TUI Travel PLC : Notice of AGM

TUI TRAVEL PLC

ANNUAL REPORT & ACCOUNTS

& NOTICE OF 2012 ANNUAL GENERAL MEETING

TUI Travel PLC ("the Company") announces that its Annual General Meeting will be held on Tuesday 7 February 2012 at 10.30am at the offices of Herbert Smith, Exchange House, Primrose Street, London EC2A 2HS.

Notice of 2012 Annual General Meeting ("AGM Notice");

Annual Report & Accounts for the year ended 30 September 2011 ("Annual Report & Accounts"); and

Proxy Form for the 2012 Annual General Meeting.

In accordance with Listing Rule 9.6.1, copies of the AGM Notice and Annual Report & Accounts have also been submitted to the National Storage Mechanism website and will shortly be available for inspection at: .

The AGM notice and the Annual Report & Accounts are available on the Company's website:

Pursuant to DTR 6.1.2R, the Company confirms that at the 2012 Annual General Meeting it is proposed that the Company's articles of association are amended with effect from the conclusion of the meeting. The proposed amendments are set out in the AGM Notice. In accordance with LR 13.8.10R, the Company confirms that copies of the new articles of association and blacklined articles of association showing the changes from the current articles of association are available at the offices of Herbert Smith, Exchange House, Primrose Street, London EC2A 2HS until the close of the Annual General Meeting.

The appendices to this announcement contain additional information which has been extracted from the Annual Report & Accounts for the purposes of compliance with the Disclosure and Transparency Rules ("DTR") and should be read together with the Final Results Announcement, which can be downloaded from the Company's website:

This announcement should be read in conjunction with, and is not a substitute for, reading the full Annual Report & Accounts. Together these constitute the information required by DTR 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service.

APPENDICES

Appendix A: Directors' responsibility statement

The following responsibility statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to, and is extracted from, page 50 of the Annual Report & Accounts. Responsibility is for the full Annual Report & Accounts not the extracted information presented in this announcement or the Preliminary Results Announcement:

'The Directors in office at the date of approval of the Annual Report & Accounts each confirm that to the best of their knowledge:

· The group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the group; and

· The Directors Report includes a fair review of the development and performance of the business and position of the group, together with a description of the principal risks and uncertainties that it faces.

The Statement of Directors' responsibilities was approved by a duly authorised Committee of the Board of Directors on 4 December 2011 and signed on its behalf by William Waggott, Chief Financial Officer.

Appendix B: Principal Risks

A description of the principal risks that the Company faces is extracted from pages 20-23 of the Annual Report & Accounts.

Political Volatility, Natural Catastrophes, Outbreaks Providers of holiday and travel services are exposed to the inherent risk of domestic and/or international incidents affecting some of the countries/destinations within its operations "We have a clear strategy and road map for delivering our strategic growth initiatives. As trading in the new financial year progresses, it is apparent that customers in some source markets are booking later than usual and that the recovery in demand for North African destinations will be slow for some considerable time. We have adjusted our winter capacities to reflect the current market conditions and are trading in line with our expectations. Summer capacities will be flexed to match profitable demand" - see Chief Executive's statement on page 9.

Risk Large scale events causing operational disruption; future reduction in destination desirability; inability to operate efficiently Potential Impact Significant losses (holiday cancellations, repatriation of customers and decline in consumer demand, possible increase in insurance premiums) Strategic Initiative · Product · Operational Efficiency

Mitigation · Ensure a balanced destination mix to minimise concentration and introduce flexible supplier agreements to allow for capacity to be switched if required · Minimise the impact of any negative events through the effective execution of established incident management policy and utilisation of experienced leadership teams to support and repatriate stranded customers · Promote the benefits of travelling with a recognised and leading tour operator to increase consumer confidence throughout source markets · Monitor actively the political situation in volatile destinations and act upon security intelligence advice · Maintain strong relationships with local tourism bodies and travel industry associations and ensure government guidance is obtained and used as required · Liaise with aviation industry stakeholders and meteorology service providers to ensure efficient emergency response plans in the event of adverse weather conditions

Economic Conditions Spending on travel and tourism is discretionary and price sensitive. The economic outlook remains uncertain with different markets at different points in the recovery cycle. Consumers are also waiting longer to book their trips in order to assess their financial situation "We are pleased with our robust performance in 2011 and have delivered another year of profit growth, against a backdrop of unrest in key North African destinations and weak consumer sentiment in some source markets. These achievements reflect the strength of our strategy to increase differentiated and exclusive product sales, increase controlled distribution with a focus on online to enhance customer access and reduce distribution costs, and the delivery of our turnaround and cost efficiency programmes" - see page 2 of Preliminary Results announcement dated 5 December 2011.

Risk Sustained decline in consumers' propensity to travel; continuation of later booking patterns; inability to respond to short-term changes in consumer demand Potential Impact Lower short-term growth rates and reduced margins Strategic Initiative · Product · Distribution · Operational Efficiency

Mitigation · Enhance the portfolio of products within the Mainstream Sector that increase competitive advantage, command a premium margin and attract greater customer loyalty · Optimisation of the business model ensuring the flexibility to reduce capacity in order to protect margins · Manage actively capacity through use of sophisticated capacity and yield management systems to improve efficiency and drive margin improvements · Continue to drive controlled distribution strategy which provides customers with greater access to lower costs and value for money

Consumer Preferences & Demands Consumers are increasingly turning online to research and book holidays. Social media, price and product play a key part in the decision-making process. Customers are increasingly booking holidays nearer the time of travel "We continue to differentiate ourselves by offering a greater choice of unique products and destinations as well as looking to new markets for growth" - see Market overview on pages 12-13 "We remain focused in our efforts to provide our customers with easy-to-access information combined with easy-to-use booking engines" - see Market overview on pages 12-13
Risk Failure to anticipate changes in consumer preferences; inability to keep up with latest technological developments; difficulty to engage efficiently in seasonal planning Potential Impact Market positions come under pressure, lower short to medium-term growth rates, reduced margins Strategic Initiative · Product · Distribution · Operational Efficiency	Mitigation · Enhance the portfolio of products within Mainstream Sector that increase competitive advantage, command a premium margin and attract greater customer loyalty · Increase hotel inventory within Accommodation & Destinations Sector as a major growth driver for online accommodation business · Consolidate the market leading positions in Specialist & Activity Sector and continue to look for innovative products and attractive markets for future growth · Appointed a Director of Online for the Mainstream Sector · Leverage new technologies in order to compete with key industry players · Focus on online presence, increase participation in social media and move towards an online driven company culture · Implement a tailored distribution strategy within each source market to meet different customer preferences and market dynamics
Global Financial Factors Cross-border element of trading exposes the business to fluctuations in exchange rates and complex and technical tax laws. A significant proportion of operating expenses are in relation to aircraft fuel which is also unstable. Pressure on the banking industry is set to continue due to the Eurozone debt crisis and the introduction of Basel III. "We have hedged the majority of our fuel and currency requirements for the seasons currently on sale" - see page 4 of Preliminary Results announcement dated 5 December 2011 "We continue to focus on cash performance and ended the year with a net cash position of £4m (2010: net debt of £249m). We have a number of cash management initiatives across the Group and the improvement in working capital as a result of these initiatives has helped us to end the year in a net cash position" - see Chief Executive's statement on page 9
Risk Volatility of exchange rates and fuel prices may have a negative impact on unhedged balances; rising input costs could increase cost of product offering and leave the Group competitively disadvantaged; increase in tax authorities taking more frequent and intrusive tax audits of the Group's business operations; lack of available funding to secure additional facilities, if needed, and at a reasonable cost Potential Impact Reduced demand due to increased costs, reduced margins, negative impact on cash flow, lengthy tax litigation processes, possible reduction in Group's after-tax earnings, increased cost of borrowing Strategic Initiative · Operational Efficiency		Mitigation · Ensure hedging cover is taken out ahead of customer booking profiles in order to provide certainty of input costs prior to pricing · Monitor the appropriateness of the Group's hedging policies in relation to fuel and foreign currency · Track closely the foreign exchange and fuel markets to ensure possession of most up-to-date market intelligence · Minimise uncertainty through recording of provisions to reflect potential tax exposures · Develop and maintain high quality relationships with tax authorities, including communication of the Group's business operations · Ensure key facilities are refinanced well ahead of maturity. The Group's key bank facilities were refinanced in May 2011 by a new £1,155m revolving credit facility committed until 2015 · Monitor actively compliance with the covenants contained within the Group's financing facilities · Develop and maintain high quality relationships with the Group's key financiers.

Regulatory Environment Industries in which the Group operates are highly regulated, particularly in relation to consumer protection, aviation and the environment "We work with national Governments and the EU to ensure that our position is understood and respected and our opinion remains that a level playing field across the industry is a necessary requirement to allow good companies to flourish" - see Chief Executive's statement on page 9

Risk Failure in safety due diligence processes; non-compliance to applicable regulations; negative perception of product offering due to increased costs and/or increase in awareness of environmental issues. Potential Impact Harm or injury to customers,and or/employees, limitations on operational flexibility, possible exposure to legal or regulatory sanctions, associated reputational damage and increased costs Strategic Initiative · Product · Operational Efficiency

Mitigation · Address issues affecting the industry and its customers through utilisation of skilled public affairs team working closely with governments and regulators · Develop more sustainable holidays by reducing the environmental impact at each stage of the customer's journey supported by experienced sustainable development team working closely with business management (see Sustainable development on page 28) · Deliver the carbon management strategy which has a commitment to reducing TUI Travel's Airlines' per passenger carbon emissions by 6% by 2013/2014 (against a baseline of 2007/2008 - see Sustainable development on page 28) · Submitted TUI Travel's 2010 airline data, which has been externally verified by PwC, to relevant authorities in preparation for the EU Emission Trading Scheme (applicable from January 2012 - see Sustainable development on page 27) · Introduced a new decentralised responsibility for Health & Safety management, enabling Sectors to focus on specific risks in the context of bespoke operating and legal environments · Continue to raise awareness of and compliance with the provisions of the Bribery Act 2010

Business Improvement Opportunities The Group is heavily reliant on legacy systems, processes and structures which, in some cases, are outdated, complex and inefficient. "We remain focused on our strategy to increase differentiated and exclusive product sales, increase controlled distribution with a focus on online to enhance our customer access and reduce distribution costs and our delivery of our business improvement programme. We have self-help measures in place to help offset the difficult macro-economic environment. In addition, we continue to strengthen our cash flow in order to fund the dividend and growth" - see Chief Executive's statement on page 9
	Risk Weaknesses or inefficiencies in IT and financial control processes; misreporting of financial results; inefficient cost structures; failure in systems causing operational disruption; Potential Impact Higher costs due to inefficiencies, failure to optimise business performance, impact on day-to-day, loss of revenue Strategic Initiative · Distribution · Operational Efficiency		Mitigation · Continue to deliver cost savings and efficiencies through the implementation of the business improvement programme · Implement strategy and growth plan in German Mainstream focusing on differentiated and exclusive products, integration of online and offline businesses and back-office restructuring. Initiatives already underway to replace outdated IT systems · Transform business processes used to create, book and process holiday products within the UK business through replacement of core IT systems · Consolidate tour operator businesses in French Mainstream to create a single business with a long-term viable future · Reposition French airline as scheduled carrier specialising in long haul through delivery of Corsairfly transformation project · Improve cost efficiency in the Group's Airline operations · Embed a COSO control framework in the UK & Ireland to strengthen financial controls as part of an initiative to implement a Group-wide COSO compliance framework · Continue to implement business continuity management across the Group to improve capability and reduce exposure · Drive efficiencies through the co-ordination of key procurement activities across the Group · Review key service providers to assess financial standing and levels of health & safety, quality and sustainability standards · Minimise levels of pre-payments to hoteliers and other third party service providers
Emerging Markets, Acquisitions & Investments The Group continues to look into new markets as the traditional mainstream markets mature. Niche businesses and the BRIC countries represent a significant opportunity to participate in longer-term travel growth trends and have higher growth potential "We believe the BRIC (Brazil, Russia, India & China) economies, with high-growth forecasts, will be the key driver of long-term travel growth. TUI Travel already has a presence in Russia and Ukraine which we plan to increase from the existing platform and we continue to determine our participation strategy in Brazil, India and China"- see Market overview on pages 12-13
Risk Inability to identify appropriate opportunities; failure of acquisitions to deliver expectations; limited experience in new markets; possible difficulty in integrating operations and systems Potential Impact Potential lower long-term growth and reduced margins, impact on anticipated cash flows, significant diversion of management time Strategic Initiative · Product · Operational Efficiency	Mitigation · Established a significant presence in the fast growing Russian and Ukrainian markets · Investigate opportunities to build on existing presence in Brazil, China and India supported by significant market research · Completed a number of successful acquisitions within the Specialist and Activity and Accommodation & Destinations Sectors during 2010/2011

Talent Management The Group's success depends on its ability to retain key management and it relies on having good relations with its employees "We believe that engaged and happy colleagues are key to both superior customer service and the Group's continued success and profitability. With people who believe in our products and services, and the right approach, we will continue to be our customers' automatic choice for leisure travel" - see People on page 24

Risk Inability to attract new and retain key managers and personnel; difficulty transferring talent within a diverse and international business; failure to build future leadership capability Potential Impact Adverse effect on the business, operating results and financial performance of the Group Strategic Initiative · Operational Efficiency

Mitigation · Continue to focus on current capability needs and gain insight in to future skills required · Ensure succession plans in place for all identified business critical roles in particular emergency successors for all Sector board roles · Review succession plans every six months · Introduced Group-wide initiatives to develop talent and ensure continued investment in international and tailored graduate programmes · Implemented a Group-wide leadership framework to be used for development and recruitment of all senior roles

Appendix C: Related party transactions

The following description of related party transactions of the Company is extracted from pages 132 to 133 of the Annual Report & Accounts.

Apart from with its own subsidiaries which are included in the consolidated financial statements, TUI Travel PLC, in carrying out its ordinary business activities, maintained direct and indirect relationships with related parties including consolidated or related companies of its ultimate parent company, TUI AG. These companies delivered services to companies in the Group.

The Group also undertook transactions with its joint ventures and associated companies. These transactions related primarily to incoming agencies and hotel companies used by the Group's tour operators. The income and expenses arising from transactions with associates and joint ventures are included within the appropriate sector revenue or costs as presented in the segmental analysis.

All transactions with related parties were executed on an arm's length basis and under normal conditions of trade with independent third parties.

Shareholder loan

A shareholder loan was advanced to the Company by TUI AG on 3 September 2007. The loan bore interest at EURIBOR plus a margin of 1.9% per annum. The Company could make voluntary repayments at any time during the term of the loan subject to a minimum repayment of €10m and the giving of 30 days' notice. The loan was repaid during the year, and had a drawn balance of €nil at 30 September 2011 (30 September 2010: €669m), not including accrued interest payable.

A further shareholder loan was advanced to the Company by TUI AG on 13 July 2011, in respect of acquiring Magic Life. The loan bears interest at EURIBOR plus a margin of 2.75% per annum. The Company can make voluntary repayments at any time during the term of the loan subject to a minimum repayment of €1m and the giving of 10 days' notice. The drawn balance of the loan at 30 September 2011 was €30m, not including accrued interest payable. It is repayable in two instalments: 30 April 2012: €20m and 31 August 2012: €10m.

Hotel Framework Agreement

As part of the relationship arrangements between the Company and TUI AG at the time of the business combination, both parties entered into the Hotel Framework Agreement, which governed the commercial relationship between TUI AG and the Company in respect of the distribution of hotel beds forming part of the hotel portfolio interests retained by TUI AG. Under the Hotel Framework Agreement, TUI Deutschland (TUI Travel PLC's German tour operating business) continued to have access to the Robinson hotel portfolio and to the distribution of such portfolio's hotel beds in Europe. The original Hotel Framework Agreement expired on 31 October 2011 and a new agreement has been negotiated which sets the room rates TUI Deutschland is charged by Robinson. These rates have been set at current market rates, but the contract does not contain any commitment from TUI Deutschland.

Trademark Licence Agreement

The Trademark Licence Agreement incorporates trademark licences granted from TUI AG to members of the TUI Tourism Group in relation to TUI Tourism's use of the TUI name and logo and other trademarks from within TUI AG's portfolio of trademarks used in the former TUI Tourism's business. Licence fees payable under each licence are an annual fee equal to 0.02 percent of the average annual gross turnover of the relevant licensee under the relevant trademarks measured over a three-year period. Total licence fees charged for the year ended 30 September 2011 were £3m (2010: £3m). Each licence's standard terms are for five years with an option for the relevant licensee to extend for a further five years on the same terms.

Details of transactions with related parties and balances outstanding at the balance sheet date are set out in the tables below:

	Revenue		Expenses
	Year ended 30 September 2011 £m	Year ended 30 September 2010 £m	Year ended 30 September 2011 £m	Restated Year ended 30 September 2010 £m
Related party
Ultimate parent TUI AG	6	11	34	70
Hotel and resort subsidiaries of TUI AG	11	13	319	423
Other subsidiaries, joint ventures and associates of TUI AG	10	7	74	98
Joint ventures and associates of the Group	42	10	114	120
Total	69	41	541	711
	Receivables outstanding		Payables outstanding
	Year ended 30 September 2011 £m	Year ended 30 September 2010 £m	Year ended 30 September 2011 £m	Restated Year ended 30 September 2010 £m
Related party
Ultimate parent TUI AG	5	385	45	594
Hotel and resort subsidiaries of TUI AG	-	4	37	66
Other subsidiaries, joint ventures and associates of TUI AG	9	4	15	12
Joint ventures and associates of the Group	34	31	28	10
Total	48	424	125	682

Payables outstanding with related parties are reported in Notes 19 and 20 and receivables outstanding are reported in Note 16. Included within the amount payable to TUI AG of £45m (2010: £594m) is a shareholder loan of £26m (2010: £575m). Included within the amount payable to joint ventures and associates of the Group of £28m (2010: £10m) is a loan to a joint venture of £10m (2010: £nil). The £385m receivable balance outstanding from the ultimate parent TUI AG at 30 September 2010 included a £370m cash deposit, which was used in the year as part of settling the prior year shareholder loan from TUI AG.

Details regarding the investment in Sunwing Travel Group Limited and Togebi Holdings Limited are included in Note 12. Details on interest rate and liquidity risks in respect of balances with related parties are included in Notes 25(E) and 25(F) respectively.

In accordance with IAS 24, key management functions within the Group (the GMB and the Directors of the Company) were related parties whose remuneration had to be listed separately. The compensation paid in respect of key management personnel (including Directors) was as follows:

	Year ended 30 September 2011 £m	Year ended 30 September 2010 £m
Short-term employee benefits	9	15
Post-retirement benefits	2	2
Share-based payments	10	9
Total	21	26

Details of Directors' Remuneration are given in the Remuneration Report.