AD-HOC ANNOUNCEMENT ACCORDING TO SECTION 15 OF THE GERMAN SECURITIES TRADING ACT (WPHG)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND TUI TRAVEL SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE NEW TUI AG SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE TUI AG PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN
DUE COURSE

FOR IMMEDIATE RELEASE

15 SEPTEMBER 2014

RECOMMENDED ALL-SHARE MERGER OF TUI TRAVEL PLC AND TUI AG

Further to the announcements made by TUI Travel and TUI AG on 27 June 2014 and 25 July 2014, the Independent Directors of TUI Travel and the Executive Board (Vorstand) of TUI AG are pleased to announce that they have reached agreement on the terms of a recommended all-share nil-premium merger of TUI Travel and TUI AG, which is to be implemented by way of a Scheme of Arrangement of TUI Travel.

Under the Merger, which will be subject to the Conditions and terms set out
in Appendix I to this announcement and to the further terms to be set out
in the Scheme Document, TUI Travel Shareholders (other than TUI AG and
certain connected parties) will receive 0.399 New TUI AG Shares for each
TUI Travel Share held by them at the Scheme Record Time.

Taking into consideration TUI AG's existing stake in TUI Travel, the Merger
is expected to result in existing TUI Travel Shareholders (other than TUI
AG and certain connected parties) owning 46% of the Combined Group and
existing TUI AG Shareholders owning 54% of the Combined Group, on a
fully-diluted basis.

Based on the Exchange Ratio and the closing share prices as at 12 September
2014 (being the last practicable date prior to the release of this
announcement), the Combined Group would have a fully-diluted equity value
of approximately EUR6.5 billion (£5.2 billion).

The Combined Group will be German domiciled with a premium listing on the
London Stock Exchange, in parallel with a secondary market quotation on a
German stock exchange. The FTSE Nationality Advisory Committee has
announced that, subject to Completion, it would allocate the Combined Group
a UK classification for FTSE index inclusion purposes.

TUI Travel Shareholders (including TUI AG) will receive a second interim
dividend of 20.5 pence per TUI Travel Share, to include 10.5 pence per TUI
Travel Share in lieu of a final dividend for the financial year 2013/14.

The Merger will result in the creation of the world's number one integrated
leisure tourism business, clearly positioned as a fully
vertically-integrated tour operator with enhanced long-term growth
prospects.

Mr. Alexey Mordashov, TUI AG's largest shareholder, has confirmed his
support for the Merger.

Reasons for the Merger

Accelerate growth and future-proof the vertically integrated business model

- Opportunity to accelerate the long-term growth of the Combined Group by
accessing high-quality hotel and cruise ship content on an exclusive
basis

- Enhances certainty of supply for the continued growth of Unique
Holidays

- Enhances and de-risks Mainstream content growth as a result of
integration

- Provides the potential for the Combined Group to double the pace of
existing TUI AG content growth through further vertical integration
- more than 30 additional hotels and up to two additional cruise
ships

- Historic annual performance suggests a potential contribution to
EBITA of EUR1.4 million (£1.1 million) per hotel and a substantial
contribution per ship (under the TUI Cruises business model)(See
endnote 1)

- Acceleration of content growth is expected to drive customer and
top-line growth

- Reinforces the Combined Group's competitive advantage versus
non-integrated leisure travel businesses through further control over
the end-to-end customer experience

- The Merger is expected to deliver material value to all TUI Travel
Shareholders and existing TUI AG Shareholders, with a continuation of
strong leadership

Deliver significant synergies, increased occupancy and cost savings

- The Merger is expected to deliver significant synergies

- Corporate streamlining - potential cost savings of at least EUR45
million (£36 million) per annum

- Significant tax optimisation - potential for a substantial
reduction in the Combined Group's ongoing tax rate - a unified
ownership structure would have delivered a decrease in the
underlying effective tax rate of around 7 percentage points to 24%
in the financial year 2012/13 (see endnote 2)

- Significant increase in occupancy levels achievable through joint yield
management

- Each 1 percentage point improvement in occupancy would be expected
to deliver approximately EUR6.1 million (£4.9 million) of
additional profit (see endnote 3)

- TUI Travel's vertically integrated Magic Life clubs have an
occupancy level which is 5 percentage points higher than the level
in TUI AG's hotel and resorts portfolio for the financial year
2012/13 (see endnote 4)

- Additional cost savings achievable through the integration of Inbound
Services into the Mainstream tourism business, resulting in net cost
savings of EUR20 million (£16 million) annually (see endnote 5)

Strategy of the Combined Group

The Combined Group will utilise the scale of its fully-integrated
Mainstream tourism business - content, Unique Holiday experiences and
distribution - whilst driving growth and value from its non-Mainstream
businesses, to enhance its growth and margin profile, thereby
future-proofing its long-term sustainable competitive position.

In particular, the Combined Group will:

- Deliver a superior end-to-end customer experience through a
fully-integrated Mainstream tourism business

- Accelerate long-term growth supported by an asset-right business model
based on an optimal mix of owned and managed hotels and cruise ships,
with a targeted minimum required return on capital of 15% for new
content (see endnote 6)

- In the financial year 2012/13, approximately 50% of TUI AG hotels
were operated under management contracts, approximately 9% were
leased or franchised and the remainder were owned

- Maximise the growth and value of the Online Accommodation and
Specialist & Activity businesses

- Treat the TUI AG stake in Hapag-Lloyd AG as a business for disposal and
finalise the exit from Container Shipping

- Focus on balance sheet strength, flexibility and strong free cash flow
generation with a view to increasing shareholder returns from the
Merger

Financial effects of the Merger

- Merger is expected to be EPS accretive (see endnote 7) for both sets
of shareholders
from the first full financial year post-Merger (see endnote 8)

- Strong EPS accretion for TUI Travel Shareholders

- Strong cash flow/dividend benefit for TUI AG Shareholders

- Strong EPS accretion for both sets of shareholders thereafter

- The New Executive Board of TUI AG is confident that value creation for
both sets of shareholders should result from the creation of a pure
play integrated leisure tourism business and from the elimination of
the current TUI AG structural discount

Continuation of existing strong leadership

- Expanded Executive Board of TUI AG and enlarged number of
shareholder-elected members of the Supervisory Board of TUI AG, to be
drawn equally from TUI AG and TUI Travel

- Peter Long and Friedrich Joussen to be joint CEOs of the Combined
Group, with Peter Long planned to become Chairman of the Supervisory
Board of TUI AG and Friedrich Joussen leading the Combined Group as
sole CEO from February 2016

Dividend

- The TUI Travel interim dividend of 4.05 pence per TUI Travel Share
previously announced by TUI Travel will become payable on 3 October
2014

- In addition, TUI Travel will, immediately prior to Completion, declare
and pay a second interim dividend of 20.5 pence per TUI Travel Share,
to include 10.5 pence per TUI Travel Share in lieu of a final dividend
for the financial year 2013/14. This second interim dividend will be
payable to those TUI Travel Shareholders on the register of members of
TUI Travel at the Scheme Record Time and will be paid prior to
Completion conditional on the Court Order having been granted at the
Scheme Court Hearing

- TUI Travel Shareholders will not be eligible for any final dividend
paid by TUI AG for the financial year 2013/14. TUI AG anticipates that
it will declare a final dividend for the financial year 2013/14
(subject to adequate balance sheet capacity, recommendations by the
Executive Board of TUI AG and the Supervisory Board of TUI AG and
approval at the TUI AG Annual General Meeting in 2015) of EUR0.33 per
TUI AG Share. The anticipated dividend of TUI AG would represent an
equivalent amount to the originally anticipated final dividend of 10.5
pence per TUI Travel Share, reflecting the agreed Exchange Ratio (which
already takes account of the 4.05 pence TUI Travel interim dividend).
The TUI AG dividend for the financial year 2013/14 will be paid after
the TUI AG Annual General Meeting in 2015 to TUI AG Shareholders (other
than holders of New TUI AG Shares)

- TUI AG and TUI Travel each confirm that neither of them will make any
distribution to their shareholders, other than the aforementioned
dividends, either in respect of the financial year 2013/14 or before
Completion

- Following Completion, the Combined Group intends to adopt a dividend
policy in line with TUI Travel's present progressive dividend policy
under which dividends grow broadly in line with earnings. Provided the
performance of the Combined Group develops in line with expectations,
the Combined Group will target an increase in its dividend per share
for the financial years 2014/15 and 2015/16 of 10% in excess of the
underlying growth in the Combined Group's earnings per share. This is
subject to adequate balance sheet capacity, recommendations by the
Executive Board of TUI AG and the Supervisory Board of TUI AG and
approval at the respective TUI AG Annual General Meeting in the
relevant year

- The net dividend receivable from TUI AG may be affected by German
withholding tax. Further details are set out in paragraph 7 of this
announcement

Financing

- Credit facility agreements have been entered into regarding new credit
facilities for the Combined Group, in an aggregate amount of EUR1.55
billion

- These facilities will provide available financing for the Combined
Group's general corporate and working capital requirements from
Completion, replacing TUI Travel's existing revolving credit
facility

- In addition, a credit facility agreement has been entered into for a
EUR600 million term loan facility available at Completion, which it is
envisaged will be refinanced by the issue of senior unsecured notes
shortly after this announcement

Directors' irrevocables

- TUI AG has received irrevocable undertakings to vote in favour of the
Merger from the Independent Directors of TUI Travel, their families and
related trusts, who hold or are beneficially entitled to TUI Travel
Shares, representing in aggregate approximately 0.100% of TUI Travel's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement)

- TUI AG has received an irrevocable undertaking to vote in favour of the
Merger at the relevant TUI Travel shareholder meetings from Peter Long
(who is a director of TUI Travel, but not one of the Independent
Directors of TUI Travel), his family and related trusts, who hold or
are beneficially entitled to TUI Travel Shares, representing in
aggregate approximately 0.267% of TUI Travel's ordinary share capital
in issue on 12 September 2014 (being the last practicable date prior to
the release of this announcement)

- Friedrich Joussen, Horst Baier and Sebastian Ebel, who are directors of
TUI Travel but not Independent Directors of TUI Travel, do not have
interests in TUI Travel Shares and neither do their respective families
or related trusts

Commenting on the Merger

Sir Michael Hodgkinson, Deputy Chairman and Senior Independent Director of
TUI Travel, said:

"The Board of TUI Travel is focused on delivering shareholder value and I
and my fellow independent directors are confident that the finalised terms
of this Merger represent significant value for our shareholders. By
simplifying the structure and combining the two businesses substantial
synergies and cost savings will be realised. In addition, the potential to
deliver material commercial benefits will be unlocked. Peter Long's
position as, firstly joint Chief Executive with continued responsibility
for the former TUI Travel businesses, and then in 2016 as Chairman of the
Supervisory Board should also serve to give TUI Travel shareholders
confidence in the long-term prospects for the group."

Prof. Dr Klaus Mangold, Chairman of the Supervisory Board of TUI AG, said:

"The Supervisory Board of TUI AG strongly endorses the merger of the two
companies. Significant operational and financial benefits are expected by
the vertical integration which enables further efficiency gains and growth
owing to a new group structure. The listing of the TUI AG shares on the
premium segment of the London Stock Exchange and the FTSE UK Index makes
the shares attractive for international investors, the euro listing on the
Frankfurt Open Market secures market access in Germany and emphasises the
international nature of the group. With this euro listing on a German stock
exchange we want to ensure that TUI AG shares will remain an attractive
investment for private investors. Further, the newly formed Integration
Committee of the Supervisory Board of TUI AG will actively accompany the
phase of re-orientation and the merger of both companies as well as attend
to the aspired benefits."

Peter Long, Chief Executive of TUI Travel and Member of the Executive Board
of TUI AG, said:

"The Merger will strengthen and future-proof our combined business by
enhancing the certainty of long-term Unique Holiday growth, and by
reinforcing our competitive advantage through further control over the
end-to-end customer experience. Friedrich Joussen and I are committed to
working closely to ensure that we achieve significant synergies, cost
savings, commercial benefits and long-term growth as the world's number one
integrated leisure tourism business. All of which will contribute to
significant earnings accretion from the first full financial year post
Completion and growth in shareholder returns."

Friedrich Joussen, Chief Executive of TUI AG and Chairman of TUI Travel,
said:

"We have conducted the negotiations goal orientated, seriously and fairly
and have completed them successfully. The result is a clear and joint
commitment to the merger of the companies. The potential cost savings are
significantly higher than expected at the start of the negotiations. The
new TUI will be the leading integrated tourism group in the world and an
innovative pioneer in the industry. We will set new standards in our
industry with respect to growth, quality as well as brand promise and
create significant opportunities for shareholders, customers and our
employees. Our shareholders benefit from faster growth, higher margins and
an attractive dividend policy. Our customers receive unprecedented access
to exclusive products and services and thereby individual and unique
holiday experiences around the globe. Our 74,000 employees worldwide in
approximately 130 countries will have completely new development and career
prospects. The new TUI will definitely be a truly international group and
thus also one of the most international employers in Europe."

Mr. Alexey Mordashov, TUI AG's largest shareholder, has confirmed his
support for the Merger and said:

"I am pleased with the recent business development of both companies. The
combination will serve to improve the tourism business model and help drive
future business growth for the benefit of both shareholder groups."

Recommendations

The Independent Directors of TUI Travel, who have been so advised by
Lazard, consider the terms of the Merger to be fair and reasonable. In
providing its advice, Lazard has taken into account the commercial
assessments of the Independent Directors of TUI Travel. Accordingly, the
Independent Directors of TUI Travel intend unanimously to recommend TUI
Travel Shareholders to vote in favour of the Scheme at the TUI Travel Court
Meeting and the resolutions to be proposed at the TUI Travel General
Meeting, as the Independent Directors of TUI Travel who hold or are
beneficially entitled to TUI Travel Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of 1,135,168 TUI Travel
Shares representing in aggregate approximately 0.100% of TUI Travel's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement). Bank of
America Merrill Lynch and Barclays have also provided financial advice to
the Independent Directors of TUI Travel in respect of the Merger.

Peter Long is a director and Chief Executive of TUI Travel and is also a
member of the Executive Board of TUI AG. As such, Peter Long is not
considered to be an Independent Director of TUI Travel for the purposes of
TUI Travel's discussion of, or decisions in relation to, the Merger and has
not been involved in or voted on such decisions. Similarly, Peter Long has
not participated in decisions in relation to the Merger by the Executive
Board of TUI AG. Accordingly, Peter Long has not participated in the
formal recommendation of the Merger by the Independent Directors of TUI
Travel or the Executive Board of TUI AG contained in this announcement.
Peter Long's comment on the Merger is set out above.

Also, as set out above, TUI AG has received an irrevocable undertaking to
vote in favour of the Merger at the relevant TUI Travel shareholder
meetings from Peter Long, his families and related trusts, who hold or are
beneficially entitled to TUI Travel Shares, representing in aggregate
approximately 0.267% of TUI Travel's ordinary share capital in issue on 12
September 2014 (being the last practicable date prior to the release of
this announcement. Peter Long, his families and related trusts have no
current interests in TUI AG Shares.

Friedrich Joussen, Horst Baier and Sebastian Ebel, who are directors of TUI
Travel are either members of the Executive Board of TUI AG or members of
TUI AG's senior management. As such, they are not considered to be
Independent Directors of TUI Travel for the purposes of TUI Travel's
discussion of, or decisions in relation to, the Merger and have not
participated in such discussions or voted on such decisions. Neither they
nor their family and related trusts hold any interests in TUI Travel
Shares.

The Executive Board of TUI AG (other than Peter Long who has recused
himself as set out above) considers the Merger to be in the interests of
existing TUI AG Shareholders. The Executive Board of TUI AG (other than
Peter Long) has been advised by Deutsche Bank and Greenhill in relation to
the Merger. In providing their advice, Deutsche Bank and Greenhill have
taken into account the commercial assessments of the Executive Board of TUI
AG (other than Peter Long).

Accordingly, the Executive Board of TUI AG (other than Peter Long) intend
unanimously to recommend existing TUI AG Shareholders to vote in favour of
all of the resolutions to be proposed at the TUI AG EGM to approve the
Direct Capital Increase, the Conditional Capital Increase and related
matters, as the members of the Executive Board of TUI AG (other than Peter
Long) who hold or are beneficially entitled to TUI AG Shares intend to do
in respect of their own beneficial holdings of 158,798 TUI AG Shares
representing in aggregate approximately 0.055% of TUI AG's share capital in
issue on 12 September 2014 (being the last practicable date prior to the
release of this announcement).

The Supervisory Board of TUI AG intends unanimously to recommend existing
TUI AG Shareholders to vote in favour of all of the resolutions to be
proposed at the TUI AG EGM to approve the Direct Capital Increase, the
Conditional Capital Increase and related matters, as the members of the
Supervisory Board of TUI AG who hold or are beneficially entitled to TUI AG
Shares intend to do in respect of their own beneficial holdings of 27,955
TUI AG Shares representing in aggregate approximately 0.010% of TUI AG's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement). The
Supervisory Board of TUI AG has obtained an additional separate fairness
opinion from J.P. Morgan with respect to the Exchange Ratio.

Next steps

The Merger will be voted on by TUI Travel Shareholders at the TUI Travel
Court Meeting and at the TUI Travel General Meeting. Resolutions required
to be passed in connection with the Merger will be voted on by existing TUI
AG Shareholders at the TUI AG EGM. In order for the Scheme to become
Effective:

- it must be approved by a majority in number of the TUI Travel Scheme
Shareholders who are on the register of members of TUI Travel at the
Voting Record Time and who are present and voting (and entitled to
vote) at the TUI Travel Court Meeting, either in person or by proxy,
representing at least three quarters in nominal value of the TUI Travel
Scheme Shares held by such holders. TUI Travel Shares in which TUI AG
and certain of its connected parties have an interest will not be
eligible to be voted at the TUI Travel Court Meeting;

- the Special Resolution approving the Reduction of Capital and such
other matters as may be necessary to implement the Scheme (requiring a
majority of at least three quarters of the votes cast by person or by
proxy) must be passed by TUI Travel Shareholders at the TUI Travel
General Meeting;

- the resolutions necessary to approve the Direct Capital Increase and
the Conditional Capital Increase (each requiring a majority of at least
three quarters of the share capital voting on such resolution) must be
passed at the TUI AG EGM;

- the proposed election of the new members of the Supervisory Board of
TUI AG set out in the TUI AG EGM Invitation, being certain of the
existing independent non-executive directors of TUI Travel, and the
proposed resolution regarding the amendment of the TUI AG Charter to
allow TUI AG to appoint one or more chairmen to the Executive Board (as
defined in the TUI AG Charter) must be passed at the TUI AG EGM;

- the resolution of the Direct Capital Increase and the resolution of the
Conditional Capital Increase must be registered at the commercial
registries in Hanover and Charlottenburg/Berlin;

- the Court must sanction the Scheme with or without modification (but
subject to any such modification being acceptable to TUI AG and TUI
Travel) and confirm the Reduction of Capital and:

- office copies of the Court Order (and the Statement of Capital)
must be delivered to the Registrar of Companies; and

- if the Court so orders for it to become effective, the Court Order
and the Statement of Capital must be registered by the Registrar of
Companies;

- the UK Listing Authority must acknowledge to TUI AG or its agent that
the application for the admission of the TUI AG Shares to the premium
listing segment of the Official List of the UK Listing Authority has
been approved and will become effective as soon as the UK Listing
Authority's decision to admit the TUI AG Shares is announced and the
London Stock Exchange must acknowledge to TUI AG or its agent that the
TUI AG Shares will be admitted to trading on the London Stock
Exchange's main market for listed securities; and

- Deutsche Bank (as German listing agent of TUI AG) must not have
received any notification or other communication from the Frankfurt
Stock Exchange or any of the Stuttgart, Hamburg, Berlin, Düsseldorf,
Hanover or Munich stock exchanges that admission to trading of all the
New TUI AG Shares on the regulated market of the Frankfurt Stock
Exchange with simultaneous admission to the segment of the regulated
market with additional post-admission obligations (Prime Standard) of
the Frankfurt Stock Exchange as well as the regulated markets of the
stock exchanges in Stuttgart, Hamburg, Berlin, Düsseldorf, Hanover and
Munich, will not be granted pursuant to an application made for such
trading.

It is expected that the Scheme Document, containing further information
about the Merger and notices of the TUI Travel Court Meeting and the TUI
Travel General Meeting, will be posted to TUI Travel Shareholders within
the next 28 days.

It is expected that the TUI AG Prospectus, containing information about the
New TUI AG Shares and the Combined Group, will be published at or around
the same time as the Scheme Document is made available to TUI Travel
Shareholders.

It is expected that the TUI AG EGM Invitation, containing details of the
Merger and notice of the TUI AG EGM at which resolutions will be proposed
for the approval of the Direct Capital Increase, the Conditional Capital
Increase and other matters relating to the Merger by existing TUI AG
Shareholders, will be published by 19 September 2014.

It is currently anticipated that the Scheme will become Effective by the
end of December 2014, subject to the satisfaction or (where applicable)
waiver of the Conditions, certain terms set out in Appendix I to this
announcement and the further terms to be set out in the Scheme Document.
However, it should be noted that there is no certainty that all of the
Conditions will be satisfied or waived by that date or that the Scheme will
become Effective by that date.

In particular, certain resolutions are required to be passed at the TUI AG
EGM, expected to be held on or around 27 October 2014. These include
resolutions for approving the Direct Capital Increase and for approving the
Conditional Capital Increase, which must also then be registered with the
appropriate commercial registries before the Scheme can become Effective.

However, in accordance with German law, insofar as any shareholder
contestation actions (Anfechtungsklagen) are raised relating to those
resolutions, TUI AG will not be able to register the resolutions for the
Direct Capital Increase and the Conditional Capital Increase until such
actions have been concluded. The conclusion of any such actions could take
up to approximately four to seven months from the date on which the TUI AG
EGM is held and therefore result in a delay before all of the Conditions
are satisfied and, if successful, could prevent satisfaction of all the
Conditions.

Media calls

There will be conference calls for the UK and German newswires and national
media today, 15 September 2014. The newswire calls will take place at
08.15hrs (BST), 09.15hrs (CEST). The national media calls will take place
at 11.00hrs (BST), 12.00hrs (CEST). Respective dial in details are below.

The UK media dial in details are:

UK newswire call at 08.15hrs (BST): +44 1452 555 566
UK newswire PIN code: 503 7004

UK national media call at 11.00hrs (BST): +44 1452 555 566
UK national media PIN code: 504 6416

The German media dial in details are:

German newswire call at 09.15hrs (CEST): +49 30 232 531 469 or +44 20 3147
4861 (no PIN code required for either dial in)

German national media call at 12.00hrs (CEST): +49 30 232 531 403 or +44 20
3367 9216 (no PIN code required for either dial in)

Analyst and investor briefing and webcast

A briefing and live webcast for analysts and investors will be held today,
15 September 2014, at 09.00hrs (BST), 10.00hrs (CEST) at the London Stock
Exchange, 10 Paternoster Square EC4M 7LS, United Kingdom. To access the
webcast, please go to www.tuitravelplc.com or www.tui-group.com for more
details. The presentation will be available to download from both websites
shortly before the webcast is due to start. A replay of the webcast will be
available through the respective websites shortly after it finishes.