Leisure operator TUI has opted to obtain replacement capacity for its Boeing 737 Max fleet for the entire current financial year.
The company is expecting the costs for the prolonged grounding to reach €220-245 million for 2019-20, a slightly narrower range than it had predicted during 2018-19 full-year results in December.
It had laid out a scenario in which the 737 Max would return to service by the end of April but, in the wake of the latest information from Boeing, TUI says it has instead “secured replacement capacity” for the entire year.
The cost of the grounding amounted for €45 million, in terms of replacement, over the first quarter to 31 December 2019.
While TUI’s markets and airlines division recorded 27% deeper losses of €198 million, the company insists that the result would have actually improved by 14% if the costs of the Max grounding and the absence of a previous €29 million hedging gain were discounted.
It says improved booking trends for its winter programme are “driving a good underlying result” in this division.
This strong trading trend, it adds, will partly offset the impact of the additional Boeing costs, and the company says its updated full-year guidance also includes a “certain level of compensation” from the airframer.
TUI expects full-year underlying EBIT of €850 million to €1.05 billion, having brought down the lower end of this range from the previous €950 million.