Friday 23 August 2019

TUI counts cost of grounded Boeing planes

People pass the logo of German travel company TUI AG at the company's headquarters in Hanover. Credit: Reuters/Fabian Bimmer
People pass the logo of German travel company TUI AG at the company's headquarters in Hanover. Credit: Reuters/Fabian Bimmer
Independent.ie Business Desk

Independent.ie Business Desk

Holiday giant Tui has reported a 46pc plunge in underlying earnings after taking a hit from the grounding of Boeing's 737 Max 8 aeroplane.

The group saw underlying earnings slump to €100.9m in its third quarter after booking costs of €144m from the 737 Max woes, while trading is also being hampered by Brexit uncertainty.

Tui now expects costs for the aircraft issue of around €300m for the full year.

It comes after Boeing grounded the plane in the wake of the Ethiopian Airlines crash in March which killed 157 people, months after the same model was involved in the Lion Air crash in Indonesia which killed 189.

Tui said trading continued to be impacted by Brexit uncertainty and a "knock-on impact" from last summer's heatwave as holidaymakers leave it later to book their trips.

It said: "We saw delayed customer bookings driven by the summer 2018 heatwave, the continued Brexit uncertainty and considerable aviation overcapacity to Spanish destinations continued in the third quarter."

Bookings for the summer are down 1pc year-on-year, although it said this marked an improvement since the first half, when they fell 3pc.

Its markets and airlines business took the brunt of the 737 planes impact, as well as the tougher trading conditions, slumping to an underlying loss of €103.9m, against earnings of €37.2m a year ago.

Passenger numbers in the division edged higher to 6.03 million from 6.02 million a year earlier.

Tui said it had secured replacement aircraft leases to the end of the summer 2019 programme to cope with the 737 plane issues.

Tui's fleet, which comprises around 150 aircraft, currently includes 15 grounded 737 Max 8 planes for the UK, Belgium, the Netherlands and Sweden.

The group has warned on profits twice this year, blaming one on the UK market and another on the Boeing groundings.

There was no further expected profit pain in its latest report as it stuck to previous guidance for full-year underlying earnings to fall by up to 26pc on last year's €1.77bn.

Chief executive Fritz Joussen has been cutting costs and making efficiencies to help offset the 737 Max 8 problems and difficult trading.

PA Media

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