TUI warns of drop in profits after 737 MAX grounding
TUI has warned that if the grounding of 737 MAX aircraft continues until mid-July, it will cost the travel giant around €200 million.
In an update to investors today, it warned that this would mean a drop of 17% in full-year profit, compared to its earlier forecast of profit being flat.
If the aircraft stays grounded until the end of September, this would bring a hit of another €100 million and a drop in profit of 26% compared to last year.
"This impact is especially attributable to costs related to the replacement of aircraft, higher fuel costs, other disruption costs, and the anticipated impact on trading," it said.
TUI said it is using spare aircraft, extending expiring leases for aircraft that were supposed to be replaced by 737 MAX aircraft, as well as leasing in additional aircraft.
TUI’s fleet comprises around 150 aircraft, including 15 grounded 737 MAX for the UK, Belgium, the Netherlands and Sweden.
A further eight 737 MAX were scheduled for delivery by the end of May 2019.
"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 told investors.
"Therefore, TUI has taken precautions along with other airlines, covering the time until mid-July, in order to be prepared for the Easter Whitsun and start of the summer holiday season and to secure holidays for its customers and their families."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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