Tui Group has warned the grounding of the global Boeing 737 Max fleet might cost the company as much as €200 million.
The German travel agent currently operates 15 of the aircraft type, utilising them to move passengers in the UK, Belgium, the Netherlands and Sweden.
Tui also has a further eight 737 Max scheduled for delivery by the end of May
However, with the fleet currently barred from flight, the company has been forced to make alternative arrangements in order to guarantee customers’ holidays.
The group is utilising spare aircraft from its fleet of 150 planes, extending expiring leases for aircraft that were supposed to be replaced by 737 Max aircraft and leasing additional aircraft.
As a result of this one-off impact, the executive board of Tui today updated guidance for the year and now expects underlying EBITA to fall by 17 per cent, to €1.17 billion, for financial 2019.
Shares in the company fell nine per cent to €8.1 in response.
No date has been given for the resumption of flights by Boeing 737 Max aircraft.
Boeing released a software update for the plane earlier this week, but this is yet to be certified by the FAA.
In response, Tui has taken precautions to cover flights until mid-July, in order to be prepared for the start of the summer holiday season.
“Should it not become clear within the coming weeks that flying the 737 Max will resume by mid-July, TUI will need to extend the abovementioned measures until the end of the summer season,” explained a statement.
Assuming a 737 Max flight resumption latest by mid-July, the group currently expects to see a one-off impact on underlying EBITA of approximately €200 million.
“This impact is especially attributable to costs related to the replacement of aircraft, higher fuel costs, other disruption costs, and the anticipated impact on trading,” Tui said.