The TUI Group's strategy outlined in the Annual Report 2022 will be continued in the current financial year.
TUI’s strategy aims to deliver growth in both Holiday Experiences and Markets & Airlines, embedded in one central customer ecosystem, underpinned by our sustainability agenda and our people. Our Holiday Experiences business strategy focuses on asset-right growth in differentiated content and expanding the customer base with multi-channel distribution. Having accelerated our strategic transformation of Markets & Airlines during the pandemic, and fully implemented our Global Realignment Programme, our business strategy is now focused on profitable growth. This will be achieved by offering more product choice, growing our customer ecosystem into untapped segments, and increasing customer value. This includes increasing the volume and proportion of dynamically sourced packages, as well as significantly increasing our component offer in accommodation only and flight only.
We also aim to further improve our cash position focusing on optimising working capital and cash from operations and maintaining disciplined capital expenditure supported by asset right growth. Besides this, we will continue reducing our debt and German government exposure with the aim to return to a solid and healthy balance sheet and improve our credit rating. On 13 December 2022, TUI has concluded an agreement with the German Economic Stabilization Fund (“WSF”) on the repayment of stabilisation measures.
FY23 Assumptions1 – Based on the encouraging booking momentum across both seasons with Summer at an early stage, we confirm our expectations for FY23 that underlying EBIT will increase significantly.
Mid-term ambitions – We have a clear strategy to accelerate profitable market growth. Our mid-term 2025/26 ambitions are for underlying EBIT to significantly build on €1.2bn2 and also have a target to return to a gross leverage ratio of well below 3.0x3.
Sustainability as opportunity
- For TUI Group, sustainability covering all three areas of economic, environmental and social sustainability is a fundamental management principle and a cornerstone of our strategy for continually enhancing the value of our company. We firmly believe that sustainable development is critical to long-term economic success. Together with our many partners around the world, we are actively committed to shaping a more sustainable future for tourism.
- We already operate some of the most efficient aircraft and cruise ships. Our commitment is to be industry-leading in achieving net-zero emissions and we aim to achieve this target across our operations and supply chain by 2050 at the latest.
- TUI has committed to the Science Based Targets initiative (SBTi) to reduce emissions in line with the latest climate science by 2030 for airlines, cruises and hotels. The independent organisation has now checked and validated our reduction targets. It confirmed that they are in line with the latest climate science. Our targets are:
- Reduction of airline CO2e per revenue passenger kilometer by 24% by 20304
- Reduction of absolute CO2e from our own cruise operations by 27.5% by 20304
- Reduction of absolute CO2e from TUI Hotels & Resorts own operations by 46.2% by 20305
1 Based on constant currency. In view of the effects from the war in Ukraine, the assumption for underlying EBIT is subject to considerable uncertainty. Amongst others, the greatest area of uncertainty will be the impact on consumer confidence, should there be further cost inflation volatility and/or an escalation of the war in Ukraine
2 FY19 underlying EBIT of €893m including €293m Boeing Max cost impact.
3 Defined as as gross debt (Financial liabilities incl. lease liabilities and net pension obligation) divided by Reported EBITDA; pre impact of potential capital increase
4 Baseline 2019. Level of ambition well below 2OC. CO2e = CO2 equivalents. Apart from carbon dioxide (CO2), they include the other five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6)
5 Baseline 2019. Level of ambition 1.5OC