REUTERS/Lindsey Wasson
- Tui expects the Boeing 737 Max’s grounding to cost it up to 300 million euros ($335 million) this year.
- The German tourism group’s third-quarter profits more than halved due to the model’s grounding, as well as delayed customer bookings and Brexit uncertainty.
- Watch Tui trade live.
Tui expects the Boeing 737 Max’s grounding to cost it up to 300 million euros ($335 million) this year.
The German tourism group — which owns travel agents, hotels, airlines, and other businesses — suffered a 58% drop in pre-tax profits in the third quarter. It blamed the steeper losses on having to replace the grounded airplane model, as well as delayed customer bookings following last year’s heatwave and Brexit uncertainty.
Aviation officials around the world have ordered airlines not to fly the 737 Max after one of the jets crashed in Indonesia last October, and another went down in Ethiopia in March. The model could remain grounded until 2020.
More than 30 airlines including Turkish Airlines, United Airlines, and American Airlines have grounded their 737 Max fleets.
Tui’s third quarter was "negatively impacted" by the loss of the 737 Max, according to its latest earning report. The company won’t return the model to service until aviation authorities give it the all clear. It has leased replacement aircraft through to the end of summer.
"We anticipate 737 MAX related costs of approximately up to €300 million for the current financial year," Tui said.
The group’s pre-tax profits slumped 58% year-on-year in the third quarter, and lingering Brexit fears have tempered its full-year outlook.
"We have seen a later booking behaviour to date from the ongoing knock-on impact of last year’s extraordinary hot summer with demand continuing to be impacted by Brexit uncertainty," Tui said.
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Source: Business Insider – feedback@businessinsider.com (Yusuf Khan)