TUI shares plunge with Boeing 737 MAX fleet grounded
Hanover-based company has predicted an impact of $224m on its earnings
Shares of tourism operator TUI plunged on Friday after it lowered its annual targets with all 15 of its Boeing 737 MAX aircraft grounded following two crashes involving the same model.
The Anglo-German group predicted the "one-off impact" of the grounding would be about €200 million ($224m) on its earnings before interest, tax and amortisation.
Shares in TUI - which offers flights, package holidays, cruises and excursions - plunged 7.46 per cent on London's stock market.
The Hanover-based company with a total fleet of 150 aircraft has seen its Boeing 737 MAX fleet grounded while it awaits delivery of eight more of the same model by the end of May.
The company expects its EBITDA to be down 17 per cent for 2019, compared to last year's figure of €1.17 billion.
If the 737 MAX remains grounded until the end of September, TUI anticipates an additional impact of "up to €100m", which would reduce its annual EBITDA by "up to 26 per cent".
A string of countries has banned Boeing 737 MAX planes from their airspace following two deadly crashes.
An Ethiopian Airlines airliner went down earlier this month, killing 157 people, and a Lion Air jet crashed in Indonesia last October, killing 189.
With Easter approaching, TUI said it had made arrangements to "guarantee customers' holidays" by using spare aircraft in its fleet - some of which had been earmarked to be phased out and replaced by the 737 MAX.
The tour operator said it had "taken precautions" covering the period until mid-July "to be prepared for the Easter, Whitsun and start of the summer holiday season".
However, the company pointed to "considerable uncertainty" around when the 737 MAX will fly again as "no dates have yet been announced for modifications of the existing aircraft models by the manufacturers" or by US and European aviation authorities.
Updated: March 29, 2019 05:34 PM