TUI AG, the Hannover based travel company that has a large foothold in the cruise industry, said it would book a one off charge of about €200 million as a result of grounding of Boeing 737 MAX passenger jets following two major accidents.
The company said it has 15 of these in its fleet of 150 aircraft. TUI AG owns Hapag-Lloyd Cruises and Marella Cruises in full and has a 50% stake in TUI Cruises.
The news sent shares in the company, which have their main listing London, sharply lower and at around 1000am local time, they traded at 8.1% lower at £7.07. They had hit a low of £6.86 earlier in the session. The company issued a profit warning – not related to its cruise operations – in January, which accounted for another sharp price fall. TUI AG shares have lost almost two thirds of their value since hitting a peak of just under £18.00 in may 2018.
“Assuming 737 MAX flight resumption latest by mid-July, the Group currently expects to see a one-off impact on underlying EBITA1 rebased of approx. €200 million in connection with the 737 MAX grounding. 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,” the company said in a statement.
Consequently, the Executive Board of TUI AG has decided to update the guidance and now expects an underlying EBITA1 rebased for FY19 of approx. minus 17% (previously “broadly flat”) compared with FY18 of €1,177 million.
“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. The current assumption for this additional one-off impact until 30 September 2019 is up to €100 million. For this scenario the Executive Board of TUI AG has also decided today to update the guidance for the underlying EBITA1 rebased for FY19 to up to minus 26% compared with FY18 of €1,177 million,” the company said.
