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TUI 737 MAX aircraft

TUI may lose €300m in MAX crisis

The tour operator is basing its forecasts for the year on two scenarios, depending on when the 737 MAX returns to service.

The 737 MAX crisis will seriously impact TUI’s financial results this year, the tour operator warns in a guidance update released today.

It is warning that the grounding of Boeing’s 737 MAX planes could cost it up to €300 million.

The company operates a fleet of around 150 aircraft. This includes 15 of the grounded Boeing aircraft type, while a further eight had been due for delivery by the end of May – the start of the crucial summer holiday season in Europe.

The financial hit comes as a result of the cost of aircraft replacements, higher fuel bills and other disruption costs, the BBC reports.

Although the outcome of the grounding of Boeing’s 737 MAX aircraft is still uncertain, with the manufacturer promising a fix for the problem, it is likely to dent TUI’s full-year earnings by between 20% and 26%, the tour operator says.

Spare planes
The group’s forecasts are based on the MAX planes remaining out of action until mid-July. The Easter, Whitsun and early summer programmes will be the periods bearing the biggest impact.

TUI says it will use eight older 737s as well as spare and charter aircraft, which it promises will “guarantee” its customers’ holidays.

If MAX aircraft are permitted to fly again by mid-July TUI would take a €200 million hit, but if the grounding is extended until the end of September it would cost the company another €100 million, reducing full-year earnings by 26%.

TUI says that there is still “considerable uncertainty” on when the MAX will return to service.

“No dates have yet been announced for modifications of the existing aircraft model by the manufacturer, neither for approval of such modifications by the Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA),” it says.

“Therefore, TUI has taken precautions along with other airlines, covering the time until mid-July, in order to be prepared for Easter, Whitsun and the start of the summer holiday season and to secure holidays for customers.”

The development comes on top of poor results due to booking turbulence that has hit tour operators like TUI and Thomas Cook in 2018 and 2019.

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