Brexit Doubts, 737 MAX Grounding Keep TUI Outlook Steady

Photo source: TUI Group

Brexit uncertainty, aviation overcapacity to Spain, and delayed summer bookings appear to have taken a toll on TUI Group’s third quarter results, which still stand by forecasts of underlying earnings before interest, taxes, and amortization (EBITA) falling by up to 26 percent against last year to 1.177 billion euros.

The Hannover-based travel giant also said on Tuesday, that robust business had outweighed problems with the global grounding of the Boeing 737 MAX in its third quarter.

Photo source: TUI Group

“Despite the challenging environment in 2019 to date, our underlying business remains robust, and we expect to deliver a solid performance in 2019, which, however, will not match the prior year’s result, as expected due to the grounding of the 737 MAX,” said TUI CEO Fritz Joussen at the presentation of the Q3 2019 results.

Underlying core earnings dropped by 46 percent year-on-year to 100.9 million euros, impacted by 144 million euros in costs resulting from the grounding of the 737 MAX.

Meanwhile, group turnover rose by 3.7 percent to 4.745 billion euros against the previous year.

Photo source: TUI Group

“We anticipate 737 Max-related costs of approximately up to 300 million euros for the current financial year,” the company said, adding that resumption of the 737 Max “remains subject to the clearance decision of the civil aviation authorities”. The company added that it had secured replacement aircraft leases out to the end of our summer 2019 program.

At the same time, the company expects its hotels & resorts segment to benefit from a diversified portfolio and cruises to deliver strong growth.

“The strength of our globally unified brand and direct access to our customer base, already comprising more than 21 million customers, offers great potential for the future,” said Joussen.