Tui Group has confirmed a €293 million hit from the grounding of the Boeing 737 Max aircraft in its 2019 full-year results to 30 September.
The group delivered underlying ebita (earnings before interest taxes and amortisation) -25.6% down year-on-year to €893 million.
Group turnover climbed by 2.7% to €18.9 billion, while the group’s northern region, which includes the UK, reported underlying ebit for the holiday experiences business down by 79.6% to €56.8 million.
The group said while its holiday experiences business delivered a “strong performance”, its markets and airlines business saw a “challenging market”, “with a number of significant headwinds”.
It cited the continued Brexit uncertainty and airline overcapacities leading to a later customer booking behaviour impacting margin performance for the year, compounded by the grounding of the 737 Max aircraft in March 2019.
It said its summer 2019 programme closed out well however, with both bookings and capacity in line with prior year.
“Looking ahead, we will continue to focus and deliver on our four strategic initiatives to enlarge Tui’s ecosystem,” it said in a statement.
That is: protect and extend its “leading positions” in markets and airlines, grow its hotels and cruise businesses through “asset-right expansion”, build reach in new markets through its new digital platform, and build scale in its destination experience business.
Tui Group expects a full-year 2020 an underlying ebit range of between approximately €950 million to €1,050million, which includes an approximate €130 million cost impact from the Max grounding, assuming a scenario whereby it returns to service by end of April 2020.
“However, in the alternative scenario, where the ban on the Max is not lifted in time for a return to service by end of April 2020, the group assumes a further cost of between approximately €220 million to €270 million.
Neither scenarios include any potential grounding compensation from Boeing, it said, adding: “That guidance range also includes a mid- to high-double-digit millions investment in our digitalised platform growth.”
Elsewhere, Tui Group confirmed following the insolvency of Thomas Cook it has experienced a significant number of new customers.
It has therefore increased its planned capacity by 2% for the current winter 2019/20 season and by 14% for summer 2020.
Currently, winter 2019/20 bookings are up 4% year-on-year and average selling prices up 6%.
Bookings for summer 2020 were stated as “at a very early stage”, but in the UK a quarter of the programme has already been sold.
Tui added UK bookings were up 18%, with average rates up by 3%.