Ladies and Gentlemen,
Following four very successful financial years with double-digit growth rates, TUI started into the completed financial year with great confidence. However, the year brought a number of unexpected challenges.
On the one hand, bookings slowed down unexpectedly at the beginning of 2019 following the hottest summer in a century recorded in 2018. In combination with a weak pound sterling as a result of the Brexit announcement as well as shifts in demand for destinations, this led to a first update in our earnings guidance. Shortly afterwards, at the end of March, we had to update our guidance once again when the Boeing 737 Max was grounded following the tragic accidents.
However, these events have also shown that TUI had taken the right strategic decisions and consistently implemented these decisions with the first strategy realignment since the merger between TUI AG and TUI Travel PLC. The transformation from a pure tour operator to an integrated tourism group that invests in, develops and operates hotels, cruises and holiday experiences secured the resilience of our business model. This year in particular, against the backdrop of recent events, we realised just how much stability we had gained as a result of this first transformation.
In the completed financial year, we continued to expand our operations in excursions and activities with the Musement platform, consistently developed our hotel portfolio and expanded our cruise ship fleet. In parallel, we supported the Executive Board throughout the sale of the French airline Corsair and the specialist tour operators Berge & Meer and Boomerang, approving the Group’s strategy of focusing on our core activities. The Supervisory Board will now continue to support the Executive Board in actively shaping the second phase of our transformation towards a digital and platform company. We will continue to provide constructive support but remain critical and challenge our executives. We will definitely not rest on our past achievements. The permanent change we have undergone in recent years, in particular, has confirmed our view that this change is a crucial basis for our success.
After all, it is already emerging that the new financial year will bring challenges of its own. We cannot yet draw any firm conclusions about the return to service of Boeing 737 Max jets, and it is not clear, either, what will happen around a potential Brexit. On the other hand, we can also see opportunities arising from the market exit of our competitor Thomas Cook, and we are planning to seize these opportunities.
In terms of governance, the Supervisory Board will address the implementation of the second Shareholder Rights Directive (SRD II) and the amendments to the German Corporate Governance Code as well as the new UK Corporate Governance Code in the new financial year. We will continue to comply with the latter as far as practically possible. We had already considered these developments and forthcoming changes in the completed financial year and believe we are already well positioned to tackle the matter.
We also look back on changes in the composition of our Supervisory Board in FY 2019.
At the Annual General Meeting held in February 2019, Carmen Riu Güell’s son Juan Trían Riu was elected to the Supervisory Board after she stepped down from this body as announced. We are delighted that Juan Trían Riu, a finance expert familiar with the structure and functioning of the hotel business, has joined the Supervisory Board. Although we already bid farewell to Carmen Riu Güell at the Annual General Meeting, I would like to use this opportunity to thank her very warmly once again for her committed work on the Supervisory Board over fourteen years.
In May 2019, my predecessor, Prof. Klaus Mangold, also stepped down from the Supervisory Board after nineteen years as a member, including eight years as its Chairman. To the end, Prof. Mangold energetically maintained his unwavering commitment and support, initially for the merger and subsequently for TUI’s transformation as an integrated tourism group. As a convinced European, he played a crucial role in uniting the different cultures within TUI and forging them into a single, global player, alongside his commitment to securing TUI’s economic success. TUI will drive the transformation process further on the basis of these foundations. We would like to thank him very warmly and wish him all the best for his future.
After Prof. Mangold stepped down in May, and with the support of the Supervisory Board, the Executive Board filed an application for the appointment of Vladimir Lukin by court order. Mr Lukin was subsequently appointed as a Supervisory Board member by court order on 5 June 2019. Mr Lukin had already been a member of our Supervisory Board from February 2014 until the completion of the merger between TUI AG and TUI Travel PLC in December 2014.
He is a valuable member of our Board, above all thanks to his financial expertise and operational insights.