Contributor - Europe

Cathy Buyck

Pointing to the “considerable uncertainty” around when the Boeing 737 Max will return to service, Hanover-based TUI Group has put in place a contingency plan through mid-July to substitute the capacity it lost with the grounding of its 15 Max jets and a further eight of the type scheduled for delivery by mid-May. In an investors’ update issued Friday, the world’s largest integrated travel company said it has taken precautions, along with other airlines, to cover the lost capacity until mid-July due to uncertainty about the date of the Max’s return to service. “No dates have yet been announced for modifications of the existing aircraft model by the manufacturer, neither for approval of such modifications by the Federal Aviation Administration and the European Aviation Safety Agency,” it said.

 


TUI’s grounded Max fleet operated with four of its airlines—in the UK, Belgium, the Netherlands, and Sweden. Its total fleet consists of about 150 aircraft, a mix of single-aisle (about 80 percent) and widebody aircraft (about 20 percent). Apart for a couple of Embraer jets flying with TUI Airlines Belgium, TUI’s fleet consists solely of Boeings, namely 737s, 757s, 767s, and 787s.&nbsp;

 


Measures to replace its Max capacity and fulfill its flight schedule include using spare aircraft, extending expiring leases for aircraft due for replacement by 737 Max jets, and leasing more aircraft.

 


The Max grounding also prompted TUI to revise its full-year profit guidance, warning that earnings could range from between 17 percent and 26 percent lower than forecast depending on when the type flies again. The group expects an effect on underlying EBITA of some €200 million ($225 million) assuming a resumption of Max flights by mid-July. However, that amount could increase by a further €100 million should it not become clear “within the coming weeks” that flying the aircraft will resume by that time. The company cites costs related to the replacement of aircraft, higher fuel costs, other disruption costs, and the anticipated influence on trading for the lost revenues.

 


Eventual compensation from Boeing will not affect the current financial year, a TUI spokesman told AIN, stressing the company maintains longstanding and good relations with the U.S. manufacturer. “Our priority now is securing replacement capacity to guarantee our customers’ holidays,” he said. “As mentioned by our CEO, the topic [of compensation] will be picked at a later stage. TUI came also to an agreement with Boeing when our 787s were delayed.”

 


TUI has placed orders with Boeing for fifty-seven 737 Max jets for delivery by 2023. As it typically does not receive new aircraft in the peak summer season, schedules call for Max deliveries not to resume until November. It currently does not plan ferry flights of the eight Max jets scheduled for delivery in the coming weeks because the airspace in the UK and Germany remains closed for all for 737 Max operations, the TUI spokesman said.&nbsp;&nbsp;

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