TUI Group has indicated that the grounding of the B737-8 could cost it up to EUR400 million euro (USD447 million) in the next year according to a report on Reuters. However, the leisure specialist would not speculate over the level of compensation it expects to receive from Boeing (BOE, Washington National).
The aircraft type was grounded in March this year after two crashes - one from Ethiopian Airlines (ET, Addis Ababa International) and one from Lion Air (JT, Jakarta Soekarno-Hatta) - where 346 people died as a result of faulty Maneuvering Characteristics Augmentation System software. The grounding of its fifteen B737 MAX 8s cost the airline EUR293 million euro (USD327 million) in the financial year ending in September. This impacted on the holiday airline group's financial performance as its pre-tax earnings dropped by nearly 30% to EUR691 million euro (USD772 million).
However, the September demise of rival Thomas Cook Airlines UK (Manchester International) has given TUI a welcome boost, with Summer 2020 bookings up by 18% in the UK. The group said this surge in new customer bookings will help it deliver a return to profit growth, assuming that the MAX grounding is lifted as expected. It is expecting underlying earnings before interest and taxes to rise to between EUR950 million euro (USD1.06 billion) to EUR1.05 billion euro (USD 1.17 billion) over the year ahead.
TUI Airways (BY, London Luton) currently has six B737-8s inactive with three more to be delivered. Its Belgian affiliate, TUI fly (Belgium) (TB, Brussels National), has four of the type parked up, TUI fly (Netherlands) (OR, Amsterdam Schiphol) has three on the ground, while TUI fly Nordic (6B, Stockholm Arlanda) has two inactive. Overall, TUI Group has thirty-nine B737-8s and eighteen B737-10s left on order from Boeing.
