Grounding of Boeing 737 Max jets hits TUI's earnings
By Vera Eckert
FRANKFURT (Reuters) - European tourism group TUI said the grounding of Boeing's 737 MAX jets was a big burden as it reported a 46% decline in underlying quarterly core earnings (EBITA) on Tuesday.
Sterling losses after Prime Minister Boris Johnson took office last month had also discouraged British customers during the peak holiday season, TUI Chief Executive Fritz Joussen said.
TUI posted underlying earnings before interest, taxes, and amortisation (EBITA) of 100.9 million euros ($113.2 million)in the quarter to the end of June, the third quarter of its financial year.
Its performance was weighed down by 144 million euros in costs resulting from the grounding of the 737 MAX trouble after two fatal crashes.
TUI operated 15 of the planes, 10% of its fleet, and has another eight 737 MAXes on order. It expects the grounding to cost up to 300 million euros in the full financial year.
TUI stuck to its guidance for underlying EBITA to fall by up to 26% from last year when it was 1.177 billion euros.
"The desperate position of its rival Thomas Cook means investors will be breathing a big sigh of relief on the publication of travel outfit TUI's third quarter results," said AJ Bell investment director Russ Mould.
“The biggest takeaway is that full year guidance is being maintained," he added.
TUI shares in Frankfurt stood 0.7% higher at 1045 GMT and shares in London were 0.5% higher on a day of general losses in European stocks.
Shares of rival Thomas Cook fell a further 10% on Tuesday after a big slide on Monday when it announced the latest part of a recapitalisation plan that will dilute exiting shareholders.
Chief Executive Joussen said efficiency drives, cost reductions and strong business areas such as excursions, add-on experiences at holiday destinations and cruises set TUI apart from competitors.
"There will be consolidation," he said, but added: "We will not be the losers."
Hoped-for customer additions of 1 million by 2022 might even be achieved at an earlier stage, he told reporters.
($1 = 0.8915 euros)
(Reporting by Vera Eckert; Editing by Michelle Martin and Keith Weir)