Tui offsets Boeing 737 Max hit with higher holiday demand
Tour operator Tui today said stronger holiday demand would partly offset an extra hit of as much as €245m from the longer grounding of the Boeing 737 Max.
The plane’s longer than expected journey to return to the skies after two fatal crashes will drag on Tui’s profit for its 2020 financial year. But strong holiday growth helped it raise the bottom end of earnings guidance.
Now Tui expects to rake in underlying core profits of between €820m and €1.05bn for the 12 months to the end of September, compared to €893m in the previous year. That beats previous guidance of €680m.
Tui’s shares surged after releasing its first quarter results, soaring 12 per cent to
958.8p.
The company said it managed to partly offset the cost of the grounding with strong demand for holidays and flights. Boeing also offered it a “certain level” of compensation.
It now expects the Boeing 737 Max grounding to cost it between €220m and €245m, down from €270m it had previously predicted.
“We now expect to partly offset this impact based on the current strong trading trends for our markets and airlines,” Tui said, “by mitigating factors such as cost measures and because we have now included a certain level of compensation from Boeing.”
“Provided the current strong trading trends for our Markets & Airlines business continue, we are now expecting a high single digit percentage turnover growth,” Tui added.
The UK helped Tui’s fortunes by delivering its highest number of bookings in the company’s history in the three months to December. That was also helped by the collapse of Tui’s longtime rival Thomas Cook.
Meanwhile the operator enjoyed strong demand for both winter and summer holidays.
The Boeing 737 Max crash last March triggered the plane’s grounding across the world and brought the death toll from two crashes to 346.
Tui was operating 15 Boeing planes at the time and currently has 60 on order. But Boeing, which fell to its first loss in two decades earlier this month, has warned there is no date for the Max to fly again.
The airplane manufacturer has been working on the model’s flight control systems and its anti-stall software.