Tui losses widen as grounded Boeing planes weigh on travel operator

Tensions on the Mexican border helped widen losses at tour operator Tui as US customers lost interest in travelling to their southern neighbour.

The company downgraded its guidance for the full year, after its Boeing 737 Max fleet was grounded.

The figures

Losses before income tax grew by 47.5 per cent in the first half of the financial year to €381m (£331m), the German group revealed today.

Turnover grew 1.7 per cent to €6.67bn while gross profit fell 43.3 per cent lower at €157.3m.

Underlying earnings before interest, tax and amortisation (Ebita) decreased 21.4 per cent in its hotels and resorts business and 8.4 per cent in its holiday experiences. Cruises increased by 13.6 per cent, while destination experiences were up 21.8 per cent, the company said.

Why it’s interesting

Tui said it is set to take a €200m hit to Ebita after 15 Boeing 737 Max jets were grounded when the model crashed twice in less than a year, leading to a global ban.

It is expecting another eight deliveries of the plane once the global order is lifted, it said.

The one-off impact caused Tui to reduce its Ebita forecast for the full year to minus 17 per cent compared to the 2018 financial year. The calculation assumes that flights can assume again in mid-July at the latest.

The charge will increase by around €200m if the ban is extended until 30 September, the company said.

Tensions between the US and Mexico, with US President Donald Trump still pushing to build a wall along his country’s southern border, has hit travel between the countries.

“Demand for Mexico from US customers has softened, as a result of border tensions and safety concerns,” Tui said.