Boeing 737 Max: Tui shares slide 10% as it reveals cost of grounding 15 jets in its fleet

Britain’s biggest holiday company has lost one-10th of its stock market value after revealing the expected cost of the grounding of Boeing 737 Max aircraft.

Tui updated its profit guidance to reflect the additional costs of covering for the 15 new Boeing jets in its fleet. They are grounded along with all others of the type following two fatal crashes, which cost the lives of 346 passengers and crew.

In October 2018, a Lion Air plane plunged into the sea shortly after take-off from Jakarta airport in Indonesia. This month, an Ethiopian Airlines Boeing 737 Max crashed soon after departing Addis Ababa.

In both fatal accidents, new anti-stall software has been implicated. The planemaker is working on new software and additional training before passenger flights are permitted again.

European regulators have said they will conduct their own tests before the plane is allowed to operate.

With the Easter holidays about to begin, and the main summer season starting in May, airlines are having to pay for additional capacity chartered in at high cost.

Tui says it is “utilising spare aircraft of its fleet, extending expiring leases for aircraft that were supposed to be replaced by 737 Max aircraft”.

As well as the 15 aircraft deployed in the UK, Belgium, the Netherlands and Sweden, a further eight Boeing 737 Max jets are scheduled for delivery by the end of May.

Citing “considerable uncertainty around when the 737 Max will return to service”, Tui has arranged cover until mid-July.

Assuming the aircraft resumes service by then, Tui estimates a drop in profits by €200m (£170m). 

“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,” the company said.

“Should it not become clear within the coming weeks that flying the 737 Max will resume by mid-July, TUI will need to extend the abovementioned measures until the end of the summer season. The current assumption for this additional one-off impact until 30 September 2019 is up to €100m (£85m).”


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