Tui warns of potential hit from grounding of Boeing 737 Max aeroplanes

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Travel operator Tui has warned of a potential £258.7m hit from the grounding of Boeing 737 Max planes.

The figure is attributed to costs for replacement aircraft, higher fuel charges, disruption and the impact on trading following the global grounding of the planes in the wake of the Ethiopian Airlines crash which killed 157 people.

If the disruption lasts until July, the firm is pencilling in a £172.5m hit.

As a result, Tui has downgraded its full-year profit guidance and now expects underlying earnings to be down 17 per cent on last year’s £1bn. This compares with previous forecasts of flat earnings.

However, the travel giant also warned that, should it not become clear within the coming weeks that flying the 737 Max will resume by mid-July, it will need to extend the measures until the end of the summer season.

This would add another £86m in costs and result in a 26 per cent hit to last year’s earnings.

The firm said it has made arrangements in order to “guarantee customers’ holidays” by utilising spare aircraft in its fleet, extending expiring leases for planes that were supposed to be replaced by the 737 Max aircraft, as well as leasing in additional aircraft. Tui’s fleet, which comprises around 150 aircraft, currently includes 15 grounded 737 Max planes for the UK, Belgium, the Netherlands and Sweden.

A further eight 737 Max aircraft are scheduled for delivery by the end of May 2019.