TUI AG

XETRA:TUI1

Earnings Call Transcript 2022-Q4

[Sebastian Ebel, executive]

So good morning, everyone, and also good morning to the ones who are on the web. I've heard about 100 or even more. So I'm really very happy that you made the effort to come here and to be with us and to be on the web. And I've seen Nicola, you are really popular here with everyone. And first, thank you to you and your team for all the work. It's -- we are quite often underestimate how much work that is. So we want to give you an overview about the Q4 of TUI the year-end results and also how we do see the market moving and how do we see TUI moving -- we have -- now I have to see this is too far away I have to look here. The screen is not working. This is the agenda for today. I will start with the highlights. Matthias will go into the details of the 12 months and especially of the fourth quarter. Then we will talk about the expectations for '23. What are the short-term trends for winter we do see what is the year expectations we have. Then I will give up -- we'll give an update on the strategy, where is TUI heading to in the next years. And then we have a special guest, Peter Ulwahn, -- he's the CEO. I mean, Matthias is known. Therefore, I didn't introduce him. He has been my successor first of October, and I'm very happy about that. We worked for 10 years together. Peter is also new in this role, and he has been with 2 year also almost 30 years, and he's the CEO of of Musement. And as Musement is extremely exciting for us to see, we thought it's interesting for you to hear a little bit more in detail. Is the microphone -- it's working -- more details about what we do with Musement, how we do see the future of Musement. This screen it doesn't work as well. So we are very pleased about the year-end results, especially the fourth quarter after a very, very difficult start 6 months of pandemic, third quarter ramping up. And now the fourth quarter where we had seen that we are almost back to normality. We are very happy, and Matthias will give you some more details about the agreement we were able to get with the WSF. That will be a major step forward for TUI and making TUI very normal on one hand, but also a very successful company in the future, again, as you will hear more details in the past.So having said, the restart third quarter was a challenge. I mean it's always amazing if you come from almost 0 to normality. A lot of things means challenges and also a lot of workload for people. And we were able to deliver a very strong fourth quarter. I said, back almost back to normality, customer levels at 93% and airline load factor, 92%. This shows that we are almost there where we had been pre-pandemic. And if we wouldn't have had all the disruptions at the airport, then we would be -- would have been above 100%. We could see when the airport disruption started here, especially in the U.K., there was less momentum when it came to last-minute bookings. So the fourth quarter above EUR 1 billion, if we take not -- if we take into account the disruption costs, and these are only the direct disruption costs, they have been also indirect disruption costs, then we would have been above EUR 1.1 billion. Hotel doing very well, EUR 300 million, almost the fifth consecutive profitable quarter and above '19 levels. This is amazing how resilient and good business is cruises, returned to profitability, EUR 100 million. That went pretty quick. I will give you later on some details. If you now see where they stand today, we are also almost back or we are back to normality. To amusement, of course, they benefited very much from the strong increase of passengers from the market and airlines. But they are also the new business part where they sell direct to customers has developed very well. So the traditional part is doing well, and the new part is accelerating well. And market in airlines, for the first time after 2 years, 2.5 years, are back into positive territories. EUR 600 million, it's a good result for fourth quarter, where was a lot of ramp-up still. So that led to a group result after minorities of EUR 800 million, which underpins the strong summer. Operating cash flow, EUR 1.7 billion, of course, very much supported by the working capital build up customer payments, but also less payments to hotels. And therefore, net debt decreased significantly, and the liquidity position was very strong. It is even in the typical seasonal swing very strong.If we go into the details, which I almost did, hotel almost EUR 300 million, load factor or occupancy, 92%. This is one of the best load factors we had, and it really shows how the model works well. Average rate, EUR 80, 10% up, which covers all the cost increases we have seen. Cruise, EUR 100 million profitable. Occupancy 80. You know historically, we had been 100%, 102%. We are now not only on the way. It's amazing. Yes, very short-term business, but that we come close to the historical levels. To amusement, EUR3 million experience sold, EUR 11 million transfers, EUR 40 million of profit. So 2 sources of profitability, the customers, which came from the markets and also the business the generic business they have built up to sell their excursions also to new customers, which is very important. Markets & Airlines, EUR 600 million in total, EUR 344 million from the U.K., Ireland and the Nordic states, a real big change to the year before load factor 91% also getting close. I think in summer, we had sometimes 95%, but it's getting close to that. Central in the region doing very well load factor, 95%. A lot of the things we present in our growth strategy, we had started 3, 4 years ago in Central Europe and Central Europe was always weak on profits. What you do see is that there is a change, quite considerable change there. And the Western region, EUR 130 million load factor below 90%, 89%. That is probably at the moment, especially in Belgium, the most difficult market or the more challenging market, why you know all the limitations on Amsterdam, therefore, Holland is doing well, but the overcapacity went from Amsterdam to Brussels, and therefore, it's more competitive than we were used to see there. We did a very strong progress on our digital platforms. And I think we now also introduced the view on our app bookings. The share of online bookings is now above 50% U.K., 70 Nordics even 80% to 90% in Germany is 30%. And 2 things are important. One, it's not an or strategy we have between retail and online. It's an end strategy because we do see the value of strong and good retail partners. And through retail is the customer, we get a high margin and early booking customers. So it's always important for us to say it's an end strategy.When it comes to online, -- the focus in future will be epicentric because we do see a lot of benefits if we are with the customer with our app, 2-way communication, bringing all the offers to the customer and using all the directional things we can do through the app. And therefore, the focus is to really become centric. And what it means we will give you later on some more information. We doubled the sales through the app, which sounds terrific. But if you look at 3.4% as of compared with best of breed, you know what big potential we still have. And therefore, the focus for the coming years is to really become app-centric. The customer is using almost 3/4 of the customers are using the app 4 service to get the book the booking confirmation to do the check-in to get information when they are traveling also to book amusement excursion. So it's good. People are getting more and more used to using the TUI app. And now it's the task to make it also as a sales app. And if you look at markets are different, some markets in the U.K. are better than other markets. But if we compare with the best of breed, there is a way to go and we want to close this gap in the next 12 months. And with the app, the customer satisfaction index is also good. There's always room for improvements, the best up probably around 8.5%, but to have 8% or 8.1% is a good starting point. So for us, yes, retail is important online, but the focus is on becoming an app-centric company like booking is or others are in other sectors. If we look at the full-year results, EUR 12 billion more revenue to EUR 16 still way to go until we are at pre-COVID level. On the other hand, I think that makes it quite clear and most of it came through the end of the third quarter and the fourth quarter, the ramp-up for a company like TUI in the value chain has been a horrendous effort. And yes, some things didn't work as we would have loved to work them. But I think it's amazing achievement, which is especially we can be very grateful with our employees who worked sometimes double as much as they had because the reps from the U.K. couldn't go due to Brexit to Spain and so on.If you look into the EBIT, holiday experience did do very well, EUR 1 billion improvement. Market and the airlines now at a breakeven level with EUR 1.4 billion. There you can see where the benefits, the improvements will come from in the future. Yes, we also want to increase the holiday experience part. Cruise still has a way to go until they are at the historical level. And in market and airlines, there is the biggest potential now for getting into strong profitability, ending up with EUR 400 million of profit and which is maybe even we fulfilled therefore, the target to be significant positive, but what is even more important is that we are well positioned for growth into this year. And we -- I think, which is even more important that what we do now, and we were able to do now should lead us to a -- I shouldn't say different because we're still building on the strength we have, but it will be to a very advanced, more advanced TUI in the coming years. And before I talk about and I'd love to talk a lot about the strategy, Mathias will go into the numbers and give you some details there also about the measures which are planned. And so you are doing the number parts. I will do later in the fun part.

[Mathias Kiep, executive]

Thank you. And also good morning also from my side again. Sebastian, as you just said, I'll cover the results '22. And I will cover also what we did on the intended capital raise, in particular, the repayment of the government funding. Now before I go into the details, thank you very much for your understanding and also complements when we were in the media calls in the breaks, I can to some of the reports already. A lot of you already covered and captured what we announced yesterday night. I -- and we fully appreciate all the hard work that went into all of this. And I mean it's probably the same for us, given that we have a year-end and then on top, we do this agreement with the government -- but of course, it's really tough for all of you so highly appreciate it that you are here, that you are on the call and that you cover us with these agreements. Now looking back and Sebastian, you mentioned it already, how was '22. And I think for us, in particular, important, the fourth quarter. 12 months ago, we were not really sure. No one could really be sure whether the company would be there with these numbers, EUR 16.5 billion of revenues, EUR 400 million of operational EBIT, cash flow north of EUR 1 billion and a Q4 result close to historical levels. I think 12 months ago, we still talked about Omnicrone. We were unclear when it would really happen. Easter business unclear. And then only in the third quarter, the last one we reported, we had the ramp up, and we actually came to something where we felt, okay, operational, we are back. Then operationally, you could see that our customers were traveling. But now these numbers, they show we are financially also where we wanted to be. And I think this morning, we said the Sebastian when we looked at these numbers, presummer, what we expected, what we wanted to achieve, I carve out the disruptions, but these numbers are actually within what we wanted to achieve. So that's really good. Also good to see that the balance sheet followed that and with the leverage of 3.4x net debt and the resulting covenant test of 3.2, I think this is all in good order. And I think this is a very good basis to think about now what is the next step. How can we grow the company? And Sebastian will elaborate on that further later. Peter will also show what we've developed over the last years in that amusement, but I think this is a sound foundation. And very importantly, now to have the agreement with the WSF, of course, opens a lot of opportunity for the balance sheet as well, and I'll talk about that in a second.Now just quickly on P&L, cash flow and balance sheet. I think on the P&L, just to highlight Q4, if you take the disruptions out, you would be at something around EUR 1.1 million, really close to what we were historically, what the kind of full potential of the company is. Please remember, for instance, crew still in the ramp-up, I think, Peter, your activities amusement also in a ramp-up. So there, but not yet fully there because just of the timing. So I think this is something that shows foundation is there, but our ambition goes beyond that. In terms of the details to the P&L adjustments, net interest, they're all within what we thought and what were our modeling assumptions also tax because we then, of course, in the fourth quarter, started to pay tax where we do have profits. Overall, our net interest, quite a high number. There's a lot of one-offs included there, something like EUR 50 million, EUR 75 million, which comes from the handbacks that we had with the state in '22. But however, I think the number overall is still elevated due to COVID and Q2-ovedebt. In terms of the cash flow, I think the elements are also something that you probably have expected and which are in line with what we reported already, the strong flowback of working capital, the strong management of working capital is a key driver. EBITDA of EUR 1.2 billion. That's in line with what we actually wanted to achieve in order to meet also the stability on the covenant side. So I think this is also in good order. In terms of what you see, what you don't see is, of course, dividends. So I think from the joint ventures, they will need at the same time like we to recover fully financially so that we get these dividends, for instance, from 2 cruises, which prior to the crisis was a substantial contribution to cash flow in the past.So as a result, the balance sheet, as I said, looks solid. I'm quite happy with that. 3.4% is a good number. Also, the gross financial debt has significantly improved. What you don't see here because it was accounted for as equity, is the silent participation too that we also repaid over the summer, so that's EUR 0.7 billion. If you look about -- on this reduction of net debt compared to the year before, this is something that I also take into account myself. So we talk about something north of EUR 2 billion that we actually have improved over the last 12 months. I think that's really significant. And as I said, I think this is a good basis to grow the company now and in particular, to do these next steps on the capital structure. Just as a note, the RCF was drawn something like EUR 600 million KW was not drawn as balance sheet date. But of course, this is prior to the seasonality, and we'll come to that in a second, how much we will draw then KFW over the winter is something we'll have to look at. We monitor, of course, very carefully. And on that basis, I think that's also an ingredient for the then following capital raise. I think I'll skip my priorities because that's very clear, discipline, financial discipline. I was also happy to see that Sebastian also mentioned cash flow discipline. And you mentioned that later in your slides as well. So I think, please be ensured that this will be a top priority going forward. Now coming to the agreement with the WSF and then I'll hand over to Sebastian on the current trading. I think I'm really, really pleased with this agreement. I'm really happy. It aggresses 2 things. When I look back in our meetings over the last 12, 24 months, there were always 2 questions. One, when is the state going to convert? What are you doing with the situation? What will actually happen, how long will they stay in the shares? This is addressed. And the second question that is always what about the balance sheet? Do you think the leverage is a good one? Can you not aim for lower leverage? This is also addressed with this one.So there are 2 components. And one component is, of course, this very clear payback of the state. To remind you, the state always had the right to convert the EUR 420 million of silent participation and the EUR 59 million of bond is warrants at EUR 1 and time. So they could have gone in for EUR 1 and half the share price of EUR 170 currently, it was yesterday as a result. Now with this agreement, what we did -- what we will not do is we will not take away this benefit that the state has a result of the package for supporting the company during COVID. What we do have, however, is one that we do it at the current share price level, less a discount. So it is 9.3% less compared to the current share price level. And secondly, we can do it now. And I think that's a really great benefit because the state could have done it later, could have done it at the wrong moment, could have done it not related to anything else that we wanted to do. And I think now we have clarity, we can do it in a structured and order process, and we have 12 months in order to implement all the necessary steps. So I think this is a really good thing when I look at this agreement, one, the current share price level, minus the discount second, we can do it at the current share price level. We can do it in a controlled manner. And also, we hand it back to shareholders because through the rights issue and protected by subscription rights, they can do the funding rather the shares go to the market, and this is kind of outside our shareholder base. So I think that's one component to that. So it's a bit replacing what would have happened anyway, which is the conversion by the state by a rights issue from our side.The second component of the rights issue will be to address the balance sheet. And we've received a lot of comments on that over the past. I think we've done our own analysis. I think the -- if you look at our balance sheet, 13th of September, this looks solid. It's in line with what we have had historically. All that the mix is a different one. But what we said is the second component should be similar size to what we pay to the WSF. Now what could that mean? And apologies, it's a bit early now to really go on numbers because we've just found the agreement, we need to go through an AGM, and then we can do the rights issue, and there are a lot of determinants to say what could be the right value. But how would I look at it -- we pay back the state or something like 0.7% plus interest. So you could say it's EUR 0.8 billion. Similar size could be 0.8%. It could be a bit more. It could be in one or the other direction. But I'm not sure the mic is still on. Can you just check -- thank you. And so this gives you a bit of feeling what we want to do. How is the second component going to be determined? As I said, KFW is not drawn per September but will be drawn over the winter, and we want to have a look how much do we want KFW to be there. We want to redeem it over time completely. I mean this is a clear target. So we need to right-size it that this issue is the final one that this issue is the one which creates the clear pathway to the full exit from the government. One is very clear. It's the WSF. And currently, the price is 730, and I come to some details in a second. And the second part is then how much do we raise in order to replace KFW facilities.Now what are certain details? The price of the government can go up if our share price develops in the right direction, government will participate. There's a cap of that could result in a maximum of EUR 1 billion that we pay to the government so that they don't convert. Second, we have time 12 months, as I said, until the end of next year to accomplish this. And third, how do we accomplish it, we will go to our shareholders in the AGM to vote for a share consolidation. This is very technical. It's very legal. Commercially, this is not effectively relevant for the issue, but it gives us much more flexibility going forward. So this is something we want shareholders to vote on. And secondly, the EU will need to provide comfort that this early repayment is in line. And I think these are the most important ingredients to the agreement that are relevant. There's a lot of technicality also in here, but I think commercially is what we want to do, use the opportunity to repay the WSF in a controlled and structured manner together with our shareholders rather than having them convert maybe at the wrong moment and to give these shares into the market maybe at the wrong moment and at the same time, finally address the balance sheet, and Sebastian will elaborate on that in a second. I think there are a lot of growth opportunities, and I think we want to have the right balance sheet at the right time rather than to wait too long and then forgo opportunities that are out there. In terms of the details, I just mentioned, we need to go to our AGM in February. So we'll incorporate all of this in the invitation, which will go out early January to shareholders. A question very naturally is can sanction shareholders participate what will happen? Our understanding is sanctions are very clear. We cannot communicate to sanctioned persons, sanctioned individuals and our sanctions individuals or shareholders are not permitted to participate in such capital raise. I think overall, as I said, I think this is a very clear opportunity to do the right step at the right time to address the balance sheet and to solve the situation that we have with the WSF. And I'm really, really pleased that we could find such a good terms with the government because, in the end, a lot of changes against the original agreement are now incorporated in this negotiation.So I think if we manage to do that, we can do all the things that are summarized on this page, which is growing the company with the right balance sheet and taking part in all the opportunities which are out there. I think this is something -- and it's good that you are there, Peter, because that the 2 of us cannot only have a discussion about where can he save, but maybe a discussion where can he grow and he gets a little bit of headroom. And I think to do the rights issue then at the right time will actually provide us with the right kind of tailwind that we can have in this '23 and Sebastian will talk about it now, what is the environment because I think the solid environment of '23 will give us the right time to do this to prepare and then grow further going forward. Yet you on quickly. Yes.

[Sebastian Ebel, executive]

Thank you, Mathias. Thank you very much. And expectations about 23. And I think I would like to draw a picture with 2 views. One, I think it would be unfair not to see that the market is challenging. I mean if we would think everything is fine and well normalized, I think that is not the fact how much impact of economy, we will see and sentiment on people we will see. I just said in one of the talks before in Germany, the sentiment is by far worse than the actual situation. And we do see inflation will come down. I expect half of the inflation next year than this year. So there will be a lot of good momentum. No one knows how the economy will be. On the other hand, that's maybe the picture where we have to be cautious. On the other hand, we do see that the trend to travel is there is strong. And the ones who have the disadvantages of the economy of the cost increase are unfortunately, unfortunately, very difficult to say politically right, are not the ones who travel with us. And so all the burden goes to the poor of people, not to our target group. Second, if the market is challenging, we have to be better than others. We have to be more agile, and that's what we do see at the moment that there is strong momentum in what we do. So on one hand, we are cautious. On the other hand, we do see the opportunities of the market or to balance that out is really, really important that the target for '23 is very clear to have a very solid and good profit. You know all about the strength of TUI brand, our customer offer, the business model. I will tell a little bit later more about the business model. And what really was important during the crisis that we rightsized the airline and that we reduced commitments because what we had learned is, if you're highly leveraged demand to own supply and there is a reduction of 10%, you really go into hundreds of millions of losses. And to have more flexibility is really important. What did it mean. We were very often at the upper end of the capacity we would need for winter. So in summer, we could fly all the aircraft in winter, we had a lot of aircraft, which we could not use or in loss making. So reduced the fleet to a capacity which we can use year round. Then the question quite often is, what do you do if there is a peak in summer? There's enough capacity, especially in Central Europe, it's a little bit more difficult in England to get the capacity. That's why the reduction has been stronger in Central Europe than in England.Reduced hotel commitments and prepayments. So prepayments that was not so difficult because we were one of the very few ones who fulfilled their commitments. And for the hotel years, it was good to see that we can fulfill the commitments. And on the other hand, we said we want to reduce the prepayments. Similar to the commitments, we really focus on the value-creating hotels and less on the broad range. And what, of course, has been also important that we reduced our general spend by EUR 400 million. By the way, this is a work which we do every day. It's not stopped now because we have achieved the EUR 400 million because the inflationary impact is strong. And therefore, whatever we can reduce in cost is important. How does it look like for winter 1? I think the trend is not a trend anymore, the situation that people book later is very, very strong. I mean, when will it normalize? And will it go back to '19 level? It will normalize? Will it go to '19, maybe, maybe not. It depends on products for the branded product, yes, for the mainstream product, probably it's more difficult. What is different to the past is that prices are stable and the margins are stable. So that in the past, when there was a short-term booking trend and normally overcapacity, low margin, that is different. And if we compare where we had been in September, where we stand today, we have 84% is the cumulative book position compared to September, 6% compared to '19, 6% up to September. And if we look at the coming weeks and months, we are very close to where we had been before. And let's say, March is still a lot way to go. Now it's an interesting question. Is there a break in the trend or will it stay? For the time being, we don't have an indication that this should end this trend. And as I said, it's very different if I look now at cruise we huge improvements also from September to now, it's all short term for all significant part short term with good prices. And we also see in cruise, which had been the longest lead time that people start to book 1 year ahead, 1.5 year. So with a branded product, it's coming back.Average price, 28% compared to '19, what is maybe -- sorry, I forgot one thing. If you look at the last 4 weeks comparison, we are almost at 100% that shows the short-term trend. Prices compared to last year, 7% up. This is slightly below the inflation trend in October and November. That has not changed again. Why? We had the strong decline of the weakens of the U.K. pound and we had a significant increase of fuel prices. And as we were just now more and more in the situation to hedge, we were hit by this effect in November. That's why we were not -- will not be 100% covering the cost increases that will be very different in the second quarter. There, we will cover the price increases very much by the 7% to 8% we will see. So it's good news that prices are stable. If we go into the details, hotels and resorts are booked very well on a strong winter, even stronger. We're a little bit suffering on having a little bit less capacity. For example, we are rebuilding a big Rio hotel in Mauritius, which we tear down and we increase capacity. So there is a slight increase in capacity because of renovation, but that is only a temporary effect. Also, the back occupancy as at a 9% higher, 57%. Rates are doing very well, and we are benefiting that long haul is still long haul to the east is still not really possible or easily possible. So where we are in our destinations, we benefit from there.Cruise, very strong increase in occupancy. In the fourth quarter, we were around 80%. Historically, will it be at 100%, 102%. We are getting now close to the 100% again. So it's amazing a little bit. That was the one which surprised me more. And the ticket rates are also good. So good development. On musement Peter will give some more information, a very good development, which is good that musement not only benefit from the higher number of customers but also that is always where we look at it, how many of the customers who travel into the destination will book an excursion. And we had targets of coming close to 35%, 40% of the customers. In the beginning, we were at 20% of course, people didn't dare to go on an excursion. Now we can see also to a lot of changes we are coming very close to what has been. But which is maybe even more interesting is the part where Musement Peter's organization has to get new customers. And there, we are doing very well. And this is important for 2 reasons. One is important for amusement, but these are all customers, which were not in the 2 ecosystem. And when they are in the 2 ecosystem, Apcentriq, we can sell all the other product. Modeling assumptions, before I do it in old habit, you should do it.

[Peter Ulwahn, executive]

And indeed very quickly to what does actually that translate into on the financial side. And I think if you look at the overall environment that we are in, this is probably not the right time to be very precise in our guidance. But of course, the ambition in revenue in EBIT, the 2 key KPIs is to be significantly above the last year. And if you think about what Sebastian showed in the beginning, that not all entities, they're operationally there where we wanted them to be because we didn't have a winter Omnicron. We did only have the ramp up in Q3. I think this should give you an idea. Q4, we did in today's environment, and I think this should be a bit our benchmark. This is where we want to be for the full year. Now the rest of the assumptions we've outlined here, adjustments go down a bit. Interest is a bit higher than we probably would have expected 12 months ago with the 410 to 430. We've seen quite some rate increases that translate into higher costs for our revolving lines, with the cash, with the banks and with the KFW. At the same time, we see also on the lease side, dollar has strengthened. So whenever we pay dollar interest, that's a bit higher. So this is reflected here. Net investment is more or less there, is back where it is depreciation prior to IFRS 16. So I think that's more or less a solid number, and this also reflects effectively that we will see investments in the hotel area, and particularly from Rio going forward. And you've seen it also this year that they came back much quicker then hotels were already on 19 levels, already beyond '19 levels. And I think these numbers, they reflect what you see also on the investment side. Last point, I think, on interest, I mean, again, this is also a reason to address the balance sheet because if you think about it, if we replace the facilities with KFW more with cash that helps us through the winter, less interest cost, but also through the summer where we draw the cash out here with our commercial banks. So I think that then will have a quite good impact on net interest.Again, a bit early to talk about, but these are the things that drive us when we plan then for the eventual capital raise later in the next year. So I think that's from my side on '23, and I think it's now a strategy going forward, Sebastian.

[Sebastian Ebel, executive]

I would love to give you more numbers you have seen that, but we're looking at Nicola, I don't dare to do so. I think what is important for us, all the measures we will discuss now should lead to significant growth. In this year, it should help us to achieve normality. In the future years, it should -- because the market is challenging and probably not as strong as we would like to have it. In the years after, we should really see incremental significantly significant growth. So the good thing is that the megatrends are still solid valid every market research shows that, yes, there is a dip due to the macroeconomics due toward this and that the fundamentals are good. And we also put the point experience into it. Why is it so important for us? It's a growing market. It's a nonconsolidated market. We are well positioned being one of the #1, 2, 3, and we can lead product consolidation, we can lead in conquering new markets. And it's so important for the decision of the customers who wants to go on a package with a package that they decide where I can get the best diving, where can I get the best skiing support and so on. What are our -- and we should change that it's not the CEO priorities. It's all our priorities in the management team. It's one to grow market share, to grow profitable market share in what we do today. I mean we do see markets where we do very well, and there we do see markets where we're doing okay.And we have also markets which are turnaround markets like Nordics, by the way, it looks like that we have achieved that, but which were a huge loss-making last year and which we want to turn around. And there, we have per-market decided for a plan how to turn it around or to make it more agile to gain market share.Second, new products. Very important. If we have -- I always give the example, if you go to a grocery shop and you have 3 sorts of milk, you buy it. If you then find oat milk or soya milk, which has not been before that, you buy this incremental in the same supermarket, you don't go to another one anymore. And it's a little bit with TUI. And we want to get new customers, which have not been part of the TUI ecosystem and therefore, musement is so important. This is all based on a very strong focus on quality. We lost the sector lost a lot of quality during corona. We probably have done better than many of the competitors, but we are definitely not there where we want to be. Sustainable sustainability. We do see as an opportunity, not as a threat anymore. First, we think it's, by the way, not only more or the right thing to do, it's important for the sector to do. It's important for TUI to do it, the front runner to be really setting the benchmark even if it cost some money because we think it's also commercially sound to do it. And last point it's on people. I mean after corona, including ourself, we were quite tired. And now we have through different energize the team, I think it was pretty easy to achieve this energizing. The more difficult challenge is to keep the momentum to keep the speed because we don't want to be authority. We want to be really entrepreneurial and to get things done, not to analyze, but to get things done, and therefore, we have to work a lot and to support a lot of our people.This is something which is crowded, but for me, always very important. 20 million customers before corona now, 16, we are back and will be back to the original number. We want to increase this number significantly with new customers in the different segments, which means that in the funnel model, we have more customer which we can steer into our asset, which still has opportunity that we can optimize the 1% or 2% occupancy, we can optimize the yield. What is more important, we have now a model asset-light model to grow with hotels, to grow with ships. And the bigger the distribution funnel is, the better we can fill this. And the clear target is to grow with hotels, asset-light, asset right. And this is very much supported by the increased number of customers. And by increasing the sales funnel, it means that we increase flexibility. We reduced significantly risk, and we increase, as I said, occupancy and risk. If we come from the assets, it's just the other way around. The asset should support TUI because they are unique. A Rio Hotel, you only find with TUI. The Robinson Club, you only find with Magic Life. And we are building on these TUI BLUE on these strong brands, management models, franchise models. And this then supports why people should go to TUI. So it's a 2 dimension supporting the profitability. Market and airlines, how do we want to grow the market share. One, we said on the wholesale package traditional market, we want to be more agile. We want to be a good competitor, a better competitor, the best of breed are the ones again soon we want to win. If we go into the dynamic package, which is bigger than the wholesale package, we are hardly there. And for the customer, it's the package. He's not so much interested is it produced A or B. And we have a very low market share. The only market where we have a significant market share is Germany. And Germany in our market share, which is really doing extremely well. If we say we have 25% is -- out of this is dynamic packaged you know that we are there between 5% and 10% to be a little bit precise. And that we have built up in recent years, recent month and half of these 25% are new customers to TUI. And that is something which we now will roll out to the next -- in the next 12 months to other markets.Recommendation only, very similar. We are Belgium, we have 5% in the other markets. We have 1% very, very no number. And we do see it's a very profitable risk-free business. And why shouldn't we get at one stage a fair share in this market? And it was not planned, but I just got the message that we have start that we rolled out recommendation only in Nordics. Today, it's working. It's selling. It's the first market we do. It will take another 12 months on all the other markets, but it's great that it's working, that people find it, people buy it, and it's an important element, and it's all under TUI brand, and it will work well. If flight-only is maybe something which is profit-wise, not really so important, low margin, but people buy flights more often, it's a way to communicate more often with the customer. So a very strong focus on growing market share, profitable in the wholesale package area by being more agile and more competitive also looking using more partners. We have agreed a very good package with the -- or plan with the U.K. management, and that is a really exciting dynamic package recommendation of flight-only car rental, very important Germany, very strong, but we have this product not in any other market. experiences. Peter will talk about and tours. That is something which especially in the Southern European market is very strong in Spain, EUR 1 billion market, Italy. And we have just -- that was the second product we brought in the market a week ago, implemented this in Belgium, in Holland, so that you can book dynamic to us through Florida, through Europe, very interesting. And this is a source of growth.On the holiday experiences, it's slightly different -- all the growth is in asset-light model, and it will and support the growth of the market -- of the TUI operators of the market and sales organizations by adding great products to it. As said, TUI Cruises will have in 25, 2 ships and 26 another ships, so 3 new ships. And it will be very unique, especially in the last 2 months, and that will lead to higher profitability there supported by our distribution strategy. Hotel, very similar. We are rolling out the TUI BLUE brand hotels to other destinations is doing very well. They have built up strong distribution also a recommendation only direct sales activities and we do see that the partners are happy, we are happy. And it's more the question how quickly we can scale it up. And last but not least, the amusement part, which Peter will express. And when we say we do it asset right, there are different sources of the hotel fund, the JV companies, we have the one or the other, we will develop on our own, the one or the other we will sell. So the number of projects of hotels of ships will increase. And whatever we do, it should be scalable. That's why so much effort on the TUI BLUE brand. By the way, we will add the hotel portfolio by the one or the other incremental brand, all about TUI, where we have not been strongly in. TUI SUNEO is a new product now really scaling up in -- also in the -- in the source market like Germany, not only in Spain. This is a 3-star club, not Club in British sense, but in the European sense family resort product market segments where we haven't been really in -- if you look at the TUI market share, it's big in the 4-, 5-star segment, 30%, 40%, it's 10% in the 3-star segment. So what does it mean? We have the TUI Heartland products, Sun and Beach wholesale and the great hotels and cruises.Now we add this with dynamic package product weekend trips or just you go somewhere to stay in a hotel. The experiences and the tickets, the ticket also for theater for museum and so on, something you can use every day. And you are probably not much aware of what Musement does in England or in Germany because Musement is a Mylan based company. So there -- what gets your guide is in Germany, Musement has been in Southern Europe. And now we're bringing the content -- the German, the British content onto the system, and we start the marketing so that in the medium run, the position should be as strong here in Germany as it is in Southern Europe. So what does it mean? One is the product side. On the other side, it's the focus on customers because you can build a lot of products if you don't have the right customers, you will not sell as much as you want. So of course, we want to keep and to build on the loyalty of the smart tenants, the home away, the senior people, the ones who have a budget with families who wants to have the all-inclusive package and so on. This is important. Whatever we do? It's not an or, it's an end. And we want to get the energized adventures, the travel is that the market is as big as the other part and to get these segments with our products into the TUI ecosystem and by adding the products by doing different marketing, different market channels, and it seems to start to work well. So very clear focus to keep the good customers we have and to get more customers in other segments by targeting very clear. What is really important is to bring whatever we have in the central customer ecosystem of TUI. That is something we haven't had. And what we do know, and I may have should have said it before, we really prioritized what we are doing, very few projects and these we want to deliver dynamic packaging, ECO-only and the customer ecosystem and all the other 100 projects we don't want to do. It's just about delivering that. And what does the ecosystem means? It means that the customer is in one system where he has access to all the TUI products with one customer account, one payment system, one loyalty program. I mean, if you look, you could ask why it's so extraordinary. Accor has a Hilton hazard. ACO probably for me is the best and gives a great standard. But in 2-operating it's not yet there. It has not been there with TUI. So in 12 months, we want to have this ecosystem, which is very much focused of being app-centric because with the app on the phone, on the mobile phone of the customer, you have -- you can be in course in contact, in communication with the customer very, very often. And this allows us to have CRM vouchers, strong communication, marketing campaign, but it also allows the customer to interact with us on a more regular basis on service, on questions on bookings on new bookings and so on. And we do see that some markets are more advanced than other markets. And this is what we do now to create one customer account, one payment system, one loyalty program. It's clear that it's not against the retail. The retail will get all the products we have. But if we look forward, it's not about web, but it's also important, but it's about the app business. At the end, this is the cheapest way to the customers and the most intensive way to the customer.So overall, there are 3 functional tasks One is on quality. We have started to look every Tuesday evening on the quality scores throughout the company. We know that we are not there where we had been pre-covered. Was probably 10%, 15% higher in Net Promoter Score. And we want to get there again. We know where we have not been good, like when you talk about the disruption, there are competitors with own people who did it better than we know that on spare parts of our dear friends from the aircraft supplier was not as good as we would have wished a lot of effort to get the right access to spare parts and so on and so on there. We do know what we need to do because you can have the best services. If a plane is late for 8 hours, the customer is annoyed. And whatever people do, they can maybe smooth it down, but people are annoyed. And customer satisfaction with 8.4% actually is very difficult to increase further. 8.5% normally is something where it stops. So there, we are happy but the NPS in all the different areas. Is it retail? Is it online app? Is it service? It's airline? We measure now, and we want to be best of breed. And there is one company who is on the same level as we as the benchmark and has also developed very nicely in the world, and that's where we want to get and hopefully to get even better.Sustainability, very important. But to us, we believe that you know that we are part of the scientific-based initiative, where after a very tough process, we will -- our targets will be acknowledged and certified. Our ambition is by far stronger. Our ambition is in 10, 11, 12 years to be carbon neutral to really be the market leader of what we do. In some areas, it's easy. Our new head office in Hannover will be carbon-free from next summer onwards on hotels. It's more flies-off rate more question of how much work you put into it, solar panels, all the other activities to reduce it on airlines and on ships, it's more difficult. We are now in the process of changing the engines that they are able to -- till 26 can an with methanol, so hydrogen derivative. We have joined initiatives on the fuel greenfield. There's a deal with Cepsa more to come. We want to really secure the delivery of green fuel. By the way, it's more than fuel and carbon-free. It's all also about social environment, supporting the local community through local marketplace. This is supported by the Care Foundation and it's also supported by our co-lab and roads where we really, in the next 7, 8 years, we want to bring everything in reality, which should be then in other 5 years later. So at the end, we think it's a commercial sound target because what you don't consume, you don't have to pay. We know that the regulation will be stronger and stronger. And we know that customers are in a limit. We have clearly to say in a limit to pay for it. It's -- I mean, the enthusiasm is getting smaller if the increase is too big, but a portion they are happy to do it. We want to be the market leader in sustainability.And the last point, which is maybe, maybe the most important is our people. There was a nice claim, which was initiated by our HID a bit eyes. Let's do it because we want to combine it, let's do it. We have been, let's put it positive. There's a lot of improvement to get things quicker done than in the past, and we should -- we want to do it in the right TUI way with the TUI values. And this is a shift or partly a shift in the momentum of the company. And for that, we need more talent to get into the company to an to promote them, has a lot to do with diversity. That's not man and woman. It's old, young, Chinese, Japanese, Spanish, Swedish, so to bring the best people together. And it's about -- I don't know if there's an English word for spleen. Everyone has his specialties, and we are better as an organization if the different specialties everyone has brought together. And leadership really to focus on execution, just do it and not to discuss too much, but just do it to take the risk to execute and to take decision where you haven't been aligned with 100 people to do it to get higher employee engagement. And as give the example of the 2 things TUI's business today, Eco-only in Nordics, we see a significant higher momentum. It will be a change of transition this year until 12 months so we have everything in place, but we are very focused on the execution of the 5, 6, 7 and yes, this should lead us to a more attractive company for customers, for employees and therefore, also for shareholders. And I have a soccer background, that's why I love the sentence, which is proper English I wrote, we are playing to win. That's the model we have. And that's what we want to prove to our investors in the coming years.And before we go to the summary and Q&A, it's Peter to give us his view on to amusement. Maybe if you allow me a few words Peter has done the whole career from the scratch, which is really amazing whenever I said I've been to Trivandrum, you said, I have been there. I've worked there as a tour guide. You have gone through the Nordic market from the very early to the top and your since '22, the CEO of Musement and one of the people who are very strong in execution and motivating people, what did you do? What are you doing tomorrow or today... News news.  And these are the things where we can learn a lot of the positive bring people together, entertain them, making them to go the one step ahead, and that's why we are so proud on your people on what you do and what you have achieved and what you will achieve.

[Peter Ulwahn, executive]

Thank you very much, Sebastian. Thank you. Hi, everybody, from me as well. I'm really excited to be here to give you a bit of insights into the magic of to amusement. I will give you a bit of a crash course on what we've been doing in the last couple of years. And hopefully, you will be as excited as I am around the potential that we have. Allow me to give you a little bit of detail what we are. So simplistically, TUI Musement is the part of TUI that manage the in-destination things with the exception of hotels and cruises. So we do 3 things. We do experiences, as Sebastian has been speaking about. And experiences for us is excursions. And when I say excursions, think about seeing the pyramids in Giza in Egypt with a bus and a tour guide. That is excursions. We have activities, which is snorkeling in the Red Sea. That's an activity. It's more of a sport getting. We have also tickets, so tickets into museum, but also tickets into all the major attraction parks in the world, Harry Potter in London and in U.S., but also Disneyland in Paris and in U.S. as well. So this is the experience part. We also have shorex, so shorex is experiences, but for cruise lines, where we have a brand called Intercruises, and we are the market leader when it comes to cruise lines explorations as well. But we also do transfers of point-to-point transfers, airport to hotel or airport to port. We do it with our buses, but we also do private taxes, private transport and private transport can be a car, a taxi, but it could also be a seaplane in Maldives. We are one of the biggest players when it comes to seaplanes in Maldives. And the last part is tours and tours, we call it multiday tours, so that's accommodation, transportation and an experience put together used to be old fashion group tours. It is now moving into one of the most exciting parts when it comes to dynamic packaging of tours that also Sebastian spoke to before.When it comes to tours activities, it is a very exciting market because it's growing, still growing. It is unconsolidated. It's probably Swinglish nonconsolidated from Lingling. And we have a really good play in that space because we're coming from that space from an operator perspective. We've been investing, thanks to the support with Sebastian and Mathias during COVID into our platforms, and we are now in an excellent position to scale with the acquisition of the Italian startup of amusement into the platform business. We have now scaled up that business. We have in-house development, so unique own unique own software. And in addition to that, we broke our systems open and been doing collaborations with tech start-ups in U.S. and in Switzerland. With the numbers that you see. So I think in 2019, we sold 10 million experiences. We had 31 million transfers. We had 300,000 tours already sold. We are now a global business, 120 countries, a revenue of SEK 1.2 billion, and our EBITDA in 2019 was SEK59 million. That makes us one of the leading tourism activity players in the world. We were probably the worst hit of the entire tourism sector when it comes to tours activities. We were down 70%. Now we have a really healthy bounce back. So the market, we think, will come back to full in 2024. Our ambition is to be back faster. If you compare with the other sectors in the hospitality business, you can see that flights 83% today is booked online. Hotels are 74 from a tourist activity perspective, it is only 26%. So that's the point in terms of the nonconsolidated market, where we now have a play in. It is different compared to the other sectors. The main one is it's a very, very, very fragmented supply, 120,000-something supply base. It's a mix of mom-and-pop shops all the way to these big attractions as Disneyland and everything in between. You still have a large part of the market booking in destination. So you have the must see that you book early, the divings or snorkeling or seeing the pyramids, but then you also have the boat trips that you prefer to go down to the destination understand the weather before you book. We have a play in that with the app, of course, but we also have a play because we are the only one that have a large service and sales force in destination because of our tradition. If you read a lot of customer insights, you can see 2 big trends, and that is that experience is starting to become almost like the entry point for the travel. So you envision yourself of what do I really would like to do on the destinations and then you book the flight and hotels. And this is something that is, of course, is going into our view for sure.The other trend is the early digitalization of tourist and activities was tickets because it's easy to digitalize. While the millennials and Gen Zs, they would much rather have a deeper kind of experience more into the tours and excursion kind of like, which also taps into our restraints. The last thing I would like to -- just to highlight is we do tons of research, and we can see a clear correlation between customer satisfaction on the customers that have done an experience. You can also see loyalty. That's just another driver in terms of why we think the tourist activity space is really important. So in short, the market is still sizable. Our part is really interesting. We're growing faster than the rest of the verticals, 4, 5, we are at 7, and we aim to outperform the market. Just a bit of a deep dive into the business model because this is unique for us. We are an end-to-end platform when it comes to tourism activities. You see on the top hand on, you see the different experiences that I just highlighted. You see the transfers and tours. And these are the product categories that we're using. We have one sourcing platform for all these components, both from a digital perspective, but we also have a global supply team all around the world, very close to the suppliers, helping them to connect to us. They can connect to us in basically any way they choose to do. We have direct connections, API connections with the biggest players. We have connections to basically every big reservation tech channel manager for in-source activity space. We also have a supplier extranet for the small players that would like to put themselves into us. But we also do input for some of the more traditional venues, most of the museums in Spain and Italy, for example. So these are different ways we connect.The next layer is the production layer, and that's where we create our magic. So again, a difference. So we have a large portfolio of products that we make. So we use supplier components and bring this to our own. I will come to that later. And that's what we call a production. So we use the destination knowledge of the team that we have in combination with the customer insights that we have and then we put together the best possible portfolio for it. Distribution is probably the area where we have invested the most in the last couple of years. We used to be an in-destination rep-selling channel only, and this has completely been transformed now in the last 2 years. So now we have the 3 buckets that I'll explain a little bit more. We have the existing TUI customers that we sell something to. We have B2C, so the open market where customer actually starts with an experience or a transfer or a tours. And then we have something that we've been very successful with, and that is rolling out to other players in the B2B business. We have OTA partners. We have hotel partners. We have airline partners. We have other tour operator partners. And they are right now also excited about this because they want 3 things. They want something that are easy to connect to. We are easy to connect to. They want products that we also manage by ourselves. We manage this by ourselves, and they want to have health and safety checked towards which we also do, because we have the teams and destinations.The last part I just wanted to highlight is also something that distinguish us from the others is that we have our own operations team, service and delivery locally in destination that we're doing. So that also helps the whole end-to-end product. I just wanted to give you a bit of a feel for how it would look like. And I would like to pick the app as one of the channel that we have. The one that's been growing the fastest for us. And even though Sebastian is saying that you can buy everything there, I'm, of course, buyers. So I prefer the app to really cater for the experience booking. So let me have a look. Let's run the video.I want to make my holiday even more memorable for me and my family and thanks to the to be app, finding the perfect experience has never been easier. While I'm counting down the days to take off, I can browse all the days out available in my destination. All it takes is a quick tap to save some of the experiences I like the look up, which I can come back to at any time. And now that I've got a short list of favs. I get personalized offers and recommendations sent directly to me. It's safe to say, I feel inspired to book. After all it only takes a couple of clicks. Okay. holiday mode activated. In-resort experiences booked. Now I'm ready to create memories to share with friends and family.

[Peter Ulwahn, executive]

We've been traveled with TUI before and by any chance, you would like to try it out. I recommend you to download the app, and I even have a special discount for you that Nicola has. So if you haven't planned your holiday period yet, you can go there. And just to emphasize that we were before Sunny Beach Company, I booked my own experience for Christmas. I did a snow scooter Safari up in the Swedish mountain. So we literally have products all around the world. So I'm personally guaranteeing wherever you are going in this holiday period, we should have a relevant offer for you. The app is good because we now have a play before you go because you go around and you swipe and you get engaged with the products that we have is definitely valid in destination because you -- before you had to go and visit somebody to buy it now you can do it from your sunbed, then of course, afterwards, we as TUI  group, we'll play -- use the TDA to be part of the TUI ecosystem. So these are the 3 things that is really exciting about the TUI app. We now have, of course, One-Click pay, you have the Apple Pay, you have the Google Pay and everything enough of commercials. Just to highlight in terms of where we are on the market, they are -- because of our unique business model, there are no real one competitor. So I just wanted to do it by product categories, you have a feel for what the difference is. When it comes to experiences, there is 2 clear competitors there, also partners because we use their platform to sell our own products. And that is Viator and get your guidance. So their play is basically to do downstream consolidation, invest heavily in to the SEM, acquire customers and then get the margin out from the suppliers. We, on the other hand, as you saw we're an upstream play. So we consolidate the destinations. We have our own products. But in addition to that, we have the same products as they are having to have a relevant offer for all different categories. And the differentiation part, the destination-based team, we have the operation to deliver and the customer service side. In terms of transfers, we have Sun transfers and Calix. We have, as we said, 31 million transfers already today.We have a play in private transfers today as well with a partnership with Mozio, a U.S. start-up. And what we are doing here is that we basically have built half of the platform already. We have a sourcing platform that I shared before. We have a fulfillment platform that we launched last year together with another startup called called Mobi. They are specialists in fulfillment or routing specialties to optimize routes, and we use them to make a state-of-the-art platform for fulfillment. This is also what you see in the app. If you would do package booking with us. This is what would power that one. In terms of tours, you have Torrado in Avanos, 2 different kinds of it. So Torrado is an aggregator for group tours. Avanos is an intermediator between destination management companies and us. We now have a play with Nezasa a Swiss start-up. So we do our sourcing ourselves, connecting Nezasa for the production and distribute ourselves. So the front end is ours. And we launched it as an MVP to the Belgium market to retail agents and to B2C last week, and we'll use next year to scale it up. This is by far the most complex product. So basically, now we are as in any digital platform balancing supply and demand that will help us scale up going forward. Just a bit of a guidance on the 3 different product categories and where we are. From the current revenue share that we have experienced is the biggest. So 47% today is the revenue share that we have on the overall to amusement. That platform is basically done. So we have, in the last 2.5 years, completely transformed from offline to completely online and is now scaling that one.The next part we're doing from an experience perspective is to do the same thing for cruise lines. So cruise lines is probably the last part from an experience perspective. Still a wholesale model that we're now doing platforming, and we're starting with our own cruise lines, Marella TUI Cruises, and we think this will be a game changer for the cruise line industry. So great expectations for experiences. In terms of transfers, we have a play already today, mainly for the TUI upsell and also for B2B. We think it's really important to have also that business as a platform. And we are building a distribution platform, the last part, and MVP will be in the beginning of summer. The growth will come from the new customers that Sebastian were presenting in terms of the accommodation only, the flight only, and the other growth part will come from upgrading from bus transfer to private taxi. Tours, I just explained about. We launched it last week. We're scaling it up right now in terms of adding supply and offer. And this is also a smaller part of our revenue share today, but something that we think can have a really big potential going forward. The potential comes from it is 2 different ways of tours. So we have the group tours. But the other part is the individual tours in a completely new interface. If you go into tuitours.com, you will see it where you basically can see items that we have done based on the destinations we have, and then you make them adapting to your own needs. From a distribution perspective, the 3 buckets. We have the TUI upsell, we call it. So how do you maximize the existing TUI customers that we have. And I think we have made this to an art. So we are now into every single touch point that you have as a TUI customers. We have retail systems. We have contact tester systems. We have rep selling systems. We have TDA systems. And the numbers that Sebastian referencing the uptick that we have 30% to 40% is unheard of in the B2B space. So that knowledge is something we're now also using to help our partners into B2B to convert even better.The other part I would like to highlight is the B2C open market. We are very strong into Sun and Beach. We also have 3,000 cities because of our partnership with the different places we have. We now want to do almost the same playbook as we have done with Sunny Beach. So we will use the demand created from the TU -- we will create our demand from -- direct from B2C to do our own experiences also in cities. So we have highlighted a list of destinations that we're going to grow in the next years. And this is really exciting because we go into a new destination space or new segment cities and will also act as one of the entry points for new customers for TUI Group into the TUI ecosystems. -- for them to be sold hotels and flights, et cetera. The last part is the B2B. We have booking and price line. We have cruise lines, like, for example, Carnival. We have other tour operators like easyJet holidays, and we have hotels like Marriott and we have an exciting plan to convert even more B2B partners going forward to increase demand for us to build our own products. I'm coming from a digital background. So I'm really excited about all the platform development. But I'm also, as Sebastian was saying, coming from a tour guide perspective. So the products are also -- I'm also very passionate about. Just 2 short examples on what we're doing from an upstream consolidation perspective. So we have a product line called TUI Collection. This is the best of the best in every single destinations that the teams have found out, put together in venues that we have special access to with specially trained guides. And we have 600 of those in 55 countries. And since 2015, we have sold 5 million of those TUI Collection. This is something that we're now ramping up because we see that it's even more important to have a really solid offer for our customers.The other part is a new one just to showcase how we are also working with partnerships and upstream consolidation and National Geographic reached out to us as we were the global player, and they basically wanted to have a one-day tour product. So we've been together with the National Geographic team, setting up 55 different products around the world, a high-margin, once in a lifetime experiences that we will operate across the world. This is targeted mainly first for cruise lines. We think that channel and that segment works good, but will then scale up afterwards. This is just one -- the example to the left is Jamaica actually been on that one, also highly recommended. It works with the app as well. Yes, lucky me. And the other one actually was trialing out in Barcelona just 2 months ago, where they took us around to the museum, the art museum on Catalonia, and you go down in the archives and see things other people wouldn't see. It was really, really engaged, and we think our customers really like it. So summary highlights, this is my last slide, sorry for being long. To amusement has a unique position in a high-growth market, developing on the market 7%, and we will outperform that. Profitable player positioned for growth combining a digital platform model within destination delivery, the 2 parts, the end-to-end. We have the 3 things that don't do, the experiences, the transfers and the tours. And the cross-selling between we think is so powerful. We have seen it work in the offline world. We definitely see in the online world as well. And as soon as we're platform in the other 2, we will also expose this into every single channel we have. We're using the one catalog the product portfolio to sell into those 3 buckets. And that's how we'll grow, continue to invest into our platforms. We will also invest in reaching cities and then see if we can find M&A opportunities to grow in faster.Our ambition is to outperform growth in the tours and activity market and maintain profitability at the same time. That's it.

[Sebastian Ebel, executive]

Thank you very much. Peter, you may have noticed why we are so excited about that. A lot of new customers, a lot of new products and a lot of cross-selling opportunities with these new customers. And so when we see what has been achieved in 2 or 3 years, it's really amazing. So short summary, we want to accelerate growth, improve profitability and margin, very strong focus on cash. There as finance orientated as Mathias to strengthen the balance sheet. And the midterm ambition is to grow to a significantly in profitability above what you have seen as historically high. Good. Now we are for questions, if you like. Jamie? Who has the mic? Thank you. There was the second on the other side. So Jamie and... oops grab it.

[James Rowland, analyst]

Jamie Rowland from Morgan Stanley. Three questions, please. The first is on the rather open-ended guidance -- sorry, modeling assumption for a significant increase in EBIT. I think consensus is about EUR 1 billion this year. And you're looking at EUR 1.2 billion by 2026 million. So could you sort of talk about how you feel about expectations this year? And as part of that question, I think, was you talked about Q1 margins being a bit soft. So should we expect profits to be sort of lower in Q1 versus Q1 '19? Secondly, just a sort of residual question on the balance sheet. What are the expectations for the cruise joint venture? Where are we there with KFW and when might that business be paying a dividend to you? And then just finally, Peter, thanks for the presentation on Musement. There seems to be a lot of sort of JVs and partners. So it'd be quite helpful to get a feeling for maybe margins for each of those divisions roughly and maybe some form of profit target or some ambition in a few years' time to give us a feeling of the magnitude there.

[Peter Ulwahn, executive]

So I take the first one?

[James Rowland, analyst]

Yes.

[Peter Ulwahn, executive]

So thanks very much for the question. I think, indeed, if you look at consensus, that's probably something that we would not feel uncomfortable with in terms of where consensus is. But at the same time, it's early in the year, and it's something we will need to monitor very carefully over the coming months. And in terms of Q1, I think indeed, so thanks for this as well. If you think about cruises, for instance, and you mentioned it Sebastian, ramp-up will take a bit longer. And '19, for instance, was a record year for cruises, 6-ship with Marella, TUI cruises fully ramped up. So there will be certainly a difference still to 2019.

[Sebastian Ebel, executive]

 Maybe I've misunderstood it. The target for 25, 26 million is not the EUR 1.2 billion. It's well above this number.

[Peter Ulwahn, executive]

Do you want to talk about TUI cruises? Joint venture?

[Sebastian Ebel, executive]

I mean we have a different situation. We can expect that the return to dividend payments earlier. That only means that the cash flow to the TUI is higher because they are consolidated, so which has an impact on bank debt. And TU cruises it's different. They have -- and I think this is public known EUR 600 million crisis-related debt. They didn't get money from TUI nor from Royal Caribbean. So I think it would not be unreasonable to expect that in '23 and '24, they will need the profits they will have to strengthen their balance sheet and to repay the debt.

[James Rowland, analyst]

You're going to check the equity yourself? Is there's an expectation that TUI..

[Sebastian Ebel, executive]

We didn't do and there is no need to do it.

[Peter Ulwahn, executive]

I think the last part was to amusement there. You said joint venture is actually not joint venture in terms of the partnership. So we've been creative in the ways we've been doing it. So from that perspective, margins won't be impacted. And because we do both distribution and products, so we have both the distribution margin and also the product margin according to the market.

[Cristian Nedelcu, analyst]

Excellent is Cristian Nedelcu from UBS. Also 3 questions from my side, please. The first one, the capital increase. Is this the last measure to recapitalize the balance sheet? And can you help us visualize a bit? Can you be a bit more precise on the gross debt ratio? Do you expect post this event? The second question, you guide for flat net debt in 2023. So I read that as a 0 free cash flow roughly. Can you elaborate on the free cash flow that you think you can generate 23, 24 or at least the range of outcomes you would expect there? And the last one, could you help us a little bit with thefree cash flow burn that you expect to see in December and in the March quarter? And I guess what I'm after here, you have this covenant, the net debt covenant of 4.5 turns. How do you see at the March testing date? How do you see the net debt to EBITDA there? Is it comfortable below 4.5% or any comments that could help us. Thank you.

[Sebastian Ebel, executive]

If I could start with the question on gross debt and further deleverage to the rights issue. I think if you look at our gross debt with the 5.3 million plus pensions, 0.4, that's how we normally look at it. If you take a normalized EBITDA, where the full year is under normal conditions, you would already be probably below 3x. I think prior to the crisis, we already said, this can only be a first step, and we were aiming to something which was more closer below 2.5. And I think that's something without giving a precise number because again, we need to size the capital raise at a later stage. I think the 3x would probably not be what is a good step for all the growth initiatives that we have in front of us. In terms of the free cash flow for this year. I think, indeed, we've looked at it in a very conservative way also with regard to how is the business developing. So I think we don't put too much focus in terms of too much stress on the system in terms of our own expectation, but let's see how it develops. And I think the last question in terms of what to expect for Q1 and Q2, I would say now if you look at Q4 as a reference, this is pretty much in line with the pattern that we saw in the past. And I think if you apply the same mechanics to Q1 and Q2, this should give you a very good, let's say, structure to where we develop. Then of course, the question is how profitable it will be. And in the end, that's something we don't know yet is how customer bookings in January, February will actually be.

[Unknown Executive]

Sort of, sorry, working capital, cash burn used to be around EUR 2 billion, roughly 4% where are...

[Sebastian Ebel, executive]

I mean the Q1 was always you had probably something 1.5 as a seasonal swing. Then you had on top what you had as the seasonal loss in the first quarter. And then in the second quarter, you normally would get inflow again from working capital, but you would still have some seasonal losses there.

[Leo Carrington, analyst]

 It's Leo Carrington from Citi. If I might ask on the acceleration of online bookings. How is this time to the retail offer and what -- does the gradual migration to online also mean a steady structural move to later bookings and potentially then weaker ASPs compared to retail. So how do you see that evolving? Secondly, on bookings, -- any -- or first of all, for the overall business, any change in the competitive environment, promotional activity, deposit levels that you're seeing across the board? And also specifically in amusement in I think some of your competitors are start-ups, any change in the competitive activity there given the macroeconomic environment and the financing environment? And then lastly, you mentioned inorganic opportunities that might present themselves once the balance sheet is refinanced. Can you elaborate on sort of more specifically where you would like to focus that?

[Sebastian Ebel, executive]

Maybe I take the question on retail versus online. And then the customer decides. And I mean, if you look at Nordics, 90% plus are online bookings. If you go to Southern Sweden, there is no retailer left anymore. If you cross the border to Germany, you have thousands of retailers. And they are there because the customer wants to book there. By the way, a lot of lanes also now come to Germany to book in a retail out in England, it's 70% online. For us, it's important that we accept what the customer does. And like in a country where Germany where books still significantly in retail, then we should support the retail in getting best out of it. And that was not always the strategy we took, but it's from our point of a management point of view, the right strategy. And it's also commercially sound. Of course, the margins are significantly higher than online. You could argue does it depend on the -- how you book or is it more the question when customer book. And it's probably more the question when they book. And therefore, it's, again, very sensible to work with the retailers and to support them as much as possible. And then, the customer will decide where he books. Then the question is online. As I tried to say is the focus should be on booking through the app because the distribution costs are 0 and you don't have to spend 14%, 15% or whatever on Google more. You have the chance to be in contact with the customers by far more often, promotional and he also has the opportunity to be more in contact with him. So yes, the customer who comes online is fine. At the end of this customer, we would prefer to have in our app. And it's a competitive environment. I think we changed -- I mean, they are great tour operators out. You have a great tour operator in England. We have the one of our other great tour operator in Germany. Maybe the great ones are less than they had been before. I think it's important that when our marketing had Eric Fremont did the presentation, and now he does it regularly once a month. It's important that we don't compare ourselves with a tour operator ABC DEF, but we compare with on ECHO only on -- with booking who is also an NPS, the benchmark, that we -- on dynamic package, that's country by country, different. We compare with Expedia or others who does it very well.If we look at flight only we compare with Momondo or Kayak or Kiwi and not with a specialized smaller company. So that's a mind shift. That doesn't mean that we don't look at the traditional competitors. I said they are some are doing well. I mean, Jet2 had less disruption than we had because they had an own workforce that we can learn a lot from. Shanshan and Germany is doing a great job. We can learn about the easiness how they do it. So it's all about learning and the learning putting into what we do. And on prepayments or the commercial terms, I haven't seen any changes in the market.

[Leo Carrington, analyst]

And inorganic Opportunities.

[Sebastian Ebel, executive]

You mean M&A?

[Leo Carrington, analyst]

 M&A. What's the balance sheet?

[Sebastian Ebel, executive]

I think the focus is -- and that's why we said it the last action we want to take measure we want to take. I think we decided to do 5 or 6 things. We do them right. And then hopefully -- we are convinced that TUI will be different also when it comes to profitability. And if I would say we are looking at M&A opportunities would distract what we do. On the other hand, in 2 years, there is an interesting thing amusement and activity. We will look at it, but it's not something which is on our play today. I think it's very clear, become the extremely difficult situation. We have survived. We made a good plan forward, our investors who supported us heavily and hopefully will support it with the measures, they expect returns from what we do, and that's the focus.

[Richard Stuber, analyst]

Richard Stuber from Numis. 2 questions, please. You gave some sort of detail in terms of winter trading. Is there any sort of early color you can give in terms of summer trading, particularly around what sort of capacity expectations that you may have? And the second question, just really sort of clarification on Jamie's question on margins in amusement. I guess the customer mix will change over time as you get more of B2B and B2C customers, the product mix may change as well. So do you expect to see margins at that division to be sort of fairly constant? Or do you expect there to be any major changes?

[Sebastian Ebel, executive]

On summer, markets are very different. U.K. is very much advanced compared to Germany. The bookings are promising, but we are talking about booking levels 10% to 30%. Therefore, I would say it looks great. It doesn't mean too much because the booking levels are as they are. Again, it's quite interesting. The pattern is early bookings are stronger but high season also. So I think it would support the expectations going back to normality, but keeping the people book later. And on amusement margin, you have seen -- I mean if you compare us with the others where you have public information, they are all, I think, loss-making still. We had always -- we wanted to balance our profitability to grow. We'll put it that we want to grow significantly by keeping the profitability, which means that we also have a very strong look on margin. What we need to invest to get more customers, we want to get out from customers which we had. So for example, the rate -- the buying rate, 40% if we achieve that, and we come from 20, which means that we can spend a lot of money on new customers. On the other hand, the uniqueness of the model is the new customers. I mean you could have a model where you buy new customers every year. What we want is that to make the customer as early profitable because we sell him incremental products of the same or of coolly and so on. So it's very clear. I mean we could have decided for a -- we put all in growth, and therefore, it's loss-making. We really try to balance it out because I think we agreed to it is possible because otherwise, you buy customers and it looks like you have to buy new. And again and again, so it's better to create value with them and to be careful on what customers you buy.

[Peter Ulwahn, executive]

My only additional comment would be you spoke about the mix of segmentation. That transformation actually already done. So 55%, 60% is TUI. The rest is B2C and B2B, and we see that going forward in the coming years as well.

[James Rowland, analyst]

James Rowland from Barclays. Just on the second part of the raise, you said earlier it might be a similar amount of WSF payment. Can you confirm what your assumptions are for the consumer environment to meet that kind of broad guidance on the amount? So how might things deteriorate through the winter? Or how might that change your outlook on the summer? And then secondly, are you expecting your rights issue to be underwritten by your banks? And finally, I guess, on your comments about taking market share, gaining new customers, you're coming off a lower NPS score at the moment. So can you talk about how difficult easy marketing spend around reacquiring those customers and how that might look going forward?

[Sebastian Ebel, executive]

James Rowland from Barclays. Just on the second part of the raise, you said earlier it might be a similar amount of WSF payment. Can you confirm what your assumptions are for the consumer environment to meet that kind of broad guidance on the amount? So how might things deteriorate through the winter? Or how might that change your outlook on the summer? And then secondly, are you expecting your rights issue to be underwritten by your banks? And finally, I guess, on your comments about taking market share, gaining new customers, you're coming off a lower NPS score at the moment. So can you talk about how difficult easy marketing spend around reacquiring those customers and how that might look going forward?

[Kate Schell, analyst]

Kate Schell from Bernstein. Congratulations on the great progress. And maybe a follow-up on the new customer acquisition there. I think in the presentation, you mentioned in the future TUI wants to capture 2 types of new customers that are adventurers or the younger part of the younger generation, I guess, anything you could elaborate on how do you see these segments and the company's aspirations there?

[Sebastian Ebel, executive]

 First, thank you for the question. We had a lot of discussion on how we want to achieve that in the company. One, we need the right products -- if we look at the tour product, it's really outstanding. It's still just limited to the Belgium and the Netherlands market, but we will roll it out. And then what you do see how your dynamic package flights, hotels and the whole rest of the tour is then adapted... It's a... It's really good. So one thing are the products. And second then is the communication, how we bring it to existing and to especially new customers. And there, for example, what Peter presented with national geography. -- is with destinations with similar organization. It's so important that we use intermediates who help us to get access to this customer. And second thing is through social media, it's easy and difficult to reach this target group. It's easy because it's doable, and it's difficult because you have to do it in the right way. You were the right people with the right messages. And there, we are getting more and more advanced through social media to get access to these customer segments. And it's exciting because the whole company shifts from -- I mean, if you look at how we did traditionally marketing to get new customers to sell, it's very different. You look at the BI data, which is available from Google, from to really target the customers. I mean it's sometimes it's shocking what data is available about me or about you and social media. And if you have this data, you can really target the products to these people.

[Unknown Executive]

Perfect... Do we have any other questions maybe from the call.

[Operator]

Yes. As a reminder, please, if you would like to ask a question or make a contribution on today's call [Operator Instructions]

[Sebastian Ebel, executive]

Cristian Nedelcu, you want to have another?

[Cristian Nedelcu, analyst]

Just one follow-up. Post the capital increase, I think there will still be around EUR 1.4 billion of undrawn RCF from the KFW. Is there any deadline to sort that out by the end of December too? And if you could talk a little bit about your plans to refinance that? Is it via debt? Or how do you think about refinancing that?

[Peter Ulwahn, executive]

Yes. So what is going to be left with KFW? I mean there's one point I would need now to size the rights issue in order to determine. So you said 1.4 whatever the number is. But then the question is really how much buffer do we want to have over the winter. That's something we're going to see over the coming months. We'll also see how much buffer we need in the current environment. I would expect that we will not need all what we currently have from KFW. But also, as in the past, we did not just return lines to KFW to return them. But we always looked, okay, when there's a good opportunity to clean up and do the right things. So I would say there's probably 3 dimensions to that. One is we will do the race to replace. We will do less facility because we will not need all KFW. And then I think we will probably take another 12 to 18 months to just look at what is going to be refinanced separately, where there is a bonding line insurance solutions, there will be much more availabilities. We currently have that already, but the raise will, of course, leverage that. Thank you. I mean if there are no questions further on the call, it's been a long morning for all of you. Thanks very much for coming. I don't know final words maybe for you the question.

[Sebastian Ebel, executive]

First, thank you for coming. Thank you for the support and for what you do. You hopefully got the impression that how we want to further develop TUI that how much we do change to good. If we get this refinancing done we are on a very solid not path, but fundament placement. What is fundament.

[Peter Ulwahn, executive]

Solid base.

[Sebastian Ebel, executive]

Solid base. So we can really put even more effort in developing the business and not always forward-looking. We will always to optimize cash and always optimize it in that. And the best thing is to do so is to improve the business because then these things come automatically. If there are any question, Nicola, and the team is there, you see us energized. And on the other hand, we are also looking forward to Christmas. Thank you very much, and all the very best.

[Unknown Executive]

Indeed. Thank you very much.