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.
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This picture taken on March 11, 2019, shows debris of the crashed airplane of Ethiopia Airlines, near Bishoftu, a town some 60 kilometres southeast of Addis Ababa, Ethiopia. – An Ethiopian Airlines Boeing 737 crashed on March 10 morning en route from Addis Ababa to Nairobi with 149 passengers and eight crew believed to be on board, Ethiopian Airlines said. (Photo by Michael TEWELDE / AFP)MICHAEL TEWELDE/AFP/Getty Images
AFP/Getty Images
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Family members mourn the victims at the crash site of the Ethiopian Airlines operated Boeing 737 MAX aircraft, at Hama Quntushele village in the Oromia region, on March 13, 2019. – A Nairobi-bound Ethiopian Airlines Boeing crashed minutes after takeoff from Addis Ababa on March 10, 2019, killing all eight crew and 149 passengers on board, including tourists, business travellers, and “at least a dozen” UN staff. Families of the victims were taken to the remote site on March 13, 2019, where the plane smashed into a field with 157 passengers and crew from 35 countries, leaving a deep black crater and tiny scraps of debris. (Photo by TONY KARUMBA / AFP)TONY KARUMBA/AFP/Getty Images
AFP/Getty Images
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A page of a Boeing flight crew operations manual is seen at the scene of the Ethiopian Airlines Flight ET 302 plane crash, near the town of Bishoftu, near Addis Ababa, Ethiopia March 12, 2019. REUTERS/Baz Ratner
REUTERS
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epa07434278 Rescue workers search the site for pieces of the wreckage of an Ethiopia Airlines Boeing 737 Max 8 aircraft near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STRINGER
EPA
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A grounded Boeing 737 MAX 8 passenger plane of the Norwegian low-cost airline Norwegian is parked at the tarmac at Vantaa airport in Vantaa near Helsinki, Finland on March 13, 2019. – A number of countries have banned Boeing’s 737 MAX 8 medium-haul workhorse jet from their airspace in response to the Ethiopian Airlines crash that killed all 157 people on board. (Photo by Heikki Saukkomaa / Lehtikuva / AFP) / Finland OUTHEIKKI SAUKKOMAA/AFP/Getty Images
AFP/Getty Images
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Rescue workers search the site for pieces of the wreckage of an Ethiopia Airlines Boeing 737 MAX 8 aircraft near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STRINGER
EPA
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A heap of debris from the wreckage of an Ethiopia Airlines Boeing 737 MAX 8 aircraft are piled at the crash site near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STR
EPA
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A crew working with an investigative team to clear the site after the Sunday crash of the Ethiopian Airlines operated Boeing 737 MAX aircraft, carry debris at Hama Quntushele village in the Oromia region, on March 13, 2019. – A Nairobi-bound Ethiopian Airlines Boeing crashed minutes after takeoff from Addis Ababa on March 10, killing all eight crew and 149 passengers on board, including tourists, business travellers, and “at least a dozen” UN staff. Families of the victims were taken to the remote site on March 13, 2019, where the plane smashed into a field with 157 passengers and crew from 35 countries, leaving a deep black crater and tiny scraps of debris. (Photo by TONY KARUMBA / AFP)TONY KARUMBA/AFP/Getty Images
AFP/Getty Images
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FILE PHOTO: An American Airlines Boeing 737 MAX 8, on a flight from Miami to New York City, comes in for landing at LaGuardia Airport in New York, U.S., March 12, 2019. REUTERS/Shannon Stapleton/File Photo
REUTERS
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This picture taken on March 11, 2019, shows debris of the crashed airplane of Ethiopia Airlines, near Bishoftu, a town some 60 kilometres southeast of Addis Ababa, Ethiopia. – An Ethiopian Airlines Boeing 737 crashed on March 10 morning en route from Addis Ababa to Nairobi with 149 passengers and eight crew believed to be on board, Ethiopian Airlines said. (Photo by Michael TEWELDE / AFP)MICHAEL TEWELDE/AFP/Getty Images
AFP/Getty Images
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Family members mourn the victims at the crash site of the Ethiopian Airlines operated Boeing 737 MAX aircraft, at Hama Quntushele village in the Oromia region, on March 13, 2019. – A Nairobi-bound Ethiopian Airlines Boeing crashed minutes after takeoff from Addis Ababa on March 10, 2019, killing all eight crew and 149 passengers on board, including tourists, business travellers, and “at least a dozen” UN staff. Families of the victims were taken to the remote site on March 13, 2019, where the plane smashed into a field with 157 passengers and crew from 35 countries, leaving a deep black crater and tiny scraps of debris. (Photo by TONY KARUMBA / AFP)TONY KARUMBA/AFP/Getty Images
AFP/Getty Images
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A page of a Boeing flight crew operations manual is seen at the scene of the Ethiopian Airlines Flight ET 302 plane crash, near the town of Bishoftu, near Addis Ababa, Ethiopia March 12, 2019. REUTERS/Baz Ratner
REUTERS
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epa07434278 Rescue workers search the site for pieces of the wreckage of an Ethiopia Airlines Boeing 737 Max 8 aircraft near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STRINGER
EPA
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A grounded Boeing 737 MAX 8 passenger plane of the Norwegian low-cost airline Norwegian is parked at the tarmac at Vantaa airport in Vantaa near Helsinki, Finland on March 13, 2019. – A number of countries have banned Boeing’s 737 MAX 8 medium-haul workhorse jet from their airspace in response to the Ethiopian Airlines crash that killed all 157 people on board. (Photo by Heikki Saukkomaa / Lehtikuva / AFP) / Finland OUTHEIKKI SAUKKOMAA/AFP/Getty Images
AFP/Getty Images
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Rescue workers search the site for pieces of the wreckage of an Ethiopia Airlines Boeing 737 MAX 8 aircraft near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STRINGER
EPA
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A heap of debris from the wreckage of an Ethiopia Airlines Boeing 737 MAX 8 aircraft are piled at the crash site near Bishoftu, Ethiopia, 13 March 2019. Ethiopian Airlines flight ET 302 carrying 149 passengers and 8 crew was en route to Nairobi, Kenya, when it crashed on 10 March 2019 by yet undetermined reason. All passengers and crew aboard died in the crash. The Boeing 737 Max 8 aircraft has come under scrutiny after similar deadly crashes in Ethiopia and Indonesia within a few months. Several countries have banned the plane type from their airspace and many airlines have grounded their 737 Max 8 planes for safety concerns after the Ethiopian Airlines plane crashed minutes after take-off on 10 March. EPA/STR
EPA
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A crew working with an investigative team to clear the site after the Sunday crash of the Ethiopian Airlines operated Boeing 737 MAX aircraft, carry debris at Hama Quntushele village in the Oromia region, on March 13, 2019. – A Nairobi-bound Ethiopian Airlines Boeing crashed minutes after takeoff from Addis Ababa on March 10, killing all eight crew and 149 passengers on board, including tourists, business travellers, and “at least a dozen” UN staff. Families of the victims were taken to the remote site on March 13, 2019, where the plane smashed into a field with 157 passengers and crew from 35 countries, leaving a deep black crater and tiny scraps of debris. (Photo by TONY KARUMBA / AFP)TONY KARUMBA/AFP/Getty Images
AFP/Getty Images
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FILE PHOTO: An American Airlines Boeing 737 MAX 8, on a flight from Miami to New York City, comes in for landing at LaGuardia Airport in New York, U.S., March 12, 2019. REUTERS/Shannon Stapleton/File Photo
REUTERS
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).”
