OTROS USOS DE SUELO EXISTENTES

You should read the following discussion together with the TUI AG consolidated financial statements and the related notes thereto beginning on page F-1 and ‘‘Presentation of Financial Information of TUI.’’ TUI AG has prepared its consolidated financial statements in accordance with the accounting rules of the

International Accounting Standards Board (IASB) — the International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

Certain information below and elsewhere in this Prospectus includes forward-looking statements that involve risks and uncertainties. You can find a discussion of important factors that could cause our actual results to differ materially from the results described in the forward-looking statements contained in this Prospectus in ‘‘Forward-Looking Statements’’ and ‘‘Risk Factors.’’

Recent Developments

On September 1, 2005, TUI AG, through a wholly-owned indirect subsidiary, launched a cash tender offer to purchase all of the issued and outstanding shares of CP Ships for US$21.50 per share. On October 25, 2005, we purchased approximately 89% of CP Ships’ issued and outstanding shares for an aggregate purchase price in the amount equal to approximately US$1.8 billion (41.5 billion). We intend to acquire the remaining outstanding shares of CP Ships pursuant to a statutory merger, which is referred to as an amalgamation under Canadian law. The total purchase price for all outstanding and issued shares of CP Ships is expected to be approximately US$2.0 billion (41.7 billion).

With the acquisition of CP Ships, we have significantly increased the size and turnover of our shipping division. In the 12 months ended September 30, 2005, CP Ships’ turnover was approximately US$4.1 billion (43.4 billion) and its EBITDA was approximately US$314 million (4260 million). In the year ended

December 31, 2004, its turnover was approximately US$3.7 billion (43.1 billion) and its EBITDA was approximately US$248 million (4205 million), compared to approximately US$3.1 billion (42.6 billion) and approximately US$221 million (4174 million), respectively, in the previous year.

Following the completion of the integration of CP Ships, which is expected for 2008, we intend to realize annual cost savings of approximately 4180 million. We expect to incur, in addition to acquisition transaction costs, restructuring and other costs in connection with the integration of CP Ships in the amount of approximately 4100 million between 2005 and 2007, primarily in 2006.

We expect to have higher interest expenses in the fourth quarter of 2005, in 2006 and at least for the medium term thereafter as a result of financing commitments related to the acquisition of CP Ships, including the refinancing of our bridge financing facility for the acquisition of CP Ships and certain of CP Ships’ existing indebtedness with a portion of the net proceeds of the offering of the Bonds and the parallel offering of the Senior Notes and as a result of existing indebtedness of CP Ships that will continue to remain

outstanding following this refinancing. See ‘‘Use of Proceeds’’ and ‘‘Capitalization.’’

You can find additional information about the acquisition of CP Ships in ‘‘Summary — Recent Developments.’’ You can also find summary financial data for CP Ships in ‘‘Summary — Summary Consolidated Financial Data for CP Ships.’’ See also ‘‘Presentation of Financial Information of CP Ships.’’

On October 26, 2005, we announced that our wholly-owned subsidiary, Preussag Immobilien GmbH, Salzgitter, agreed to sell its residential property holdings in the Ruhr area, including approximately 1,400 rented apartments located in the heart of the Ruhr area, as well as a few related commercial units, garages and other properties for approximately 470 million. The transaction is scheduled to complete on December 31, 2005, subject to regulatory approvals. For more information on our real estate holdings, see ‘‘Business — Property, Plant and Equipment — Real Estate.’’

Pro Forma Financial Liabilities

As of September 30, 2005, on a pro forma basis after giving effect to the adjustments described under ‘‘Capitalization,’’ we would have had total financial liabilities in the amount of 44.4 billion (excluding indebtedness of CP Ships, but including our discontinuing operations).

Overview

Since the commencement of our divestment program in October 2000, we have transformed our Group from an industrial conglomerate to a group focused on tourism and shipping. This change and the associated divestments are also reflected in our segment reporting.

Divisional reporting

Our divisional reporting reflects our internal control and reporting structure. We allocate companies to divisions and sectors based on the relevant companies’ operational and functional role in the Group and not based on the Group’s ownership structure of these companies.

Divisions and sectors for reporting periods beginning on or after January 1, 2005

The following diagram shows our current divisional reporting structure for reporting periods beginning on or after January 1, 2005: TUI AG(1) Tourism Central Europe Northern Europe Western Europe Other Tourism Central Operations Shipping Special Logistics(2) Destinations Continuing Operations Trading Discontinuing Operations

(1) See ‘‘Business — Our Business Structure’’ for a diagram illustrating our simplified corporate structure.

(2) Includes VTG AG’s rail and tank container logistics business, which was sold in June 2005, subject to antitrust clearance.

With the completion of the majority of our divestment program, our business includes four divisions for reporting periods beginning on or after January 1, 2005. Three of our divisions are included under continuing operations: tourism, shipping (our former logistics division) and central operations. Our fourth division is our discontinuing operations, which includes our trading and special logistics sectors. The tourism division covers all of our tourism companies with the exception of the cruise ship activities of Hapag-Lloyd AG, which are reported in the shipping division.

) Tourism. Our tourism division includes activities at all stages of the value chain, including:

) the sale of holiday travel packages and other travel products through our own travel agencies and direct distribution channels;

) the bundling of the component products and services into packaged tours; ) branding and marketing through our tour operators;

) the provision of incoming services at the holiday destination; and ) the provision of guest accommodation in our own and third-party hotels.

In addition to package tours, we also offer the main components of a holiday, flights and hotels, as single or bundled products, predominantly through our direct distribution channels, including the internet.

We have divided our tourism division into five sectors during the period under review (including

reporting periods ending on or before December 31, 2004). We treat each of our primary source markets as a sector: Central Europe, Northern Europe and Western Europe. This subdivision primarily tracks geographical aspects of the business and the respective functions within the value chain. Each of these sectors include retail sales, tour operators and airlines, including our airlines, Hapag-Lloyd Express in the Central European sector and Thomsonfly in the Northern Europe sector, which we formerly operated as low-cost airlines in our other/consolidation division, but have integrated since January 1, 2005 with our traditional airlines. Our hotels and destination services are reported under the destinations sector. Our other tourism/consolidation sector includes all tourism companies that are not directly associated with the organization and implementation of holiday tours, including central tourism-related IT and business travel activities.

) Central Europe. The Central Europe sector consists of retail sales and tour operation activities in Germany, Switzerland, Austria and Poland. Our airlines, Hapag-Lloyd Flug and Hapag-Lloyd Express, are also included in this sector.

) Northern Europe. The Northern Europe sector consists of retail sales and tour operators in the United Kingdom and Ireland and in the Nordic countries of Sweden, Denmark, Norway and Finland, as well as our airlines, Thomsonfly and Britannia Airways Nordic, that operate from the United Kingdom and Scandinavia.

) Western Europe. The Western Europe sector includes TUI’s retail sales and tour operation activities in France, the Netherlands and Belgium. Since its acquisition in October 2002, Nouvelles Fronti`eres has been included in this division, together with its airline Corsair. The Western Europe sector also includes TUI Airlines Belgium and TUI Airlines Nederland, which started operations in 2004 and 2005, respectively.

) Destinations. Our destinations sector includes our hotel companies and prior to 2004, also included, the Anfi group, which builds and sells timeshare apartment complexes. This sector also includes companies that provide destination services, including airport and hotel transfers, day trips, sightseeing trips and other events organized by our own agencies.

) Other tourism/consolidation. The other tourism/consolidation sector mainly includes our companies that engage in business travel organization and agency activities. This sector also includes our tourism head office functions, such as the provision of data processing services and central hotel purchasing, as well as the consolidation of activities within the tourism division. ) Shipping. The shipping division encompasses our significant shipping operations, including our

container shipping lines and our passenger cruise lines.

) Central operations. We manage all remaining activities not included in our tourism or shipping divisions in our central operations division. This division comprises TUI AG with its central

financial, tax and legal functions for our Group as a whole, several real estate businesses and certain industrial holdings that stem from when we were an industrial conglomerate, including a heating technology business, Wolf GmbH.

) Discontinuing operations. Our discontinuing division comprises the trading sector with the U.S. steel service companies of Preussag North America, Inc. (PNA) and the special logistics sector, which in 2005 only includes VTG AG with its rail and tank container logistics activities. We divested the rail and tank container logistics business of VTG AG in June 2005; however, completion of the sale remains subject to the receipt of antitrust clearance. Until the completion of the sale, we will record earnings from the special logistics under discontinuing operations, as we have done for our

other special logistics companies since 2002. We have also identified the U.S. steel service companies for disposal as part of our divestment program.

Divisions and sectors for reporting periods ending on or prior to December 31, 2004

The following diagram illustrates our divisional reporting structure for reporting periods ending on or prior to December 31, 2004: TUI AG Tourism Central Europe Western Europe Northern Europe Other Tourism Other/ Consolidation Logistics Special Logistics Trading Building Engineering Energy Shipping Industry Destinations Continuing Operations Discontinuing Operations

For reporting periods ending on or prior December 31, 2004, we managed our business in the following operating divisions: tourism, logistics and other/consolidation. In reporting periods ending on or before December 31, 2003, we also had an industry division.

) Tourism. Our tourism division comprised all of our tourism activities and five sectors described above, with the exception of our airlines Hapag-Lloyd Express and Thomsonfly, which were operated as low-cost airlines and included in our other/consolidation division prior to January 1, 2005.

) Logistics. Our logistics division comprised our shipping and special logistics sectors. Our shipping sector encompassed the container shipping and cruise line services that have since been rebundled in our current shipping division. Our special logistics sector included other logistic services, in

particular services for the chemical, petroleum, and petrochemicals industries. We divested our special logistics sector in 2004 and 2005. The sale of the rail and tank container logistics business of VTG AG in June 2005 remains subject to the approval of the relevant antitrust authorities.

) Other/consolidation. We managed all remaining activities not included in tourism or logistics divisions in our other/consolidation division. This division comprised TUI AG with its central financial, tax and legal functions for our Group as a whole, several real estate businesses, a heating technology business (formerly included in the building engineering sector), our remaining trading companies (the U.S. steel services companies of Preussag North America, Inc.) as well as our low- cost airlines, Hapag-Lloyd Express in Germany and Thomsonfly in the United Kingdom.

) Industry. In financial years prior to 2004, we also had an industry division, which consisted of three sectors: building engineering, energy and trading. Our trading sector included, in addition to our U.S. steel services companies, the AMC group (a trader in non-ferrous metals). We sold our shareholding in the AMC group to a company owned by the group’s management in November 2003. We sold off our energy businesses between 2001 and 2003 (the drilling services business in September 2001, our interest in the Deminex projects in 2002, our indirect stake in Ruhrgas and the remainder of the energy business in 2003). We also sold off the businesses in our building

engineering sector in 2001 and 2002 in accordance with our divestment program, except for the heating technology company Wolf GmbH. The disposal of Wolf GmbH was postponed due to a downturn in the market for such businesses. Following this postponement, effective January 1, 2002, Wolf GmbH no longer met the definition of a discontinuing operation and was subsequently

accounted for under the central operations division. In 2003, we sold a 20% interest in Wolf GmbH to its management.

In 2004, tourism accounted for approximately 73% of turnover and logistics for approximately 19% of turnover.

Acquisitions and disposals

We have made a number of significant acquisitions and disposals during the periods under review. Our most significant acquisition was Nouvelles Fronti`eres. We acquired a minority interest in this company in 2001 and full ownership in October 2002, for a total consideration of 4122.9 million. Nouvelles Fronti`eres contributed approximately 41,108.2 million to our turnover in 2004, 41,115.6 million in 2003 and

4203.6 million in the three month-period ending December 31, 2002 (the first period in which the company was consolidated in our financial statements).

During the period under review, we have also made a number of significant disposals that have enabled us to focus on our core businesses of tourism and shipping and reduce our overall indebtedness. In October 2000, our Supervisory Board approved the divestment program for several holdings in our former industry division. Further, our Supervisory Board on March 21, 2003 and January 21, 2004 approved our reorientation program for our logistics division. Our divestment program reflects our long-term strategy of focusing on our tourism and shipping businesses and divesting our non-core activities. Pursuant to our divestment program, we have sold the following businesses during 2001 to 2005:

Significant disposals

Turnover(1) Year ended December 31, Date of

Name Activity deconsolidation 2001 2002 2003 2004

(millions of 5) Building services engineering

Minimax group************* Stationary and mobile fire May 30, 2001 194.5 — — —

protection

Kermi group *************** Heating and sanitary systems July 1, 2001 105.5 — — —

Subsidiaries of Wolf GmbH*** Heating systems (burners, November 30 and 457.4 — — —

boilers, gas heaters, etc.) December 31, 2001

(two-step disposal)

Fels group***************** Building materials and lime May 1, 2002 687.2 202.7 — —

products Energy

KBB********************** Engineering and consultancy August 31, 2001 11.0 — — —

services and construction

Deutag group*************** Drillings and oilfield September 30, 2001 241.2 — — —

activities

Preussag Energie GmbH****** Exploration and production June 13 and 24, 586.7 448.2 176.9 —

of crude oil and natural gas 2003 (two-step

trader disposal)

Trading

AMC group**************** Non-ferrous metal dealer October 31, 2003 2,351.7 2,400.5 1,430.9 —

Logistics

Pracht Spedition + Logistik*** Haulage and storage logistics January 1, 2004 168.7 190.9 209.9 —

Business unit II (part of

VTG AG)(2)************** Bulk and special logistics March 31, 2004 — 563.6 520.9 136.0

Algeco group*************** Mobile buildings and pallets August 31, 2004 405.1 396.7 399.3 244.5

Business unit I (part of

VTG AG)(3)************** Rail and tank container — — 406.8 403.0 405.8

(1) Represents turnover until the date of deconsolidation and includes intra-group turnover.

(2) Turnover figures for this part of VTG AG for 2002 and 2003 are taken from separate financial statements prepared in connection with the sale of this business. Similar financial statements were not prepared for 2001.

(3) The sale of Business Unit I is subject to the approval of the competent antitrust authorities expected for December 2005.

Our financial condition and results of operations for the periods under review reflect, in addition to organic growth, growth from acquisitions and deconsolidation effects for companies that were divested. Consequently, comparability of our results of operations and financial condition between periods is limited. The results of divested or acquired companies are reflected in our financial statements up to the date on which they ceased to be controlled by us for disposals or from the date of their first-time consolidations for acquisitions. We discuss effect of acquisitions and disposals in more detail under ‘‘— Results of Operations’’ and provide the turnover and EBITDA of our discontinuing operations as a separate item in our financial statements.

As part of our divestment program, we have identified the sale of our U.S. steel service companies as soon as conditions are appropriate. These companies are part of the trading sector in our discontinuing operations divisions and contributed 4625.1 million to our turnover in 2003 and 4971.5 million to our turnover in 2004.

Group of consolidated companies

We operate worldwide through over 115 German and 515 non-German subsidiaries. Our consolidated financial statements for the nine-month period ended September 30, 2005 included 51 German (excluding TUI AG) and 350 non-German subsidiaries. In 2004, we consolidated a total of 52 (excluding TUI AG) German and 350 non-German subsidiaries in our financial statements, compared to 62 German subsidiaries and 369 non-German subsidiaries in 2003 and 82 German subsidiaries and 399 non-German subsidiaries in 2002. In 2004, we did not consolidate 62 of our German and 165 of our non-German subsidiaries because we do not consider them to be material, either individually or in the aggregate.

In 2004, we consolidated 18 subsidiaries for the first time, 12 of which were consolidated in the tourism and logistics divisions. In addition to the consolidation of these entities, six companies were consolidated for the first time in the other/consolidation division following spin-offs, start-ups or the expansion of their existing business activities.

We deconsolidated 47 companies in 2004. 33 of these companies were related to the discontinuation of the logistics division. Nine companies were deconsolidated as a result of disposals or mergers and the remaining five were accounted for in the logistics and other/consolidation divisions.

In 2004, we reported 21 associated and 27 joint venture companies at equity, compared to a total of 46 in 2003. In 2004, five additional companies were added to equity measurement, primarily due to acquisitions of shares, two companies were removed from equity measurement due to the disposal of shareholdings and one company was removed due to an acquisition of the remaining shares in that company and its subsequent first-time consolidation.

Since December 31, 2004, five additional companies have been consolidated in the tourism division, four due to the acquisition of shares and one due to the expansion of its business activities.

Since December 31, 2004, six additional companies have been deconsolidated, either as a result of their disposal or due to reductions in business activities that rendered them immaterial for consolidation purposes. Four of these deconsolidated companies were part of the tourism division.

Factors that are important in understanding our results of operations

In addition to the divestment program outlined above, our results of operations, financial position and liquidity have been affected during the period under review by the following factors and market

characteristics:

) Income Recognition. We report turnover and other operating income at the time the service is rendered or the good is delivered and the associated risk passes to the purchaser. For tourism services, we recognize turnover as services are rendered at the various stages of the value chain. We recognize commission income from package tours of non-Group tour operators sold by our travel agencies generally upon payment by customers, at the latest at the departure date. We do not recognize commission income from the sale of Group products until the departure date. The services of tour operators mainly consist of the organization and coordination of package tours. Turnover from the organization of package tours is therefore recognized in full upon the start of the relevant tour. We recognize turnover received at later stages along the value chain from hotels, airlines and