Boeing 737 Max woes hit world's largest holiday firm's profit
TUI blamed the grounding of its Max fleet for wiping out an earnings rebound because it had to lease less-efficient jets from third parties
TUI blamed the grounding of its Boeing 737 Max fleet for wiping out a profit rebound as the world’s largest holiday company cut costs and expanded to cruise ships.
The global idling of the Max following two fatal crashes meant TUI had to lease less-efficient jets from third parties, the company said on Tuesday, cutting earnings by €144 million (Dh591.7m) in the fiscal third quarter and causing profit to slump 46 per cent when it would otherwise have gained, according to Bloomberg.
TUI reiterated the grounding will cost about €300m for the full year, saying it will step up efficiency measures at its tour operator arm to help cope. Customers are still booking later than they used to after the summer 2018 heatwave led many to stay home, leaving the German company based out of Hanover with too much flight capacity in Spanish markets.
Uncertainty around Brexit presents a further obstacle to a company that relies on the UK for much of its revenue.
TUI has a fleet of 15 Max aircraft and was due to take several more this year. While Boeing is striving to get the jet back into service this year, airlines including Southwest Airlines have taken the plane out of their schedules until January.
Chief executive of TUI, Fritz Joussen, said on Tuesday that he expected consolidation in the holiday industry but believed his company was well equipped to deal with it, Reuters reported.
"We will not be the losers," he said.
He said the hotels and resorts units were benefiting more from a diversified portfolio than comparable rivals and cruises would deliver strong growth.
Updated: August 13, 2019 12:19 PM