Grounding Of Boeing 737 Max Jets Hits TUI's Earnings
European tourism group TUI said that the grounding of Boeing's 737 MAX jets was a big burden as it reported a 46% decline in underlying quarterly core earnings (EBITA) on Tuesday August 13.
Sterling losses after Prime Minister Boris Johnson took office last month had also discouraged British customers during the peak holiday season, TUI Chief Executive Fritz Joussen said.
TUI posted underlying earnings before interest, taxes, and amortisation (EBITA) of €100.9 million in the quarter that ended on June 30, which was the third quarter of its financial year.
Its performance was weighed down by €144 million in costs resulting from the grounding of the 737 MAX trouble after two fatal crashes.
TUI operated 15 of the planes, which was 10% of its fleet, and has another eight 737 MAXes on order. It expects the grounding to cost up to €300 million in the full financial year.
TUI stuck to its guidance for underlying EBITA to fall by up to 26% from last year when it was €1.177 billion.
Joussen said efficiency drives, cost reductions and strong business areas such as excursions, add-on experiences at holiday destinations and cruises set TUI apart from competitors.
"There will be consolidation," he said, but added: "We will not be the losers."
Hoped-for customer additions of one million by 2022 might even be achieved at an earlier stage, he told reporters.