TUI AG

XETRA:TUI1

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, ladies and gentlemen, and a warm welcome to the TUI AG conference call regarding the financial year '24 Q3 results. [Operator Instructions]

Let me now turn the floor over to your host, Sebastian Ebel and Mathias Kiep.

[Nicola Gehrt, executive]

Thank you very much. And ladies and gentlemen, a warm welcome also from our side to TUI's third quarter results presentation. My name is Nicola, Group Director, Investor Relations, and I'm here with our CEO, Sebastian Ebel; and our CFO, Mathias Kiep. They will present a record quarterly performance and provide an update on trading and outlook. And as always, afterwards, we will be available for Q&A.

And with that, I have the pleasure to hand over to Sebastian.

[Sebastian Ebel, executive]

Thank you, Nicola. A very warm welcome also from my side. I'm very happy to present with Mathias our numbers. You find that in a good mood in Berlin and our office in a good mood, not only because of the third quarter results and the good outlook for the full year result but also because we're seeing very good progress on our transformation program.

We have given the promise that we will unlock significant value by focus on operational excellence and by transformation. And we will give you more information with the full year result on our transformation. Today, I can say that we very much leverage on our unique holiday experience products, and we are more and more positioning TUI as a successful platform business. And by knowing how the progress is on the transformation, we will stay committed to our midterm ambitions to have an EBIT underlying growth of 7% to 10% per year and to further improve the net leverage.

So the agenda is like always. I will give you some highlights. Mathias will dig into the numbers. Together, we will do a trading update and outlook and a summary, and then we are looking forward to the Q&A session.

If we look at the highlights, we can report another record revenue quarter with EUR 5.8 billion, which is almost 10% up compared to last year, and a significant improve in our underlying EBIT to EUR 232 million, EUR 62 million up, which is 37% and all business contributing.

Markets & Airlines are doing very strongly with significant increase in bookings. Also the ASP is up 3%. Booking has accelerated the growth. The ASP is slightly less than we had before. This is purely a mathematical issue. You may recall that FTI went into insolvency in Germany. They were at the very lower end of the market. And as we got our market share with the FTI customers, that had a mathematical impact on the ASP. The ASP on the products we have sold before is stable.

Great result in Holiday Experiences. Hotels, very strong. Cruise, surprisingly strong. You may recall we had the Suez impact. We had to reroute cruise ships from the Suez channel around South Cape -- the southern part of Africa, and we were able to offset even more of these additional costs. And also Musement has seen significant growth with our own product.

And by this, we can reconfirm the guidance we have given to increase the EBIT by at least 25%. I think this is a good promise we have given to you and the market.

If we look into the sectors, hotel, significant increase of profitability, EUR 20 million. Now we stand at EUR 339 million. And if you look at the average daily rate increase with 7%, this is a very good result for the season just before the peak season.

Cruise, EUR 30 million -- almost EUR 30 million, up now at almost EUR 200 million. What is amazing here is not only the occupancy increase to almost 100% technically. It's difficult to overachieve that and especially daily increase -- rate increase of 7%.

Musement has also seen an improvement of results. We have more focus, and this is important also for the future for the next quarter but also for the long-term future. We are not so much in buying new customers with a low revenue, average revenue, a number where the margin is at an absolute terms, not high enough. We are focusing very much on selling the own products, where we have a very good margin, therefore this 14% increase. Important transfers are almost in line with the growth of the tour operator, which we have seen.

If we come to Markets & Airlines, an increase of EUR 10 million. Two markets are contributing positively: the Northern Region and the Central Region, whereas the Western Region is negative. This is mainly due to the introduction of the new IT systems we had and some delays in the MAX delivery. So these are onetime effect, which should not occur anymore next year.

Some highlights, which is always good to be anecdotally what are good examples for our strategy. One example from Hotels & Resorts -- or 2 examples of Hotels & Resorts and 1 example from Musement. RIU opens the 10th city hotel. City hotel, which is very much focused on leisure customers. This is pretty unique in major cities. And what we do see is very, very strong profitability. We have 2 hotels in New York. We have one in Dublin. We have one in London. We have one in Madrid, and we have one in Panama. I think I've now forgotten 2. We have one in San Francisco. And now it's -- and in Berlin. Thank you, Nicola. And the one in Chicago is the next one. And that's really great because we bring the TUI brand also in the source market to life, and people, when they go to a capital city or to a city, can experience TUI.

Another good example have been the opening of the Mora Hotel, a 6-star product, on Zanzibar, very well received, 100% occupancy at the moment, very good prices. There is a market for that. It's a different product to other 6-stars hotels because it's very, very much focused on leisure customers -- big market of leisure customers.

Musement, we are very happy that we were able to gain lastminute as a B2B partner with all the brands. It clearly shows that the strategy: one, to focus on B2B, strong partners; and second, on B2C with our own products works very well. And we always said that this is a source of new customers. That's what we see. And with all the activities, we will accelerate this growth.

Sustainability is part of our DNA. It's in our heart. And it's not only altruistic but also because we do see the commercial sense in it. And the 2 good examples, one is the Mein Schiff 7, which was delivered a couple of weeks ago, is the first ship which will be green methanol ready. And which means that if we are in a harbor, we will source green electricity, offshore -- what is the name of -- shore power. And this means we buy this wherever it's possible, green electricity, and this is relevant for 12, 13 hours. And the remaining part then will be done by e-LNG or e-methanol, and that will bring the cruise business in a very different territory when it comes to sustainability.

And another thing we are very proud of, the one or the other may recall that we built a huge solar plant at our property in Hanover in Germany. We are now in with all the activities in the Germany office activities, the retail activities. We are 100% CO2 free. But again, this, we want to achieve also in our hotel business. We have now 25% of our hotels have solar products, and a major step has been and will be that we just launched 3 significant big solar plants in Turkey. Another 3, which brings us to 6, will be opened within the next weeks, which means that our TUI hotels -- owned TUI hotels in Turkey will be carbon free.

And the good thing is it's not a contradiction to profitability. It just supports the profitability in the medium term. It's even getting more important to the customers. And I think these are good examples about our sustainability agenda.

And with the nice words, we come to the heart, also nice numbers and which will be presented by Mathias.

[Mathias Kiep, executive]

Thank you very much, Sebastian, and thanks very much, everyone, for joining this call. Good morning also from my side. Let me give you some further details on the quarter numbers and before we then come to trading and outlook.

All in all, Sebastian already summarized, this has been another good quarter for the group. This clearly delivers on our targets for the full year. Just something to remind everyone on this is the eighth consecutive quarter in a row with a strong increase in profit. That's something we're, of course, very pleased with. 2 years, absolutely. So I think this has been quite a great journey if we look back on that coming out of crisis. And at the same time, this is also a trigger because this was -- we have, in this quarter, had the final step to redeem KfW and effectively do the final refinancing step for that period.

So with this further progress on balance sheet, I would like to start, before I go into the bridge and then the details to P&L, cash flow and balance sheet. We were able to place a convertible bond, around EUR 500 million, in July. What is important is 3 facts. One is, this is -- just to reiterate, this is the final step to fully cancel our KfW credit line, an unutilized line, as we already discussed and presented quarter-by-quarter. Still, this was used as a headroom. And at the same time, we had to put in the existing convertible also for 2026. And we always said these together, we would like to address. We address this with the placement of a new convertible, EUR 500 million, that was immediately used to buy back effectively the old convertible. And thereby, that's the second important fact. We will have around EUR 18 million interest saving -- cash interest saving from next year onwards.

Just to mention it because that has an impact on our fourth quarter and on the full year numbers then on interest, there will be because the repayment of the old convertible is then at par market price, plus we have to -- you see a valuation impact. Convertible is always discounted, and that kind of, you can call it, step up effectively noncash impact. That you will see as a P&L interest charge in our fourth quarter of around EUR 45 million.

So these are the 3 important facts: KfW handback initiated now, refinancing done, significant interest cost savings next year around EUR 18 million. And then please note, in Q4, we will have a one-off impact on a noncash charge for the valuation of the old convertible by buying it back.

Now coming to the quarter, as Sebastian said, this has been a very good quarter. Another step towards our targets for the full year. And what I really like is that all segments have really contributed to that. Sebastian alluded on it. Also Cruises, despite the cost that we have with Suez, one, the traveling around Africa but also, in particular, the canceled voyages that were already sold that we couldn't execute upon. So that's really a good result. Markets as well, they were the Western Region situation, a bit special to the rest, and then the strong profit contribution from hotels continues.

And that overall results in our P&L for the quarter, which is in line with expectations. What has been important for me, one, it's revenue, 9% growth. I think that's something which underlines again holidays are a key priority for consumers. Our guests, they want to travel with us, and they want to continue to travel with us. This is really encouraging, and it's a strong signal that holidays are prioritized in such a high way and that we, in the end, can realize record revenue again this year and are 9% up.

The P&L, of course, shows the EBIT improvement for -- now for the 9 months. Year-to-date, for the first time, also positive. That's really great. And then irrespective of the refinancing that I just touched upon, which will have an impact next year, already also this year, you see the strong benefits that we have achieved in reducing our interest costs. That, year-to-date, is a EUR 75 million improvement. We would normally lower our guidance below the EUR 400 million, but with this special charge in Q4, that moves us up again. So we would then, as a result, formally be at the end of the guidance at the upper end.

At the same time, underlying, you could call it -- that, we will see in a minute. On the cash side in particular, you see the strong improvement, one, in line with what was our expectations during all these refinancing steps but, secondly, also the product of all the additional initiatives. So that's something I'm quite happy with.

Now coming to cash flow. You see that if I may focus on interest first, and that's, one, year-to-date improvement of around EUR 80 million in the 9 months, also an improvement in the quarter. And then the guidance has been adjusted, so that's reflecting that improvement to a new range of EUR 310 million to EUR 325 million.

The improvement I expect in the fourth quarter will be a bit less because also last year, we were already out of all drawings in the fourth quarter. So you talk about less interest kind of savings. At the same time, we have some products now on balance sheet where interest payment due in the full year like the high-yield bond. So that's all in all, the improvement will be less, of course, in the fourth quarter. Still the reduction is really a great achievement.

Working capital, again, also in line with expectations. I think there are 2 effects just to mention on the quarter. While it's a bit lower than -- the delta is a bit lower than last year's same period while Easter was earlier. So in Q3, we already pay more invoices for the Easter period. And secondly, Q3 last year still had quite some ramp-up between the seasonality, winter towards summer. So that's something, I would say, this year, a bit more normal in terms of development. Still on the balance sheet, working capital at record levels. So something we are also very pleased with.

Last point before I summarize cash flow is the net investments. You see in the quarter this is in line with last year. Year-to-date, it's higher. This includes the payment for -- the final payment for funding the new joint venture with RIU. At the same time, I would expect that we are more towards the upper end of the guidance in investments because of some phasings on the projects. Still a bit difficult on the last euro to forecast that because you always have these construction payments and you have also on the delivery schedule still some moving parts. But overall, I would say the corridor tends towards the upper end, maybe at the upper end or a bit higher.

And other than that, on cash flow, importantly, that the lease amortization, the amortization of asset financing, what we saw in the quarter, in line with our expectations for the full year of around EUR 0.6 billion, just to make that point also clear. Now as a result, the cash flow brings us to a slight improvement on our balance sheet.

Again, debt now EUR 2.1 billion. I would expect that this further reduces in Q4. We will probably see less of working capital outflow as a net result in the fourth quarter than we saw last year. And we also have the profit development. So let's see on that. But overall, I would say this also confirms our slight improvement that we have guided.

So with that, I would hand back to you, Sebastian, because that brings us to the outlook, and the basis are, of course, the bookings.

[Sebastian Ebel, executive]

Yes. Thank you very much. We are happy with the bookings in summer and for the winter, the first glimpse into the winter. The program with U.K., Germany is now roughly sold 90%, which means still 10%, but we are very close to the target.

The bookings are up 6%. There, we have seen an acceleration, especially in Germany but also in the U.K. There were a few weeks which were slightly slower due to the champion -- the European soccer and the Olympics. What we have seen on the recent days and the last 2 weeks, a very strong late business for August or September but also going into the first quarter of winter. That is very nice to experience, and significant volumes are getting in. So we are very optimistic for the next -- for short term and medium term. It's a good picture.

ASP is slightly down, as I explained before. It's a technical effect. The increase in Germany was -- came from very short-term bookings because of the FTI insolvency. FTI is in a very different market segment where we never had been strong, in the lower-end segment. And for the first time, TUI Germany was able -- by the way, it's also Switzerland. It's also Austria. It is also Holland and France. We were able to capture our market share in this market segment. And as the average ASP of these customers are significantly lower that this leads to a decrease in the ASP. Otherwise, we do see a stable development there.

So a nice picture also looking into the winter, especially in the first quarter. Strong bookings, U.K. on the same level like a good level of last year. And it's very promising that especially now the month till the end of this calendar year are booked very well with robust pricing and with a good outlook. Different to the years before.

We have a normal hedging pattern. We were able to hedge -- as we wanted to hedge and not -- others wanted us not to hedge, and this is good. And when we compare with the competitors, I think the amount hedged and, of course, the rates hedged are supporting a further improvement of profitability.

If we go into the details. As said hotels in the fourth quarter doing very well, plus 10% on the daily rate. That is amazingly strong. And you could ask, why is that happening? We are getting more and more international. I think one of the targets of TUI is to get out -- not to get out, to increase the share outside the region of Europe. Of course, Europe is our core business. We want to get stronger. We want to go into the markets in Europe where we haven't been like Eastern Europe, Southern Europe, but going out. And the front is their hotels and resorts where we have a strong footprint in the Caribbean, now also in the cluster of West Africa, the cluster of East Africa, the Middle East, the Far East, the first Robinson Club in Vietnam, the first hotels in China. And all this leads to benefiting from the strong demand and price pattern of these markets. Occupancy also again, a slight increase on a high level, which is good.

Cruise, 11% more sold cruise days. You should keep in mind that we have just introduced Mein Schiff 7, so we increased significantly the capacity. And occupancy with plus 1%. Sounds small, but when the ship is full, it's full, and we are above 100% in the next quarter. So that's why it's a great result. And also, the daily rate is actually stronger because it's more a mix effect than it looks like as it is today.

Experiences sold significantly increased. Very, very much a focus on own-produced products because there is a higher margin.

And maybe, Mathias, as the guidance comes from the finance -- Head of CFO, it has a special weight.

[Mathias Kiep, executive]

Okay. Thank you, Sebastian. And indeed, I think you mentioned in the beginning already in your summary, what we can do today is that we can reconfirm our guidance in line with the policy that we had in the last quarter that at least a growth of 25% is expected on EBIT. At the same time, you saw the development on revenues, and that also remains unchanged for the full year. And I think, again, there's something which, personally for me, is really important because it shows the consumer is there. And a 10% growth in revenues means our consumers, they all pay more holidays. We have more customers, and that's encouraging, as you also said, for the coming seasons.

In detail by the segment, I think, to cut this short, what we saw in the quarter, what Sebastian presented in the details of development in Q3, that's fully reflected here in terms of the full year development of each of the segments. And then on the details, it's coming from adjustment down to net debt. That's all I covered when we talked about the details in P&L, cash flow and net debt.

And with that, I would hand over back to Sebastian for final words on this conference call.

[Sebastian Ebel, executive]

Thank you, Mathias. And as said, we are very confident on this year, but we are also very confident -- not but, and we are very confident for the future season, for the future years. Yes, we focus very much on operational performance, and we do see significant opportunity there to further improve. And due to the transformation through the rollout of platforms going into more markets we want to grow, and we are seeing it that we are growing significantly by implementing these global platforms.

And this profitable growth we want to and we are doing to accelerate. An example here is the dynamic packaging. It's Eastern Europe, Southern Europe, Lat Am and a very strong focus on profitable growth. Important is profitable growth by improving margin due to higher revenues but also by getting better cost ratios.

By improving profitability, we are going to strengthen further the balance sheet. And this only works when we are really focused on cash. That's our daily business. We look at cash every day. And we know that further improvement of free cash flow is required as our target. And it is -- and we will achieve that.

And that's why we can confirm our midterm ambition with an EBIT growth of 7% to 10% per year to improve the net leverage significantly. And of course, by doing that to improve the rating.

With all of what we do, the transformation, we want to bring TUI a [indiscernible] with the hotel, also with our all other products to be not only the very strong brand in Europe but also outside Europe. And thereby, the combination of performance and transformation, we think that we are -- have a lot of opportunities. And the management team and, I must say, everyone in TUI is very excited about what we are doing and what we can achieve. And sometimes I say, it's a giant which just awoke -- or awake -- or what is the right English word?

[Nicola Gehrt, executive]

Woke up.

[Sebastian Ebel, executive]

Woke up. Woke up. Thank you, Nicola.

[Nicola Gehrt, executive]

Thank you, Sebastian. Thank you, Mathias. I think we are now available for Q&A. Looking forward to your questions.

[Operator]

[Operator Instructions] First question comes from Jamie Rollo, MS.

[Jamie Rollo, analyst]

Jamie Rollo from Morgan Stanley. I've got a few on Markets & Airlines, please. So the third quarter profit, as you showed, did double from last year, but it's still pretty low compared to the third quarter of 2019 once we adjust for the Boeing delays in that year. So can you just talk a bit about the margin outlook in Markets & Airlines and, in particular, what's happening on the dynamic packaging side and what impact that might be having on margin? Secondly, just on the outlook on Markets & Airlines, you're talking about slightly weaker ASPs, which is all due to FTI and mix. Are you seeing any slowdown anywhere in the market, whether that's your seat-only business, I know you don't do much, or whether it's the low end of the market? And what are your sort of capacity plans now for the summer? You had, I think, something like a 10% plus ATOL capacity increase plan.

And then finally, a general question on the full year guidance. Now looks pretty conservative. 25% growth would be sort of no growth at all in Q4 profits or indeed a small drop. Is there anything in the fourth quarter we should think about, whether it's CrowdStrike or FTI or any moving parts that we're perhaps not aware of?

[Sebastian Ebel, executive]

Maybe I start, and Mathias, you step in. If we look at the bookings, we don't see a slowdown. So like, as I said, the short-term bookings, they are good. Also the price quality is good. Maybe it's because of the positioning of TUI. We are more in the upper end, and if you have -- this is a very stable and dynamic business. If -- that's why I think we are positioning well. And by FTI getting out of a segment we are not in, we are benefiting from that as well. And therefore, we are confident also for the short term but also for the medium term.

And one other thing is as we have invested and what we are building now come in place. We talked about the direct access to hotels, to airlines, a lot in the last 12 months. Now it is coming, and that's why the dynamic, which is in weaker times, bringing more margin and more volumes, is supporting us very much. For example, today, we started with Ryanair in Germany, which is a great achievement. So we'll bring more and more content into the system, which supports our growth ambition.

If you talk about the performance of Markets & Airlines, for us, due to how we do price the main -- the quarter, the most important quarter is quarter 4. And there, we are also very optimistic about the development there. You're right, and that's why the transformation has been and will be so important. There is still a significant part where we can up -- catch up, can catch up. We are on the way. And besides all the other things, what we do, the focus of being excellent to close the gap to the one or the other competitor is so important.

Mathias, would you like to add?

[Mathias Kiep, executive]

Yes, maybe on the question on comparison to '19 in detail between the 2 quarters -- or between -- in Q3, between the 3 years and indeed restated for the MAX. I think one is that generally, I think it's fair that the margin level is slightly different one versus '19 because we are -- since then, we've seen a lot of inflation, and that's something which was more or less costs coming to the sector.

In terms of the comparison of the performance then, if you then look -- I would say it's not so much market. It's certain units where we just see different patterns. And Scandinavia, for instance, in '19 had a record performance, last year. But I think we were quite transparent that this is something we need to work on and are working on. And that's, of course, something which is on its way to get back towards their targets and our targets on it. Just to name an example.

And the last point is I don't -- to be honest, I don't recall when Easter was in 2019. And that, of course, also had -- always had a shift in profits between Q2 and Q3.

[Sebastian Ebel, executive]

And then -- and maybe if I add, which is also a good outlook. We haven't seen the positive impact of the fleet rollover. I think this is something to come when finally the MAX, especially the MAX 10 will arrive. I'm really -- we really are proud that the network stability has been -- never been as good as this year, at least. I can't remember. With the exception of the 2 days around the CrowdStrike, we haven't had to cancel flights.

So the DBC costs are -- or the delays are at a historical low level. And that's in a situation where we don't have the new aircraft yet. And taking this into account, the network quality is good, and there is more -- even more positive to come to what we see today.

[Mathias Kiep, executive]

And then on the guidance, if I may. I think how I look at this, I mean we had a clear policy throughout the year that we followed, and you can call it conservative or careful. But I think it's something, as we also said in the call in the beginning, this is the eighth quarter with an increase in profit. And we have quite a stable framework throughout the year. That's something that we continue to use going forward for the rest of the financial year. I think that's maybe the best description to look at that.

[Sebastian Ebel, executive]

And it's better conservative and to underline at least than be different.

[Jamie Rollo, analyst]

I'm sorry, just on the capacity question. Have you reduced your capacity plans in the U.K.? Or are they still what they were at the last ATOL increase?

[Sebastian Ebel, executive]

Maybe we can answer this question later. I will try to -- I'll do it out of my memory. There are different impacts. One is, yes, it's on the [ 2019 ] level. Further growth, it's more on the dynamic part because, as said, we had to take in lease aircraft because we didn't get the MAX aircraft with all the cost impact and so on. And that's why it's so great that we are able to achieve or overachieve the profit targets and even if we would like to increase a further capacity.

And I would say the room is there for us. But at the moment, we are, as many other companies, are limited. On the other hand, if you look at our business with easyJet, now Ryanair has started to work. The U.K. will follow in '25. This gives us a big upside because there we are in a catch-up or we can get into a catch-up mode. And by the way, this is also true for the direct connect to our hoteliers. And this will give us significantly growth opportunities, whereas we don't have to increase the fleet, which is technically, for us, at the moment, not possible, and it will be possible when we are back to a normal pattern, hopefully, '26 with Boeing.

[Operator]

The next question comes from James Rowland Clark of Barclays.

[James Clark, analyst]

My first question is just on the acceleration of bookings in Germany that you've outlined is sort of partly or mostly to do with FTI's exit and picking up the customer volumes from there. It's gone from 7% for the last update to 10%. Is that number still accelerating? And perhaps you could give us an idea of how much of that change or what it would have been ex the incremental customers from FTI's exit.

And then dealing with FTI again, should we think about this jump-up in bookings that we're seeing in the summer for the German source market as potentially being how to think about sort of FY '25 boost? Or could you do better than that? And maybe you could also talk about the FTI's exit, what that could mean in the medium term for your tour op, Hotels & Cruises business in terms of revenue and profitability.

And I guess just finally, just following up on the guidance question from Jamie. I think consensus sits at about EUR 23 million EBIT growth in the fourth quarter. And I know you're very conservative with your guidance, and you've remained steady in that outlook throughout the year. But are you confident in where consensus sits or increasingly confidence -- or more confident? Perhaps you can give us a bit color around that and why EUR 23 million is the right sort of growth in the fourth quarter?

[Sebastian Ebel, executive]

Maybe the consensus question is answered by Mathias. I will take the more fun part, the FTI question. The insolvency of FTI was a sad thing for the customers who had booked with us because they are still waiting for the refund of their money. So these customers hardly had the opportunity to go on vacation, again, because they haven't had the money back from what they had paid before.

So we talked about pent-up demand in corona times. Here, there is probably an FTI demand for next year. Is it big? Is it huge? It's reasonable, and it will happen. And why have these people not very often not able to rebook and paying a second time? Because as I said, they are positioned more on the lower end, where families -- where money is more an issue than -- with our customers.

We tried to support the hoteliers and the FTI customers as much as possible. The team went after the day of insolvency immediately into the destinations to discuss with the hoteliers, to help them to overcome the summer issue, the summer problem, the summer challenge. And we were able to get most of -- not, but we get -- got all the hotels we wanted to have. So we were able to grow the base, the future base because quite often a customer is linked to a hotel, and you have the hotel, you sell it.

We supported the customer very much, first, by attractive offers. And I must say that was done together with all other competitors. They reacted very much like us in favor of the customers. We also made payment terms that they have to pay at departure and don't have to prepay. These were all limited measures, so we are going back after the summer to a normal pattern. And that's why, I think, the assumption is that there is that we get at least our fair market share of FTI customers and, second, that there will be a profit -- positive profit impact for the next years.

And overall, I think there have been probably reasons why FTI went into insolvency. And these reasons going away should also improve the market conditions in Germany. So it's one cornerstone of our -- I mean it's something which supports -- and that was not what -- I mean it supports our targets. We have -- more important for us is and has been to accelerate the transformation that whatever and whoever is in the market, we can win more and take the profits into our pool.

[Mathias Kiep, executive]

Thank you, Sebastian. And then I think on the guidance, I think what I can reiterate is we are quite transparent on the KPIs for the fourth quarter. Sebastian, you mentioned what your expectations are in terms of the forward-looking business. And we will just turn the question around. If we were unhappy with consensus, if we would feel we deviate with our own expectations, we would need -- we would anyway need to talk about this because then we would be obliged to mention this. So I think that's maybe helpful for you.

[Operator]

The next question comes from Othmane Bricha, BofA.

[Othmane Bricha, analyst]

I just want to follow up on those FTI volumes. So can you quantify maybe what market share FTI had in Germany? And how much can you grab both in the short and medium term? And also, can you quantify the difference in absolute ASP between FTI and your own volumes so far? And also as this comes -- as this volume comes with a dilutive impact on the pricing, can you explain the moving parts and the impact on the margin?

[Sebastian Ebel, executive]

I don't know how many numbers are available on FTI. When you look at the absolute numbers, you should have in mind that they have had a strong component business, selling car rental, selling flight only. So the numbers you quite often hear. My educated guess, only half of it is package.

And from what I have seen, again, not confirmed, their latest market share was 7%, 8%. I have no idea how much is -- out of that was component, how much was package, but there's a significant component part to it. And I would be -- the team would be unhappy if we were not able to get our -- to get a 30% market share out of that. So it's a significant volume. Again, the numbers are very, very difficult to calculate.

And second, the customers who had booked with FTI, they were hardly addressable this year because these people needed to get the money back. They haven't got the money back. The process of getting back the money has just started. I have no idea if it takes another 4 weeks, 8 weeks or even 12 weeks, but it will be outside the summer season. So the impact that these people can think about going on vacation, again, will probably start in winter and will be more important for next year.

If you asked about ASP, again, very difficult to judge. It will be significant on the package. It will be significantly lower would be my estimate. If you have a high share of components, it will even further bring the things down, and that's why it's difficult to judge. What I can say is when we got our share of the package -- FTI package, it's one thing, but we also got the share of car rental customers. That is, educated guess, at EUR 200, EUR 300, EUR 400 on average booking and not EUR 1,100. So there are a lot of structural effects, which we don't know yet. And the FTI customers are not yet distributed to all the competitors, including us, as a lot of people were not able to book.

[Othmane Bricha, analyst]

And do you still expect -- or do you expect the impact on the margin to be accretive or dilutive once you integrate those volumes in the midterm?

[Sebastian Ebel, executive]

Can you repeat? It was very difficult to understand your question for me, at least.

[Othmane Bricha, analyst]

Yes. Yes. Can you explain how accretive or dilutive would these volumes be on your margin?

[Sebastian Ebel, executive]

I said -- I would say the impact on this year is probably neutral. For the future, it will be, of course, value creative. It will be volumes which will increase the load factor on our aircraft, which helps us -- or we're able to get the hotels, which we normally wouldn't have got, into our portfolio. We will have the volumes in our transfers. They will buy excursions, so there will be a significant positive impact this year.

I would say there has been a neutral effect because you should not underestimate the pure logistics to ramp up. Several hundred thousand of customers was huge. And for us, that was very well recognized by the market. To make sure that TUI is the problem solver for the customer is important. There were 2 companies who were very much engaged in bringing customers back -- FTI customers. We were organizing that they got payments. Of course, that will be reimbursed, but there was a lot of effort and, as said, payments just when they went on vacation, attractive offers, so that they could book. And we -- it was all on the late business and not on the long business, which is commercially a very attractive one. But in the future, it will have a significant effect on us and on the market. And you should have in mind, it's not only Germany.

[Operator]

The next question is from Jaina Mistry, Jefferies.

[Jaina Mistry, analyst]

I've got 2 questions left. The first question, when we last spoke, I think you said that summer would be made or broken through the late market. I wondered if you could give any color on how the late market has performed versus your expectations. And you've mentioned more robust pricing in your outlook commentary over the summer. Does that mean that pricing has accelerated into later bookings?

And then my second question is on winter. Now I know it's still very early days, but you've also spoken about robust pricing over the period. Should we take that to mean kind of the same as what we're seeing in summer, 3%, or something slightly higher than that?

[Sebastian Ebel, executive]

I can't remember saying that what you have said or what I've said. Of course, it's always the last 10%, the other ones, which makes a season good or not as good but that I would -- everyone would have said a year ago, TUI -- maybe not in COVID, but outside COVID. And especially in our business, July, August, September are these month. And when I take out the effect of FTI, which we discussed, it has been a fairly normal late market, slightly higher volumes.

And so nothing special from my side to add. Maybe, Mathias, you want to add, but that would be my summary. And again, it's 6 weeks to go. And of course, if you see 7 days great bookings, you are more optimistic when the market seems to be yesterday more difficult, and it looks good at the moment.

And on winter, it's -- I mean the U.K. is the most advanced with 1/3. They're doing well. Germany on 10% less or other markets, very much in line with other winter. We have seen dynamic is growing, which supports our growth. For the time being, I would not expect something extraordinary. And therefore, it's also so important that the outside European activities or the cruise activities, the hotel activities are even performing better. And that's why in total, we are confident about a good winter next year and also a good summer '25.

[Mathias Kiep, executive]

Winter, just to reiterate, I mean this is like a first kind of lifting where we are with bookings and showing some illustrative numbers. That's what we normally do in that quarter. And then there's the more formal update in September with then -- where we also, from the booking side, as Sebastian has mentioned, U.K. with 1/3, you can expect all other markets, some 10% in the booking curve behind that. It's all within expectations. But that's why we normally don't give more numbers, and again, that will be then delivered in September.

[Sebastian Ebel, executive]

The volumes are still low, but it's robust.

[Jaina Mistry, analyst]

That's very helpful. Can I just confirm, when you talk about robust price levels, does that imply growth at this stage?

[Mathias Kiep, executive]

Sorry, the line is not perfect. Can you reply -- repeat the last part, please?

[Jaina Mistry, analyst]

In the release, when you talk about robust price levels, does that mean prices are up year-on-year?

[Sebastian Ebel, executive]

I mean, we want to -- we need to cover inflation. And that's why it's important for us that we -- that prices are up.

[Operator]

[Operator Instructions] At the moment, there are no more questions. Next coming incoming from Andre Juillard of Deutsche Bank Equity Research.

[Andre Juillard, analyst]

Congratulations for the results. A few questions if I may. First one about destinations. Did you see any significant change in the destination of your clients and maybe a more significant rebound on long haul? So the first question.

Second question, coming back to the competition, the bankruptcy on -- of FTI and the former one of Thomas Cook a few years ago. Did you see any regulation or specific rules coming up to have easier refunds because you mentioned that it was quite complicated for FTI clients to be refund? Did you see any significant changes that we should take in consideration in our assumptions and in your cost base or rules for distribution in general?

[Sebastian Ebel, executive]

If you look into the passenger development to the different destinations, there are destinations, I would say, with normal growth, 5%, 6%, 7%, like Spain, like Greece, like Cyprus, like Italy. And then there are markets which significant growth, double the growth. And this is Turkey. This is Egypt, and this is Cape Verde. And that's when I always say when we talk about where should growth go, TUI fit.

It's important that we have the capacity outside the markets where capacity could be constrained and could be limited. We have a very strong footprint in Turkey with the owned hotels. We started 10 years ago to build footprint in Cabo Verde, which is a very good business.

And third, we have also, through our hotel joint venture, a strong footprint in Egypt. And that's, I think -- and they are outside Europe. They have a cost advantage. And therefore, I would expect that these markets will see overproportional growth, and we are well positioned.

Long haul out of Europe is slower because of the -- and if you see that on the hotel side, we have 10% increase, which means that hotel prices in the Caribbean have probably gone up even more than 10%, 12%, 13%. And that, of course, is a cost situation, which makes it sometimes harder to sell a trip to Mexico because the Americans are paying a lot more. We are benefiting from that in the hotel business. These customers then go also to Egypt, to Cape Verde or which seems to be -- get normalizing now is the Far East. It's Thailand. It's Sri Lanka. So I would say that there is further growth to be anticipated in these Middle East, Far East countries in the short term.

And there was a question on the route concerning FTI. We don't -- at least I would not expect any significant changes. Of course, there are always -- we know that there was a new directive plan. We think it will be, for our markets, on a very similar level. It's more the impact that component seller could have an impact, which would be very much in favor of it. I have no idea if that will happen or not. But I think whatever happens, it will -- there is an opportunity. It improves our competitiveness. Most likely, I would say, it stays as it is.

[Andre Juillard, analyst]

Okay. And just to come back on destinations. Did you see any recent changes because of the situation in the Middle East and geopolitical situation in general or nothing really significant at this stage?

[Sebastian Ebel, executive]

I mean there has been small things. You can't fly over Russia, so therefore, you have higher cost if you go to Thailand, but that is now learned after this horrible 2 years with the Ukrainian war. The business to Israel, to Lebanon, to Jordan has -- actually has never been a big. We talked about a few thousand customers, so not relevant at all.

And what you have seen, yes, there were maybe 2 weeks where it was lower for Egypt, but that has picked up. And if you see how strong Egypt is growing because it's such a great product. If something happens, it's very short term. And the effect is that there is a small shift from A to B, but nothing more. And that's always -- I mean that's why it's so important that we have enough capacity for when the customers -- and it's more price than anything other reason, has other thoughts. And maybe a destination like Mallorca, it was really for this year, and you could hardly get a reasonable bed. And then it's important that we have enough beds on Cape Verde or in Turkey. And that's what we are having.

[Operator]

Next question is from Jurgen Kolb, Kepler Cheuvreux.

[Jurgen Kolb, analyst]

Basically, one question with several components maybe. First of all, housekeeping really, any update on the situation with Boeing? What's the current status? Also maybe a quick and first look into 2025.

And then in this respect, I understand you don't want to be too precise here, but the negative effect from CrowdStrike, from the Red Sea, from the Boeing all had obviously negative implications on your EBIT line. Maybe any further indication as to how much that really affected your EBIT would be helpful. I understand you don't want to be too precise, but maybe a little bit of an indication as to what the total amount and what the level has been.

[Sebastian Ebel, executive]

Before I get too precise, I will ask Mathias to answer the question. On Boeing, as I said, I'm really proud of the team that we haven't had -- the lowest number of cancellations, I think, in Germany, one, that the delay, 3 hours delay at historical low number. So the disruptions which could have occurred and others had by not getting the delivery of Boeing, we have diminished. And that is really something we are proud of. As I said, we expect that the deliveries we are waiting for will come in '26, and therefore, we will manage the situation well in between.

[Mathias Kiep, executive]

Yes. And I think -- I mean I understand the question on being more precise. I mean, on one side, of course, there have been some events. At the same time, events are not new for the business. We've shared with you the KPIs, which are positive. And then I think the best is what we can do. I mean, again, reiterate, we are -- we have a clear guidance policy this year that we follow. And I think we have done the same when we entered into Q3, and we're doing the same again in Q4.

[Operator]

As of now, we have no more questions in the queue. So with that, I would like to close the Q&A session, and I'm handing the floor back over to the hosts.

[Sebastian Ebel, executive]

First, thanks again for attending. A good quarter, a good full year. And what is, I think, for us, even more important is a good prospect, the focus on excellence. There is a lot of room of improved -- possibilities of improvement, a strong focus on transformation, a lot of opportunities outside Europe as we have described. We are not only getting ready. We are seeing the first results of this, and that makes TUI for us as management so exciting that we are not in a downhill battle, but we really can focus on the areas where we can win and where we can change TUI. And as I said, the TUI of tomorrow will be very different of the TUI of today. And the long-term vision is to really have a strong, global-player TUI.