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TUI warns investors that Boeing grounding will hurt earnings

The travel company has issued a warning to investors that the grounding of its Boeing 737 Max planes could cost the company up to £258 million.

TUI has warned investors that the grounding of its Boeing 737 Max plans willhurt its earnings, with the company estimating that it could cost the business anywhere up to £258 million.

The travel company boasts a fleet of around 150 aircraft, including the 15 grounded Boeing models, with the business expecting the delivery of a further eight 737 Max planes to arrive by the end of May.

TUI shares fell more than 8% on Friday following the announcement, but have since recovered slightly, sitting at €8.48 a share as of 14:30 GMT.

TUI to lease aircraft to maintain capacity

The grounded planes will see the company incur a substantial financial hit, with the travel firm forced to lease replacement aircraft, driving up fuel bills and other related costs in order to ensure customers holidays go ahead as planned.

The incident has has forced its maangement team to update the company's earnings guidance, with it expecting underlying EBITA rebased for 2019 to come in 17% lower than the €1.17 billion recorded last year.

Unclear when Boeing planes will renter the skies

TUI admitted that there is considerable uncertainty around when the 737 Max aircraft will return to the skies, with no dates yet announced by Boeing for when the necessary modifications to the planes will be made.

As such, the travel firm has taken precautions along with other airlines, covering the time until mid-July, in order to be prepared for the Easter-, Whitsun- and start of the summer holiday season, the company said.

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