A sample of some of the key risks that the Group is currently managing are:
| Risk type | Risk Description | Business Response |
| Hedging and cost base increases | Negative impact on margin from volatile foreign exchange and fuel price increases and other general cost base increases. | - Robust hedging policies in place across all source markets, controlled and monitored by the Group treasury team.
- Standing agenda item at the monthly Mainstream meeting.
- Flexible cost base and strong focus on fixed cost reduction and transitioning fixed to variable costs.
- Strong relationships and contracts with key suppliers to control cost increases.
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| Macroeconomic | Decline in the economy and potential impact on consumer demand and capacity commitments. | - Flexible business model (beds and aircraft) in order to change capacity in response to changes in demand with only 20% of Group bedstock committed and 3rd party flying accounting for 30% of all tour operator Mainstream volume.
- Majority of aircraft on operating leases with 43% of all leases due to expire in the next 3 years.
- Strong focus on cost control.
Competitive supplier scale benefits post–merger. - Robust, aligned strategy across Group.
Strong balance sheet and secured lines of finance.
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| Aviation financing | Ability to secure adequate funding for aircraft order book as a result of economic climate | - Long and well established partnerships with diverse group of institutions providing aviation financing.
- Continued strong operating performance.
- Deferring some new aircraft deliveries going forward.
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| Health and safety | Accident or injury being caused to any of our colleagues or customers whilst in our care as a result of failure in our due diligence process or supplier negligence | - Robust risk based approach to Health and Safety due diligence for Group products and activities.
- Destination based quality reviews carried out for areas of high risk.
- Industry leading expertise employed at the centre to set policy and provide guidance.
- Best practice sharing across new group tailored to source market needs.
- Robust airline safety management systems in place across the Group.
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| Liquidity and cash management | Management of Group cash position over diverse portfolio and potential risk to refinancing due to lack of credit within financial markets | - Daily cash balances reported and monitored.
- Strong focus on working capital management at the centre.
- Implementing centralised cash management system post. integration.
- Daily counterparty reviews and investment control by central team.
- Key lines of finance do not expire until 2011 (TUI AG £0.8bn) and 2012 (RCF £0.8bn).
- Strong relationships with banking and financing partners.
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| Integration and synergy | Delay to synergy delivery and increase in operating costs as a result of extended post merger activity and instability with regards to people, processes and systems as a result of the integration | - Governance structure and reporting framework well established.
- Group integration steering committee review progress and monitor delivery against plan.
- Robust Human Resources’ plans in place focused on retention and people development.
- Regular reporting and communications in place.
- Strong performance results delivered to date.
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