular stakeholders can be found on the following pages of this Annual Report:

  • Customers – see page 98
  • Employees – see page 91
  • Shareholders and other financial stakeholders – see pages 113 and 188
  • Suppliers – see page 84
  • Non-governmental organisations – see page 90

Diversity concepts for the composition of the Executive Board and Supervisory Boards

Diversity concept for the composition of the Executive Board

The diversity concept for the composition of the Executive Board takes into account the following diversity aspects:

(a) Age:

As a rule, the employment contracts of members of the Executive Board end once the standard retirement age for statutory retirement insurance has been reached (currently 67).

(b) Gender:

The Executive Board should include one woman.

(c) Educational / professional background:

The necessity for a variety of educational and professional backgrounds already arises from the obligation to manage the company in accordance with the law, the company’s articles of association and its terms of reference. In addition, the Executive Board as a whole, through its individual members, should possess the following essential background qualities:

  • management experience, some of which ideally has been acquired abroad, and intercultural competence for successful management and motivation of global teams;
  • in-depth practical experience in stakeholder dialogue (i. e. with managers and employees, including their representative bodies, with shareholders and the public);
  • experience in IT management and an understanding of digitalisation of vertically integrated value chains;
  • profound experience in value-driven, KPI-based strategy development and implementation and corporate governance;
  • profound knowledge of the intricacies and requirements of the capital market (shareholder management);
  • knowledge of accounting and financial management (controlling, financing);
  • in-depth understanding of and experience with change management.

Goals of the diversity concept for the composition of the Executive Board

The standard retirement age on the one hand enables incumbent members of the Executive Board to contribute their professional and life experience for the good of the company for as long a time as possible. On the other hand, adherence to the standard retirement age is intended to promote regular rejuvenation of the board.

Inclusion of both genders in Executive Board work is on the one hand an expression of the conviction of the Supervisory Board that mixed-gender teams lead to the same or better outcomes as teams with representation from only one gender. But it is also the logical continuation of the gender diversity measures implemented by the Executive Board within the wider company, which aim to increase the proportion of women in leadership roles. These measures are only to be applied and implemented in a credible manner if the Executive Board does not consist solely of male members (‘proof of concept’).

A variety of professional and educational backgrounds is necessary on the one hand to properly address the tasks and obligations of the law, the company’s articles of association and its terms of reference. In addition, it is the view of the Supervisory Board that they are a guarantee of ensuring diverse perspectives on the challenges and associated approaches to overcoming them that are faced in the day-to-day work of the company. International management experience is of particular importance. Without such skill and experience with integrating, leading and motivating global teams, it is impossible to take into consideration the different cultural backgrounds of managerial staff and the workforce as a whole.

Long-term succession planning for the Executive Board

A key aspect of applying the diversity concept to the composition of the Executive Board is inclusion of the Supervisory Board within the corporate organisation, as is prescribed by law, the company’s articles of association and its terms of reference. This ensures the Supervisory Board is familiar with the strategic, economic and actual situation of the company.

In its role as supervisor of the management of the Executive Board, the Supervisory Board of  AG makes decisions on the allocation of business responsibilities within the Executive Board, appointments to the Executive Board and thus also workforce and succession planning within the Executive Board in line with recommendation B.2 of the GCGC. As part of that workforce and succession planning, the Presiding Committee or the Supervisory Board itself regularly meets with the Executive Board or its members to discuss suitable internal succession candidates for Executive Board positions (short-term, medium-term and long-term scenarios). The contract terms and renewal options for current Executive Board members are discussed, as well as possible successors. As part of these Supervisory Board and Committee meetings, or in preparation for them, members of the Supervisory Board have the opportunity to meet up with so-called high potentials within the Group in a professional and personal setting. The Presiding Committee and Supervisory Board make their own deliberations about these matters and also discuss them in the absence of the Executive Board. This includes evaluation and possible inclusion of external candidates for Executive Board positions in the selection process. In all of these deliberations, the above-mentioned diversity aspects of Executive Board appointments play a part in the decision-making of the Supervisory Board. Long-term succession planning is primarily oriented towards the corporate strategy and takes into account the diversity concept defined by the Supervisory Board. The Supervisory Board also asks the Executive Board to report on current progress and implementation of family-friendly concepts and concrete measures for promotion of women (e. g. at least one woman on the final shortlist for any new or replacement appointments to roles within the senior leadership team).

Results achieved in financial year 2023

With effect from 1 October 2022, Mr Sebastian Ebel was appointed to succeed Mr Friedrich Joussen as Chairman of the Executive Board of  AG. In this connection, Mr Mathias Kiep was appointed as a member of the Executive Board as successor to Mr Ebel with effect from 1 October 2022. Mr Kiep took over the Finance Ressort. In the opinion of the Supervisory Board, Mr Ebel and Mr Kiep contribute to the diversity of the Executive Board through their professional careers, their wide-ranging international experience and respective professional backgrounds.

Mr Frank Rosenberger, Executive Board Member for IT and Future Markets, has decided to leave the Group on 31 October 2022. Mr Rosenberger had been with  since 2015 and had been responsible for Future Markets and the Group’s digitalisation on the company’s Executive Board since 2017. Under his responsibility, a global system for  Tour operators was launched and the digitalisation of the company was significantly advanced.

The reduction in the number of Executive Board members also required a reorganisation of responsibilities in the management team. The CIO with his central IT functions of the  Group has been located in the direct area of responsibility of CEO Sebastian Ebel. The other IT units are interlinked with the operational areas to enable fast and efficient implementation of the digitalisation strategy. Peter Krueger is fully responsible for the Holiday Experiences segment at Executive Board level.

The current composition of the Executive Board meets all the requirements of the diversity concept. The Executive Board members cover a comprehensive range of knowledge and experience as well as educational and professional backgrounds and have international experience. In addition, with Ms Sybille Reiss as a member of the Executive Board, the legal requirement that at least one woman should be a member of the Executive Board was met in the reporting period. Different age groups are represented on the Executive Board. More information on all members of the Executive Board can be found in the CVs on the Company’s website and in the communication on the occasion of the appointment decisions of the Supervisory Board.

Diversity concept for the composition of the Supervisory Board

The Supervisory Board revised and updated objectives for its composition in addition to the competence profile in the 2023 financial year. In accordance with the applicable legal requirements, the Supervisory Board of  AG shall be composed in such a way that its members as a whole have the knowledge and professional experience required to properly perform their duties. In this context, sufficient diversity shall be ensured. This includes in particular cultural and ethnic origin, gender, nationality and professional and life experience as well as age. A gender quota of 30 % is to be guaranteed. The standard age limit for election to the Supervisory Board is 68 years.

Goals of the diversity concept for the composition of the Supervisory Board

The goals set with regard to the composition of the Supervisory Board reflect the demands placed on the advisory and supervisory body to perform its task in a globally operating company with a challenging competitive environment. For example, multicultural and international experience is just as important as knowledge of the value and success drivers of the sector. In all of this, the impact and cultural features of the so-called stakeholder approach of a social market economy must be taken into account, which is ensured by the codetermination of employee representatives on the Supervisory Board as well. For the shareholder side on the Supervisory Board, the Nomination Committee also ensures that mandatory and voluntary targets are met with regard to the composition of the Supervisory Board. As part of the regularly conducted efficiency reviews, the Supervisory Board also undergoes a self-assessment, which includes aspects of its composition.

Results achieved in financial year 2023

The Supervisory Board is of the opinion that it meets the composition targets and fills out the competence profile and the diversity concept. The status of implementation of the competence profile and composition targets has been published in the form of a qualification matrix. The competence profile of  AG’s Supervisory Board is published at www.tuigroup.com/en-en/investors/corporate-governance/management. The qualification matrix can be found at page 126.

The diversity of professional and educational backgrounds of the individual members of the board is also evident from the CVs of Supervisory Board members published on the corporate website.

Diversity in the Executive Board and Supervisory Board as well as in the Executive Management of TUI AG

Pursuant to LR 9.8.6 R (9) of the FCA Listing Rules, the Executive Board and the Supervisory Board confirm that, as at 30 September 2023, the Company has partially met the targets set out in this provision by at least 40 % of the members of the Executive Board and the Supervisory Board were women and at least one member of the Executive Board or the Supervisory Board was from an ethnic minority. The Company did not meet the target in relation to the requirement that at least one of the named executive positions (the Chairman of the Supervisory Board, the Chief Executive Officer, the Senior Independent Director or the Chief Financial Officer) should be held by a woman. The Company recognises the importance of diversity and its long-term goal is to further improve diversity on its boards. This is taken into account primarily in the context of succession planning for the boards.

Since 30 September 2023, there have been no changes in the Executive Board as well as the Supervisory Board that would affect the company’s ability to achieve the two objectives mentioned above.

Data on gender and ethnicity was collected directly from board members. Members were asked to indicate their ethnicity using the categories in the table below.

In accordance with LR 9.8.6 R (10) of the FCA Listing Rules, the following table contains data on the ethnic origin and gender of the members of the Executive Board and the Supervisory Board as well as the Executive Management of the Company as of 30 September 2023.

Gender and ethnic background of board members

 

Number of board members

Percentage of the board

Number of senior positions on the board (CEO, CFO, SID and Chair)

Number in executive management

Percentage of executive management

 

 

 

 

 

 

Gender

 

 

 

 

 

Men

15

60 %

3

7

100 %

Women

10

40 %

0

0

0 %

Not specified / prefer not to say

Ethnic Background

 

 

 

 

 

White British or other White
(including minority-white groups)

24

96 %

3

7

100 %

Mixed / Multiple Ethnic Groups

Asian / Asian British

Black / African / Caribbean / Black British

1

4 %

Other ethnic group, including Arab

Not specified / prefer not to say

Description of the main features of the internal control and risk management system

 Group’s internal control system comprises all systematically designed rules within the Group that serve to methodically manage operational, financial and compliance-related risks. These rules may result from published statements or take the form of policies, work instructions, process descriptions or risk control matrices. A Group-wide framework is in place for the creation, approval, revision and communication of these rules. With its Integrity Passport,  Group commits to implementing its Group-wide Code of Conduct that sets minimum standards and provides guidance on how to deal with ethical and legal challenges in day-to-day work, and provides orientation for conflict situations.

On that basis, the business units define an appropriate framework of processes and rules where necessary for the criticality of the process in question. These rules may vary from business unit to business unit as the process of processing the transactions involves different systems, workflows or volumes. For certain risks, addressed through a uniform Group framework,  has established central functions, operating as a ‘second line’ for their area, in order to create appropriate Group-wide standards and support or monitor implementation of these standards.

A Group function has also been established for the area of sustainability. For years,  Group has collected certain sustainability-related indicators for management and reporting purposes in the framework of separate sustainability reports or the non-financial statement. The methodologies used to gather this data have been published. These ensure uniform understanding and collection throughout the Group. In the period under review, a reporting software specifically designed for non-financial data points was implemented, further enhancing the maturity of the internal control system in this field.

To ensure that our businesses are scalable, almost all business processes are supported by IT solutions. Where possible and appropriate, we use the controls integrated in these applications or services. This offers greater security and efficiency in implementation compared with manual controls. The IT solutions themselves are protected by a Group-wide framework of general IT controls. The internal control system is completed by a set of manual process controls to prevent or detect errors.

We have a clear approach for identifying and mitigating information security risks.  undergoes external auditing, has an IT security risk insurance policy in place and provides a training and compliance programme. Additionally, the Audit Committee is updated on TUI’s risk position on a regular basis.

In the case of business processes, the respective process owners are responsible for the effectiveness of the controls put in place; in the case of Group-wide control frameworks, the respective second line is responsible. Depending on the risk assessment, they use a different degree of monitoring intensity.

As an independent third line, Internal Audit reviews business processes, including IT solutions, according to its own risk assessment and provides recommendations to enhance the effectiveness and efficiency of processes and controls.

The Supervisory Board of  AG, in particular the Audit Committee, is involved in  Group’s internal monitoring system with process-independent auditing activities.

Our Risk Report presents the key elements of our risk management system.

Details in our Risk Report, page 35.

The internal control system and the risk management system are dynamic systems that are continuously adapted in response to changes in the business model, the nature and scope of business transactions or responsibilities. As a result, there is potential for improvement in terms of both the appropriateness (lack of suitable controls) and the effectiveness (inadequate execution) of controls, both from the reviews carried out by the second line, from internal audit engagements, and from the audit activities of the external auditor. In addition, potential for improvement may also arise from compliance incidents. In our overall assessment of these management systems, we find that none of the potential improvements identified in the period under review speak against the appropriateness and effectiveness of the two management systems.

However, there can be no absolute certainty, despite the internal control and risk management systems in place, that the controls will detect every single process weakness or, in particular, that newly emerging material risks will always be immediately identified and effectively addressed.

Disclosure pursuant to UK Listing Rule LR 9.8.6

Task Force on Climate-related Financial Disclosures (TCFD)

Climate change is one of the greatest challenges of our time.  recognises the risk posed to its business by climate change from both physical changes in the climate and the transition to a low-carbon economy.  is committed to contributing to the transition and mitigating climate-related risks for its business. As a company listed in the Premium Segment of the Main Market of the London Stock Exchange,  is required pursuant to Listing Rule LR 9.8.6 to make disclosures in relation to the Recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). The TCFD provides a framework to improve the disclosure of consistent, comparable, reliable and clear climate-related financial information so that investors can make better capital allocation decisions in support of the transition to a low-carbon economy.

In financial year 2022,  aligned its climate-related disclosures with the TCFD Recommendations for the first time to communicate the potential effects of climate change on its business. The disclosure for financial year 2023 builds on our prior year disclosure and has been enhanced to better align with the TCFD Recommendations. We are committed to complying with the recommendations and recommended disclosures of the TCFD, taking into account the TCFD All Sector Guidance, and we consider the disclosures set out on the following pages to be consistent with these guidelines.

  • In financial year 2023,  conducted a climate scenario analysis to identify and analyse the potential impact of climate-related risks and opportunities on its business model, and assess the resilience of its strategy (TCFD Recommendations: Strategy a., b. and c.).
  • In financial year 2023,  embedded the identification, assessment and management of material individual climate-related risks into existing risk management processes (TCFD Recommendations: Risk Management a., b. and c.).
  • In 2023, TUI’s near-term science-based emissions reduction targets were published following the successful external validation by the Science Based Targets Initiative (SBTi). These targets are included in TUI’s 2023 TCFD report (TCFD Recommendations: Metrics and Targets c.) and  continues to disclose on its key climate-related metrics (TCFD Recommendations: Metrics and Targets b. and c.).

The following statement follows the structure of the TCFD Recommendations, covering Governance, Strategy, Risk Management, and Metrics and Targets. Our disclosures on these four thematic areas will continue to evolve and mature over time alongside our strategy and the evolution of the risks and opportunities themselves.

governance

 

 has a governance structure in place that ensures that sustainability issues, along with climate-related risks and opportunities, are assessed and actioned at all levels.

See page 82 for the governance structure in the Non-financial declaration.

 

TCFD Recommendation

 

TUI Approach

a) Describe the Board’s oversight
of climate-related risks and opportunities.

 

The Group Executive Committee (GEC) has ultimate oversight of climate-related issues and is responsible for reviewing climate-related risks and opportunities, strategy, measures, and target-setting. At the GEC level, the Group Chief Sustainability Officer (CSO) as a member of the GEC is responsible for reporting on sustainability and climate-related issues for TUI. The CSO informs the GEC on sustainability issues on a monthly basis. The Group sustainability Director regularly reports into the CSO, which is the most appropriate and direct line of reporting to raise climate-related issues to the highest level within the business. Moreover, the Executive Board (all being members of the GEC) also has the final oversight of the non-financial declaration that includes the climate / environmental strategy, organisation, management, measures and targets. By taking into the provided risk information, the Executive Board considers climate-related issues when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, and business plans as well as setting the organization’s performance objectives, monitoring implementation and performance, and overseeing major capital expenditures, acquisitions, and divestitures. The highest monitoring body in sustainable management is the Supervisory Board which oversees the work done by the Executive Board.

 

b) Describe management’s role in assessing and managing climate-related risks and opportunities.

 

The GEC manages TUI’s business strategically, sets the Group’s strategic direction and long-term objectives for sustainable development, and signs off the Group’s Sustainability Agenda. A team of experienced Sustainability professionals are working in close collaboration with senior management to ensure that TUI’s business and sustainability focus areas are aligned. The Group sustainability Director heads up the Group Sustainability team.

 

         

 

governance

TCFD Recommendation

 

TUI Approach

 

 


Our group sustainability team, led by the Group sustainability Director, is responsible for the implementation of the sustainability Agenda across  and along its supply chain. The GEC is regularly updated on our performance in delivering the Sustainability Agenda and tackling other key Sustainability issues. Regular meetings are also held with the Group Risk Oversight Committee (ROC) to review climate-related and Sustainability risks and discuss any changes, either internal or to the external environment, which affect the business exposure.

To incentivise management to achieve climate-related targets, KPIs are linked to monetary rewards.  operates a discretionary bonus scheme for senior and middle management. It is designed to reward employees in line with both financial performance and personal contribution to delivering successfully against our strategy.

 

 

 

 

 

 

STRATEGY

 

Climate change is an urgent global challenge that requires a strategic response. The tourism industry in which  operates faces significant impacts from climate change. As temperatures rise, the attractiveness of certain destinations will decline, and the biodiversity loss will make certain destinations less attractive. The sector also faces impacts of a more general nature: more cancellations from extreme weather-related events, increased risk of stranded assets, as well as changes in policy and customer preferences. Climate change also presents an opportunity for  – besides extending touristic seasons in summer destinations also to innovate in new types of tourism, to diversify to new regions, and to engage customers and other stakeholders along the business transformation process.

As part of our strategic and financial planning process, we have analysed various industry and macro trends to model the expected development of  and the tourism industry as a whole. We clearly see sustainability as a major trend, largely driven by climate-related market and policy risks (e. g., changing customer behavior, emissions-based taxes and fees, and increasing regulations for aircraft and cruise ships). In financial year 2023,  ’s 2030 emission reduction targets have been approved by the SBTi. Priorities and strategic directions from TUI’s Sustainability Agenda ‘People, Planet, Progress’ take into account current challenges, global scenarios, and regulatory developments such as the EU Green Deal. These priorities were built into our midterm strategic and financial plan. To better identify and assess the impact of climate change on our financial performance and business model, we have conducted a qualitative and quantitative climate risk assessment for the first time in financial year 2023.

Two scenarios were considered in the climate risk assessment:

  • A high emissions scenario to assess the impact of significant changes in the physical climate, which is based on the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway 8.5 (IPCC RCP8.5) and the International Energy Agency (IEA) Stated Policies Scenario. This is aligned with global warming of approximately 4.3°C by the year 2100.
  • A low emissions scenario to assess the impact of significant socioeconomic changes to achieve a low-carbon economy, which is based on IPCC RCP2.6 and the IEA Net Zero Scenario. This is aligned with global warming of approximately 1.5°C by the year 2100.

A number of assumptions underpin these scenarios regarding changes to the frequency and intensity of weather-related events, economic growth, technology development, and the development of energy and carbon prices.

The identified risks and opportunities across the different combinations of scenarios and time horizons were first assessed qualitatively to identify the most relevant climate-related risks and opportunities for TUI. Based on the results of this qualitative analysis, a number of risks and opportunities were then subject to more detailed analysis to better understand the potential financial impacts.

 

 

STRATEGY

TCFD Recommendation

 

TUI Approach

a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.

 

The following climate-related risks and opportunities have been identified by  over the short, medium and long term, where short term is defined as the period up to 2030 (aligned with TUI’s science-based targets), medium term as the period up to 2040, and long term as the period up to 2050 (when  aims to achieve net-zero emissions across our operations and supply chain). Climate-related impacts are divided into two categories:

  • Transition: Socioeconomic changes related to the transition to a low-carbon economy including policy, legal, technology and market changes.
  • Physical: Physical changes in the climate including event-driven (acute) changes such as storms, fires and floods, and long term (chronic) changes such as increased temperature.

Given the nature of TUI’s business model, most of the below listed risks and opportunities apply to TUIs business segments and geographies. Modest variations in their significance for each segment are described below.

 has undertaken a qualitative assessment of all below summarized climated related risks and opportunities. In additon,  has performed a high-level quantitative assessment for eight risks and opportunities. This assessment has shown the risks to be immaterial for financial planning, which was confirmed by a sensitivity analysis. Further information on the effect of climate-related risks on the useful lives and the measurement of assets can be found in the Notes, chapter ‘Key judgements, assumptions and estimates’, page 200 of this Annual Report.

 

 

 

 

 

 

Strategy

TCFD Recommendation

 

TUI Approach

b) Describe the impact of climate-related risks and opportunites on
our business, strategy, and financial planning.

 

TCFD Risk Type

 

Description

 

Impact

 

Management

 

Transition

 

 

 

 

 

 

Policy Legal

 

 

Increased costs due to the introduction of new, or extension of existing, carbon pricing mechanisms (including pass-through of higher costs by suppliers), and new energy and emissions regulations.

Increasing regulations and restrictions targeting the airline and cruise industry, leading to reduced revenue and / or stranded assets.

 

As an energy-intensive company, regulatory changes, such as to carbon pricing through emissions trading systems, emissions-based taxes and fees, and energy and emissions regulation, pose a significant cost risk in the short to medium term for TUI.

There is a risk for TUI’s airline and cruise operations of stricter regulations and restrictions related to energy and emissions in the short to medium term. Already today, there are operating restrictions at certain airports based on sustainability criteria. and the ban of non-sustainable fuel types while sailing in certain maritime areas.

 

  • TUI is committed to decarbonising its business, and has set ambitious near-term science-based emissions reduction targets validated by the SBTi.
  • To achieve these, TUI airlines procures state-of-the-art aircraft, implements operational efficiencies (including route optimisation), and will increase the use of SAF. TUI already has cooperation agreements in place to promote the production and supply of SAF.
  •  Cruises invests in energy efficiency at ship operations, fuel-saving route optimisation, shore power in ports and alternative fuels, such as sustainable biofuels, bio-LNG and green methanol. The three newbuilds coming into the fleet by 2026 will not use heavy fuel oil. Mein Schiff 7 will enter service in 2024 and will run on lower-emission marine diesel and be equipped with catalytic converters and a shore power connection. In addition, the ship will also be able to run on green methanol in the future. In 2024 and 2026, two ships will follow, which will be operated with LNG. LNG serves as a bridge technology until bio-LNG is available, which will be produced either from biogenic sources or synthetically from renewable energy.
  • TUI Hotels Resorts is focused on renewable energy and resource-saving operational practices to reduce hotel emissions as far as possible.

 

Technology

 

Costly or unavailable future fuels and technologies resulting in higher costs, or preventing further decarbonisation and compliance with regulations.

 

Although it is expected that future fuels will continue to gain momentum and that production capacity will dramatically increase in the short to medium term, there is a risk that demand will outpace supply resulting in low availability and inflated prices.

In the medium term, there is a risk that low carbon technologies are not available to support TUI’s path to net zero. Whilst there are trials e. g., in battery or fuel cell aircraft and ships, such technology might not be developed to a market stage.

 

 

Strategy

TCFD Recommendation

 

TUI Approach

 

 

TCFD Risk Type

 

Description

 

Impact

 

Management

 

Market

 

Decline of travellers due to shifts in consumer preferences and behaviour, and increasing negative public sentiment towards travel, resulting in loss
of revenue.

Decline of overall customer demand as the price for
our products will increase to reflect higher capital expenditures and operational expenses to offer carbon low products.

Difficulties in obtaining access to financing and increasing cost of capital due to the inability to reduce emissions in line with market expectations.

 

Market trends show tourism growth outstripping global GDP growth as it has for the last two decades, and customers prioritising spend on leisure tourism over other large purchases such as cars and houses. Nevertheless, there is a risk in the medium to long term that customers decide to travel less (or differently, for example moving away from air travel) for environmental reasons.

 as a market leader in Europe has significantly contributed to make leisure travel an affordable product for people with lower disposable income, e. g. families, retired persons, etc. Significant price increases for leisure product poses the risk that in the medium to long term such consumer group will not be able to afford our leisure travel products any more.

Increasingly policies and laws are being introduced that combat climate change, and institutional investors increasingly consider ESG to be part of their fiduciary duties. These investors might be more inclined to divest from  if the company does not take sufficient action on ESG issues in the medium and long term.

 

  • Managing both market and reputational risks depends on the successful implementation of our emissions reduction initiatives. Accordingly, we have roadmaps in place to deliver on our science-based targets.
  • Whilst the cost for flights is very likely to increase, all markets participants have to roll-over this ‘green inflation’. With our state-of the art efficienct fleet, it is likely that our cost increase is competitive. Further, the share of extra cost from low-carbon flying is lower in a package and hence we believe that we can effectively transfer cost additions.
  •  has set science-based emissions reduction targets for 2030 and a net zero target for 2050. TUI continues to notice a wide range of financiers due to  Group’s financial performance and is continuing to develop relationships with new sources of finance and monitor development of the market. TUI is in a continuing education process with lessors and the financial community to maintain confidence in the strategy.

 

 

 

 

 

 

Strategy

TCFD Recommendation

 

TUI Approach

 

 

TCFD Risk Type

 

Description

 

Impact

 

Management

 

 

Reputation

 

Failure to meet decarbonisation targets, negatively affecting TUI’s reputation with stakeholders.

 

There may be a reputational risk due to increased negative public sentiment on climate change if  is unable to meet its decarbonisation targets. This impact applies across all time horizons.

This risk may also have an impact on our ability to attract and retain talent.

 

 

 

 

 

 

 

 

 

 

Physical

 

 

 

 

 

 

 

 

Acute

 

Physical damage to assets and business disruption due to extreme weather-related events.

 

Unstable and more extreme weather conditions in certain regions might have a physical impact on our assets resulting in higher costs from property damage and business interruption, predominantly in our hotels  resorts segment. Higher insurance premiums for property damage and / or business interruption will be the consequence. This risk is mostly likely to be realised in the long-term as the effects of physical climate change become more profound.

 

  • This risk is managed at the asset-level.
  • We manage the overarching risk through insurance and a large and regional spread hotels resorts portfolio, providing diversifiying the risk of asset impairment.
  • We hold relatively short-duration lease contracts, enabling flexibility in case of changes in insurability.

 

 

 

 

Extreme weather events disrupting transport hubs, resulting in delays and cancellations, and increased costs.

 

Extreme weather events may disrupt the airport and port operations which  relies on, resulting in delays or cancellations.

Delays or cancellations are expected to result in additional costs including refunds, repatriation flights and hotel accommodation costs.

This risk is mostly likely to be realised in the medium and long term as the effects of physical climate change become more profound.

 

  • The risk of airport disruption was found to be low in the physical risk analysis. Nonetheless, TUI works closely with airports in case of disruption and will continue to evaluate the risk profile of its material airports.
  • Whilst docking is already considered a resilient activity, the risk is further mitigated by the flexibility to adjust cruise itineraries.

 

Strategy

TCFD Recommendation

 

TUI Approach

 

 

TCFD Risk Type

 

Description

 

Impact

 

Management

 

 

Chronic

 

Physical damage to assets and business disruption due to longer-term shifts in climate patterns.

 

Chronic physical changes in the climate can result in asset damage and business interruption, as well as higher operating costs for example from increased cooling load requirements to offset higher sustained temperatures. This risk is mostly likely to be realised in the long-term as the effects of physical climate change become more profound.

 

  • Whilst the scenario analysis indicate higher probability of extreme wheather events, non of the locations where our hotels resorts are located is vulnerable to a rising sea level during the time frame of our climate scenario analysis.
  • This risk is managed with insurance and TUI Hotels Resorts’ renewable energy strategy.

 


 

 

 

 

 

 

 

Changing weather patterns decreasing suitability for tourism and / or making source markets more attractive, impacting tourism demand.


 

 

Tourism demand in the medium and long term is expected to be affected by climate change as weather is a key determinant in destination choice. In Europe, it’s expected that southern regions will face reductions in demand as weather becomes less suitable for tourism, particularly in higher warming scenarios. On the other hand, northern European regions are expected to benefit from changing weather patterns.

 

  • Climate-related factors are considered in the expansion of TUI’s Hotels Resorts business segment.

     

 

 

 

 

 

 

 

 

 

 

Strategy

TCFD Recommendation

 

TUI Approach

 

 

Opportunities

As short to medium term opportunities, we identified more efficient aircraft and cruise ships as well as a shift to renewable energy sources at hotels resorts as a way to reduce operating costs. We further see an opportunity to offer lower-emission air travel, cruise travel and hotel stays as a way to improve our competitive position. Providing alternative modes of transport including a move to high-speed rail is also seen as an opportunity for our business. We are investigating and promoting the management of all of these opportunities.

The summer season 2023 in Turkey and Greece for selected destinations has been expanded which has been well received by our customers.
In the long term, we expect to see this more frequently and in more destinations following a shift in consumer preferences from peak seasons where heat waves may be imminent to shoulder seasons where the wheather is still very favoiurable for travel. In addition, our business model is flexible to offer new destinations based on changing weather conditions, e. g. more travel to destinations around the Baltic Sea. We continue to monitor these trends and embed them into our strategic and operational planning.

 

c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

 

In financial year 2023,  conducted a qualitative and quantitative scenario analysis in order to understand the potential effects of climate change on its business and to test its strategy and financial planning to increase resilience. A number of assumptions underpin this assessment regarding changes to the intensity and frequency of weather related events, technology development, development of energy and carbon prices and the development of knowledge on global warming.

Two scenarios were considered in the 2023 climate risk assessment:

  • A high emissions scenario to assess the impact of significant changes in the physical climate, which is based on the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway 8.5 (IPCC RCP8.5) and the International Energy Agency (IEA) Stated Policies Scenario. This is aligned with global warming of approximately 4.3°C by the year 2100.
  • A low emissions scenario to assess the impact of significant socioeconomic changes to achieve a low-carbon economy, which is based on IPCC RCP2.6 and the IEA Net Zero Scenario. This is aligned with global warming of approximately 1.5°C by the year 2100.
  • Both emissions scenarios could have different consequences for the TUI Group. In a low emissions scenario, stricter emissions and fuel efficiency targets could increase operating costs, while assets based on unsustainable practices could lose value. On the other hand, TUI could benefit from a positive image, as environmentally conscious travellers prefer companies that are committed to sustainability. In a high emissions scenario, physical risks from extreme weather events and natural disasters could impact TUI’s tourism destinations. Rising operating costs due to stricter environmental regulations could impact profitability.

 

 

Strategy

TCFD Recommendation

 

TUI Approach

 

 

Measures to strengthen and more closely align risk management and strategic planning were identified and discussed.  has committed to the Science Based Targets initiative (SBTi) to reduce emissions by 2030. Our targets are:

  • Reduction of airline CO2e per revenue passenger kilometer by 24 % by 2030.
  • Reduction of absolute CO2e from our cruise operations by 27.5 % by 2030.
  • Reduction of absolute CO2e from TUI Hotels Resorts by 46.2 % by 2030.

Furthermore it is the commitment of  to achieve net-zero emissions by 2050. The reduction of emissions will be accomplished with investments in new technologies and the use of fuel with less CO2 emissions.

The results of the scenario analysis confirm that the Group’s above described strategic initiatives and reduction pathway are suitable for minimising the respective risks and creating opportunities. We acknowledge that a number of assumptions descibed above had to be taken into account to derive the scenario analysis and the uncertainty of the impact and likelihood of certain effects increases mid- to long term.  has undertaken a qualitative assessment of all below summarized climated related risks and opportunities. In additon,  has performed a high-level quantitative assessment for eight risks and opportunities. This assessment has shown the risks to be immaterial for financial planning, which was confirmed by a sensitivity analysis. One key assumption concerns the extent to which costs for low-emission fuels and emission certificates can be passed on to customers. Further information on the effect of climate-related risks on the useful lives and the measurement of assets can be found in the Notes, chapter ‘Key judgements, assumptions and estimates’, page 200 of this Annual Report.

 

 

 

 

 

 

RISK MANAGEMENT

 

 has a systematic and Group-wide approach in place to identify, assess and manage risks across the business. This is managed through the processes and structures described in more detail in the Risk Report on page 35.

 

 

TCFD Recommendation

 

TUI Approach

a) Describe the organisation’s processes for identifying and assessing climate-related risks.

 

 constantly considers existing and emerging regulatory requirements in the risk management process. The processes and structures to identify, assess and manage climate-related risks across the business are described in the Risk Report. They apply to all types of risks assessed throughout the whole company, including climate-related risks. Decisions are made to mitigate, transfer, accept or control risks based on a likelihood and impact scoring against an established risk appetite. By including the specialist teams,  prioritizes risks based on their assessed magnitude and significance. In financial year 2023,  has defined a new principal risk ‘Climate change impacting our business model’.

For more information on the relative magnitude and significance compared to other risks, see overview on page 39 in the Risk Report.

 

b) Describe the organisation’s processes for managing climate-related risks.

 

Within the framework of TUI’s integrated approach, the key business segments and climate risk owners work together in the management of climate-related risks and opportunities.

In addition, specialists in the Group Sustainability team coordinate climate-relevant activities and support and facilitate the management of climate risks and opportunities within the Group.

When necessary, the GEC deals with climate-related issues at board level.

 

c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management.

 

Our systematic risk management process has identified sustainability risks including climate-related risks. The existing risk categories and definitions of our risk management framework have been used to assess and integrate the climate risks into our ERM. For further details on the risk management process please refer to page 35 in the Risk Report.

Whilst the impact of some risks is medium to long term, the Group Risk Management time horizon is short to medium, covering the economic lifetime of an investment at a maximum. The climate change risk assessment has also highlighted risks and opportunities where the impact falls beyond the risk management time horizon. Nevertheless, all major climate-related risks and opportunities from this assessment will be covered by the Group’s Risk Management process and will be managed. Where the impact of risks or chances detected in the assessment is in far future, they will be continuously monitored. Moreover, we see additional value in early identification to ensure risks are managed effectively and opportunities are capitalised on.

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

a) Metrics used by  to assess climate related risks and opportunities in line with its strategy and risk management process

 

Climate change is a pressing global challenge. There is an urgency to act and for everyone to play a role in the transition to a low carbon economy. As a global tourism group, our business model inherently leads to a significant emission of greenhouse gases. In alignment with our reduction strategy, low emissions are the cornerstone for our pathway. This is reflected in our currently used metrics to assess climate related risks and opportunities.  is continuously working on improving its metrics and targets to ensuring an effective steering of the most material climate related risks and opportunities. Following the larger scale use of SAF, we will further develop our metrics to reflect the impact on CO2 emissions. Emissions from TUI’s airline, cruises and hotel segments represent 99 % of the Group’s emissions. Within our asset portfolio our airline emissions represent roughly 75 % of the Group’s total carbon dioxide (CO2) emissions. We are working to reduce the environmental footprint of holidays and drive-up environmental standards in our industry. In order to measure and manage climate-related risks and in line with our strategic target to achieve net-zero emissions across our operations and supply chain by 2050 at the latest, we monitor our absolute CO2 emissions, (specific) fuel consumption and specific carbon emissions.  has considered the cross-sector risks Following the larger scale use of SAF, we will further develop our metrics to reflect the impact on CO2 emissions.  currently does not have an internal carbon pricing mechanism.

For the reasons outlined above, CO2 emissions form our key metric to assess climate related risks and opportunities.

 

b) Scope 1, Scope 2, and, Scope 3 greenhouse gas emissions and the related risks

 

In financial year 2023,  Group’s total absolute emissions were largely stable year-on-year at an increase of 1 %. In aviation, emission reductions were partly due to the sale of the stake in Sunwing. In Cruises, the increase was driven by the continued recovery of business after the COVID-19 pandemic and the inclusion of our river cruises segment in reporting. Scope 3 emissions reflect the expansion of the reporting framework, in particular due to the inclusion of WTT (well-to-tank) emissions from marine cruise fuel and jet fuel.

Carbon dioxide emissions (CO2)

tons

2023

2022

Var. %

Airlines

4,218,553

4,331,628

 2.6

Cruises

899,790

762,942

+ 17.9

Hotels

805,541

767,049 1

+ 5.0

Major premises / shops

14,890

14,251

+ 4.5

Ground transport

14,413

13,144

+ 9.7

Scope 3 (indirect emissions from TUI’s value chain)3

1,239,493

1,232,804 2

+ 0.5

Total

7,192,680

7,121,818

+ 1.0

1 Previous year adjusted due to inclusion of refrigerant gases

2 Previous year adjusted due to extended reporting scope

3 With reference to the Greenhouse Gas Protocol,  Group currently includes Scope 3 emissions from the production of office paper and printed brochures, well-to-tank emissions from fuel consumption of aircraft, ships, hotels and ground transport, the distribution of electricity (hotels), waste and water treatment (hotels), employee business travel with third-party airlines and rail, and employee commuting. The current scope of the reported Scope 3 emissions therefore does not yet fulfil all the requirements of the Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

Carbon dioxide emissions (CO2), Scope 1 – 3

tons

2023

2022

Var. %

Scope 1

5,416,692

5,395,049

+ 0.4

Scope 2

536,495

493,965

+ 8.6

Scope 3

1,239,493

1,232,804

+ 0.5

With reference to the Greenhouse Gas Protocol,  Group currently includes Scope 3 emissions from the production of office paper and printed brochures, well-to-tank emissions from fuel consumption of aircraft, ships, hotels and ground transport, the distribution of electricity (hotels), waste and water treatment (hotels), employee business travel with third-party airlines and rail, and employee commuting. The current scope of the reported Scope 3 emissions therefore does not yet fulfil all the requirements of the Corporate Value Chain (Scope 3) Accounting and Reporting Standard. For the validation of it’s SBTi targets  assessed it’s total GHG inventory. Scope 3 emissions currently constitute less than 40 % of the total GHG inventory. Because of this,  is not obliged to set a standalone scope 3 target. Yet due to their significance for the respective segments,  included category 3.3. fuel and energy related activities in their targets for the segments Cruises and Airlines. The corresponding emissions are currently reported. The current extent of the scope 3 reporting is explained above.

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

Energy usage by business area

MWh

2023

2022

Var. %

Airlines

17,202,638

17,655,179

 2.6

Cruises

3,507,396

2,962,423

+ 18.4

Hotels

1,762,992

1,599,057

+ 10.3

Major premises / shops

59,651

60,036

 0.6

Ground transport

61,087

55,311

+ 10.4

Total

22,593,764

22,332,006

+ 1.2

More efficient flying

We already operate one of Europe’s most carbon-efficient airlines and aim to continually enhance our environmental performance. Our airline emissions reduction targets by 2030 have been validated by the SBTi. Our emission reduction roadmap for our aircraft fleet comprises the following measures: additional capex on modern carbon-efficient aircraft, efficiency enhancement through operational measures and investments in sustainable aircraft fuels (SAF).

In order to reduce emissions,  Group has invested in state-of-the-art aircraft such as Boeing 787s and Boeing 737 Max aircraft. On average, these planes are 20 % (787) and 16 % (737 Max) more fuel-efficient than the aircraft they replace in TUI’s fleet.

Moreover,  fly Belgium added Embraer E195-E2 aircraft, highly efficient planes in the category of up to 150 seats, to its fleet. The aircraft will operate on short- and medium-haul routes and reduce the carbon footprint by up to one third.

Environmental management systems and operational measures play a key role in implementing sustainability and further enhancing TUI’s climate efficiency. In financial year 2023, all  airlines were certified under the internationally recognised ISO 14001:2015 standard. All ISO 14001 management systems used by individual  airlines were transferred to one single management system in the period under review. The following examples illustrate the operational measures implemented to enhance efficiency:

  • Flight operations, for instance single engine taxiing in and out, wind uplinks and optimised climb speeds and profiles
  • Weight reduction, for instance carbon brakes and fly away kit (spare parts and tools)
  • Fight planning optimisation, for instance alternate distance and minimum fuel programme
  • Fuel management system to improve fuel analysis, identification of further savings potential and tracking of savings

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

Sustainable aviation fuels (SAF) play a crucial role in reducing aviation emissions and are hence a key part of our emission reduction roadmap to further improve airline carbon efficiency by 2030.  cooperates with a number of partners to secure supplies of SAF. Examples include the signing of a Memorandum of Understanding with the Spanish energy company CEPSA. The partnership with CEPSA will focus on SAF fuels generated from raw materials such as used cooking oils, non-food animal waste and biodegradable waste from various industries. This will make it possible to reduce aircraft emissions by up to 80 % compared to conventional jet fuel. An additional Memorandum of Understanding was signed with Shell.

In 2023, relative carbon emissions across our airlines decreased by 3.9 %. This improvement was largely due to higher load factors versus 2022 and our ongoing re-fleeting programme to replace older aircraft by new, more carbon-efficient aircraft.

Specific emissions are additionally shown in the form of CO2 equivalents (CO2e). Apart from carbon dioxide (CO2 ), these include the other
five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4 ), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6 ).

 Airlines – Fuel consumption and CO2 emissions

 

 

2023

2022

Var. %

Specific fuel consumption

l / 100 rpk*

2.43

2.52

 3.9

Carbon dioxide (CO2) – total

t

4,218,553

4,053,745

+ 4.1

Carbon dioxide (CO2) – specific

kg / 100 rpk*

6.11

6.36

 3.9

* rpk=revenue passenger kilometer

 Airlines – Carbon intensity

g CO2 / rpk*

2023

2022

Var. %

g CO2e / rpk*

 Airline fleet

61.1

63.6

 3.9

61.7

 Airways

60.7

62.2

 2.5

61.3

 fly Belgium

66.3

70.7

 6.3

66.9

 fly Germany

60

64.4

 6.8

60.5

 fly Netherlands

59.6

59.8

 0.2

60.2

 fly Nordic

59.8

66.4

 9.9

60.4

* rpk=Revenue Passenger Kilometre

We commissioned Verifavia to provide assurance on the carbon intensity metrics for financial year 2023 as shown in the above
table ‘TUI Airlines – CO2 intensity’. The airline carbon data methodology document and the full assurance report are available at
www.tuigroup.com/en-en/responsibility/sustainability/reporting-downloads

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

More sustainable cruising

We continue to focus on reducing the emissions of our cruise ships, delivering progress by investing in state-of-the-art technology to reduce
air emissions and in operational efficiency. Emission reduction roadmaps were drawn up for  Cruises, Hapag-Lloyd Cruises and Marella Cruises as part of our submission of 2030 targets for validation by the SBTi. Key levers include investments in fleet modernisation and efficiency enhancement with a focus on shore power, route optimisation, energy efficiency enhancement and switching to alternative fuels.

 Cruises with its Mein Schiff and Hapag-Lloyd Cruises brands continues to operate a modern and technologically advanced fleet. The newbuilds in the fleet are equipped with state-of-the-art technologies to minimise fuel consumption. A smart energy management system, efficient air conditioning, innovative lighting controls and the use of exhaust heat from the engines contribute to a significant reduction in the carbon footprint compared with vessels not equipped with those technologies.

In the period under review, essential steps were taken to reduce emissions generated by the Mein Schiff and Hapag-Lloyd Cruises fleet. The Company will successively install the equipment required for shore power connection on all ships of the Mein Schiff fleet. In the period under review, Mein Schiff 1 was retrofitted during her scheduled dock period. Mein Schiff 2 and Mein Schiff 5 will follow in November 2023 and in January 2024.

In summer 2023, both fleets successfully used shore power, e. g. in Kiel and Hamburg. During their scheduled dock periods, both ships, Mein Schiff 1 and Mein Schiff 6, also obtained a new silicone coating to reduce resistance in the water so as to save fuel during the voyage.

In the period under review, the Company also successfully completed the first tests on the use of sustainable biofuels, with both Hanseatic Inspiration and Mein Schiff 4 successfully operating on biofuel blends on some voyages. The second-generation biofuel, which was bunkered for the first time, is purely plant-based and mainly consists of cooking oil residues. This fuel is virtually free from sulphur oxides and in its pure form offers a CO2 reduction of up to 90 % compared to fossil fuels.

Thanks to new exhaust gas treatment systems operated on all new vessels, the newbuilds in the Mein Schiff fleet also significantly reduce their sulphur and nitrogen emissions. Use of these advanced emission purification systems goes beyond regulatory requirements. They are, for instance, not only used in the designated emission control areas in the North and Baltic Seas, the English Channel and North America, but also in other regions sailed by Mein Schiff such as the Mediterranean, the Orient, the Caribbean and Central America.

The Mein Schiff fleet is also setting another milestone for sustainable growth. Mein Schiff 7 is currently under construction in the Meyer Turku shipyard in Finland. The focus is on compliance with high maritime environmental standards by optimising the design in terms of energy efficiency and the use of modern technologies to improve sustainability. The ship will feature equipment enabling her to run on green methanol in future. She is scheduled for commissioning in 2024.

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

The expedition ships in the Hapag-Lloyd Cruises fleet exclusively use low-sulphur marine gas oil with a sulphur content of 0.1 %. This reduces sulphur emissions from these vessels by up to 80 % and particulate and soot emissions by up to 30 % versus the use of heavy fuel oil. All Hapag-Lloyd Cruises ships have tributyltin-free underwater coatings, on-board seawater desalination systems to make drinking water and biological sewage treatment systems for wastewater. Waste is separated on board prior to disposal on land by specialised companies in accordance with international regulations (MARPOL).

In financial year 2023, relative CO2 emissions in the Cruises segment declined by 23.7 %. This was due to a significant increase in load factors, as the previous year’s figures were more strongly impacted by the effects of the pandemic. The amount of waste per cruise passenger night decreased by 23 % to 8 litres, with freshwater consumption up by 24.2 % to 46 litres. Our reporting covers all ships operating under the Mein Schiff, Hapag-Lloyd Cruises. Marella and  River Cruises brands.

Cruises – carbon intensity

 

2023

2022

Var. %

Carbon dioxide (CO2) – relative kg / Cruise passenger night

101

132

 23.7

Environmental protection in our hotels

Our hotels and hotel partners continue to focus on promoting the sustainability transformation across their operations. Each hotel plays an important role in managing the impacts on the local community, the economy and the environment. Emission reductions remain our key priority, and we have prepared comprehensive roadmaps and defined targets for 2030 for our Hotels Resorts segment. These targets have been validated by the SBTi.

Our hotel portfolio is still growing and many of our hotels use green technology in order to improve their sustainability performance. The generation of renewable energies from solar and wind power is a key element of the emission reduction roadmaps for our hotels, alongside efficiency measures delivered through hotel refurbishment and standard-setting for new buildings.

Sustainable construction is an important tool for saving energy and cutting carbon emissions from hotels. In the financial year under review, the Hotels Resorts segment published Green Building Guidelines for the first time. They provide specific recommendations to our own hotels and to our hotel partners for their construction and refurbishment projects. The Guidelines cover the key factors for reducing the ecological footprint of construction and refurbishment projects and paring back water and energy consumption. They also cover aspects such as monitoring systems, sustainability certifications and stakeholder communication. The Guidelines were reviewed by external experts from the Fraunhofer IAO Institute.

For more information on the topic, please refer to:  Green Building Guidelines (online version): https://mediacenter.tui-info.com/onlinekataloge/index.php?catalog=tui_greenbuildingguideline_gj2023_f#page_1

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

 

 

Our  Global Hotel Awards 2023 placed a particular emphasis on sustainability. The award included categories reflecting TUI’s Sustainability Agenda. The winners in these categories are selected by an external committee based on pre-defined criteria. In 2023,  also granted an award for sustainability innovation. Atlantica Hotels Resorts was recognised for introducing new, sustainable technologies. Examples of this commitment can be found on the Greek island of Rhodes, where the hotel company has invested in the latest solar panel technology, e-mobility for electric cars and a water desalination plant.

We continued to drive forward the use of photovoltaic systems in our hotels to promote sustainable power generation. In cooperation with our joint venture partners Riu, Grupotel and Atlantica, 19 PV systems with an output of almost 3,500 kWp were installed in Greece, Spain and the Cape Verde Islands in financial year 2023.

Our hotels made further inroads towards a better ecological footprint in terms of emissions, water consumption and waste production. This
is the result of continual measures to improve our environmental performance alongside higher customer numbers and occupancy levels as
the pandemic subsided. The scope of the hotel KPI-reporting is made up of TUI’s Hotels Resorts portfolio. This includes owned, managed, leased and franchised properties.

Hotels – Carbon intensity

 

2023

2022

Var. %

Carbon dioxide (CO2) – relative kg / guest night

12.4

13.8 *

 9.8

* Previous year adjusted due to inclusion of refrigerant gases

 

 

METRICS AND TARGETS

TCFD Recommendation

 

TUI Approach

c) Targets used by  to manage climate-related risks and opportunities and its performance against targets

 

For  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 already operate some of the most efficient aircraft and cruise ships. Our commitment is to be industry-leading in achieving net-zero emissions and we aim to achieve this target across our operations and supply chain by 2050 at the latest.

 has committed to the Science Based Targets initiative (SBTi) to reduce emissions in line with the latest climate science by 2030 for airlines, cruises and hotels. The independent organisation has now checked and validated our reduction targets. It confirmed that they are in line with the latest climate science. Our intensity and absolute targets are:

  • Reduction of airline gCO2e per revenue passenger kilometer by 24 % by 2030 1, 3
  • Reduction of absolute tCO2e from our own cruise operations by 27.5 % by 2030 1, 3
  • Reduction of absolute tCO2e from TUI Hotels Resorts own operations by 46.2 % by 2030 2, 3

1 Baseline 2019. Level of ambition well below 2 °C. CO2e = CO2 equivalents. Apart from carbon dioxide (CO2 ), emissions include the other five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs)
and Sulphur hexafluoride (SF6).  Group’s science-based targets commitments include well-to-wake emissions for our airline and cruise operations (emissions from aviation and marine fuel, scope 1 and scope 3, category 3).

2 Baseline 2019. Level of ambition 1.5 °C. For our hotels, the commitment includes emissions from all energy sources plus refrigerant gases (scope 1 and 2).

3 Airline, cruise and hotel GHG emissions figures published in the FY23 Non-Financial Declaration do not match the scope, boundaries or reporting methodology of our science-based targets. Therefore inferences of progress towards achieving SBTs based on figures in this or previous Non-Financial Declarations should not be made.

 

Integrity Compliance

Anti-corruption and bribery

In implementing our business activities, and along our supply chain, compliance with many national and international laws and rules as well as internal policies is essential. However, our understanding of Compliance goes beyond respecting laws and regulations, as we shift our Company’s culture away from a purely rule-based approach towards a living culture of integrity. Behaviour violating integrity principles may not only have legal consequences, but can also result in lasting damage to TUI’s reputation. TUI’s Compliance Management System aims to promote integrity and prevent potential misconduct, to make liability risks manageable for  and its employees and in this way to protect the Company’s reputation. It is a fundamental component in our commitment to corporate, environmental and social responsibility.

In the completed financial year, Integrity Compliance focused on the core areas of, implementation of the new legal requirements set out in the German Act on Corporate Due Diligence Obligations in Supply Chains and the German Whistleblower Protection Act, training and risk analysis.

In the financial year under review, mandatory online training courses were provided on the Integrity Passport (for all employees) and Fair Competition (for all employees in Finance, Legal, Purchasing, Procurement, Corporate External Affairs and Aviation). For selected groups of employees, in-person training sessions with an anti-trust law expert were carried out to facilitate more in-depth discussions of specific legal questions with employees. As sanctions have remained an important topic, an online training session on sanctions was rolled out by the end of the financial year.

In order to comply with the obligations arising from the German Supply Chain Due Diligence Act and Whistleblower Protection Act, the whistleblowing system was opened up to third parties to provide an additional channel for raising concerns confidentially and anonymously. The rules of procedure are available on  Group’s website. In addition, the Integrity Compliance team, in collaboration with other relevant stakeholders, has drafted contractual clauses to reflect the obligations set out in the Supply Chain Due Diligence Act with regard to human rights and environmental matters, and, where appropriate, to pass on these obligations to business partners and suppliers.

Furthermore, a pilot risk analysis was implemented for selected  Group companies in the completed financial year. The risk assessment was carried out by means of a revised survey and a newly developed weighted assessment matrix which automatically calculates the risk score for each region / segment.

Compliance Management System

 Group’s Compliance Management System is based on a risk management approach. It is built around three pillars: prevent, detect and react, which, in turn, comprise a variety of measures and processes.

The Integrity Compliance team is in charge of the core areas anti-corruption, fair competition and trade sanctions. Our Compliance Management System defines pilot and standard operation and the documentation of roles, responsibilities and processes in these areas.

The Compliance Management System applies to  AG and all companies majority-owned, directly or indirectly, by  AG, whether domestic or foreign, and to any other shareholdings where management control directly or indirectly lies with  AG (‘Managed Group Companies’). Implementation of the Compliance Management System is recommended for companies where management control does not lie with  AG (‘Non-Managed Group Companies’).

Integrity Compliance structure

The Chief Compliance Officer is responsible for drawing up, maintaining and developing our Compliance Management System. He is supported by the Group Director Integrity Compliance and the centralised Integrity Compliance team, forming part of Legal. All Compliance Officers are in close contact with local management, who remain generally responsible for observing all the Compliance rules, and together they are responsible for implementing our Compliance requirements and Integrity values, above all:

  • Raising awareness of Integrity Compliance and the associated core issues through communication campaigns
  • Performing risk analyses relating to the core Compliance issues and self-assessments or Pulse Checks
  • Implementing measures to ensure that we comply with our commitment to integrity in line with the Integrity Passport
  • Providing training on the Integrity Passport and Fair Competition
  • Advising employees, primarily with regard to trade sanctions, anti-corruption anti-bribery and fair competition
  • Securing the necessary exchange of information between local management and the Integrity Compliance team
  • Monitoring new national and international legislation
  • Providing regular reports to the Group Executive Committee and to the Audit Committee of the Supervisory Board

Integrity Compliance culture

The Integrity Compliance culture influences people’s behaviour and their views about complying with the applicable rules. It therefore forms the basis for an effective Compliance Management System. Our culture reflects our corporate values and the fundamental attitude and conduct of management all the way up to the Executive Board and Supervisory Board of  AG, thus the ‘tone from the top’. It is expressed, in particular, in our corporate value ‘Trusted’, appealing to our employees’ personal responsibility and their honesty and sincerity in handling guests, fellow employees and other stakeholders.

Integrity Passport – TUI’s Code of Conduct

Our Integrity Passport is binding for all employees, from Executive Board members to trainees, and for all managed Group companies. The Integrity Passport serves as the guiding principle for our Executive Board, managements, executives and employees alike. It provides orientation in key areas of people’s day-to-day work and in conflict situations: fair competition, anti-bribery and anti-corruption, appropriate gifts and hospitality, protection of our business secrets, data privacy, handling conflicts of interest, prevention of insider trading, maintaining proper accounts and financial records, anti-money laundering, trade restrictions, respectful dealings with each other, sustainability, and public communications about  and how to raise a concern.

Supplier