Uncertain Future

Grounded Boeing Adds To TUI Woes

by CNN Newsource

Uncertain Future

Europe's largest tour company says its profits will take an extra $112 million hit unless it can be certain that Boeing's 737 Max will start flying again soon. TUI was forced to lease new aircraft and extend the leases on others after all 737 Max planes were taken out of service in March following two deadly crashes in five months.

The TUI Group is an Anglo-German travel and tourism company headquartered in Hannover, Germany. It is the largest leisure, travel and tourism company in the world, and owns travel agencies, hotels, airlines, cruise ships and retail stores.

Image result for tui companyTUI Group Building, Germany. Source: Simple Wikipedia

The German company warned that month that its 2019 earnings would be slashed by €200 million ($224 million) because of the grounding. On Wednesday, it said the hit could rise to €300 million ($336 million) if it remains unclear at the end of this month whether the 737 Max will resume flying by the middle of July.

The company operates 15 of the 737 Max aircraft, which make up 10% of its total fleet. It was expecting another eight of the jets to be delivered by the end of May.

Tui is heavily committed to accommodation in Spain, where there is overcapacity because of a shift in demand to Eastern Mediterranean destinations – primarily Turkey. The firm also blames “continued Brexit uncertainty” for diminishing demand among British holidaymakers.

Image result for boeing 737Boeing 737 Classic Source: Wikipedia

The result includes the initial impact from the Boeing 737 Max grounding, which began in mid-March after a second fatal accident involving the new aircraft type. Many of these factors had been flagged in advance, and Tui’s share price rose by 3 per cent in early trading. At €9.52, though, it is less than half the price a year ago.

TUI is not the only operator to suffer from the Boeing crisis. A number of airlines, including Norwegian Air and United Airlines, have warned about losses from the grounding and said they expect to reach an agreement with Boeing over some form of compensation.

Image result for brexitThree-quarters of voters think the government has spent too much time on Brexit | The Independent

The 737 Max does not appear close to flying again. Aviation experts doubt global regulators will act in concert to let the 737 Max fly again because serious questions remain about how and why the US Federal Aviation Administration approved the jet for flight and whether it rushed the certification process.

TUI said Wednesday its underlying losses ballooned to €301 million ($332 million) in the six months to the end of March, up from €170 million ($187 million) in the same period last year. It blamed the slowdown on the Boeing grounding, weak consumer confidence and uncertainty about Brexit.