Tui Group has reported a €144 million impact on its Q3 earnings from the grounding of the Boeing 737 Max aircraft and expects a €300 million cost for the full financial year.
Underlying Ebit (earnings before interest and taxation) was reported at €100.9 million for the quarter, versus €186.8 million in the same period last year.
However, group turnover for period was up by 3.7% on last year to €4.75 billion.
Tui said “efficiency enhancement and cost reduction” in its tour operators would be “accelerated”.
Chief executive Fritz Joussen said: “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.
“Hotels & Resorts will benefit from our diversified portfolio and Cruises will deliver strong growth.
“We have significantly reduced our dependence on traditional tour operators over the past five years. The transformation of our group will continue.
“The tour operator businesses in our European markets will be brought together faster and more effectively.
“We are consistently pursuing our digital transformation to develop Tui into a global platform organisation.”
Tui’s Holiday Experiences segment, comprising Hotels & Resorts, Cruises and Destination Experiences, delivered an increase in underlying Ebita of 16.7% to €208.3 million in the period under review. However, for the Northern Region, which includes the UK, the result for Holiday Experiences was -€58.6 million.
The company said “as expected” the Markets & Airlines business performance was “significantly impacted” by the 737 Max aircraft grounding, ongoing since March, as Tui launched a number of measures including the securing of replacement aircraft capacity for the grounded aircraft until the end of the summer season.
Total costs related to the grounding will be approximately up to €300 million in the full financial year 2019.
Tui added it saw delayed customer bookings driven by the summer 2018 heatwave, the continued Brexit uncertainty and considerable aviation overcapacity to Spanish destinations continued in the third quarter.
In the period under review, underlying Ebita for Markets & Airlines amounted to €-103.9 million, down on the positive prior-year comparative.
Elsewhere Tui Group reported bookings for the summer 2019 down 1% year-on-year, improving from the booking performance delivered in the first half of 2019 (-3%).
The company added for Q3 average prices were up by 1% and “we expect the recent positive trend to continue as we lap the extended heatwave in the prior year”.
The group has reiterated its guidance for the full year 2019, predicting underlying Ebita down approximately 26% compared with the rebased underlying Ebita for financial year 2018 of €1.2 billion.