Boeing 737 Max: Grounding could cost tour operator Tui €400m next year

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Tui has reported record revenue in its half-year results, not long before it take flight from London markets for Germany.
Tui has reported record revenue in its half-year results, not long before it take flight from London markets for Germany.

Tui has admitted the grounding of its fleet of Boeing 737 Max planes could cost up to €400m next year if it does not return to the skies by April.

The world’s biggest tour operator said that if the global ban on the jet lasts beyond February next year it will not have time to get its fleet ready to fly from April for the summer season.

Read more: Gatwick airport to lose 600,000 passengers because of Thomas Cook collapse

Tui, which is the largest operator of 737 Max jets in the UK with a fleet of 15, has already lost €293m this year from the grounding.

The jets were banned from global airspace after the second of two crashes which killed 346 people in total. The first was in Indonesia in October last year, while the second was in Ethiopia in March.

Tui said profit for the year ending 30 September had fallen 24.5 per cent to €893m, in part down to the 737 Max grounding, and in part because Brexit uncertainty had affected the amount of people booking holidays.

Revenue grew 2.5 per cent to €18.9bn, but missed analyst expectations of €19.4bn.

Nevertheless, Tui benefitted from the collapse of one of its main rivals Thomas Cook. The failure in September has allowed the operator to hike its prices and grab market share. 

It has already said that it has added 2m extra seats to its summer schedule next year, plus 135 more hotels since Thomas Cook went bust.

However, lower cost firms like Jet2 and On The Beach have made similar grabs for market share, while Easyjet is relaunching its holiday offering with trips starting in the new year.

Read more: What Thomas Cook’s collapse tells us about the power of disruption

Chief executive Friedrich Joussen said: “In 2019, our planned growth was impossible to achieve. Nevertheless, we held up well in a very challenging market environment for tourism and aviation. 

“The traditional tour operating business in Europe is still changing, the aviation sector is feeling the impact of overcapacity, in particular on short- and medium-haul routes, and our results for the completed financial year were affected in particular by the grounding of the Boeing 737 Max.”