Tui stands by Boeing 737 Max — with safeguards
Tour operator plans to expand services using jet if it passes safety tests
Tui, the world’s largest tour operator, will keep faith with the Boeing 737 Max aircraft — if they are approved as safe, said its chief executive.
Friedrich Joussen, who has headed the Anglo-German group since 2013, said Tui plans to add 2m more airline seats next summer to cater for extra demand following the collapse of major rival Thomas Cook this year.
He said that the aircraft would be the 737 Max model 8: “If they are approved to be safe we would fly them. It will be potentially the most checked aircraft,” he said.
Boeing’s 737 Max, which first flew in 2016, was hailed as a more fuel efficient aircraft than its predecessors, consuming 14 per cent less fuel than the 737 Next Generation model.
But the jet was grounded in March after two fatal crashes in five months were linked to its anti-stall software, raising questions over its design and Boeing’s failure to provide pilots with sufficient training on how to use the system.
Tui was the UK’s biggest operator of 737 Max with 15 in its fleet and a total of 72 ordered from the US aircraft manufacturer. In March it said the grounding would cause a €300m hit to earnings in the year to the end of September 2019.
The travel company has yet to provide guidance on the impact for next year as it said that it will depend on when the aircraft is declared fit to fly and how long Tui will need to lease alternative planes for.
Boeing had hoped the aircraft would be flying again by the end of this year but Tui said it did not expect its return until early 2020. Mr Joussen said that compensation talks with Boeing were ongoing.
“We need to know what the damage is but we don’t know what the damage is until it’s flying again,” he said.
It is likely that should the 737 Max 8 fly again, airlines will seek discounts because of the grounding and caution around its safety. The aircraft’s current list price is $121.6m.
IAG, the parent company of British Airways, said in June that it intended to buy 200 737 Max jets but at a substantial discount because of the difficult circumstances.
Harry Martin, an analyst at Bernstein, said that it was unlikely that passengers would boycott the planes. “These things don’t tend to linger long in consumer minds. It will only be the first few months that people will be a bit more wary,” he said.
Boeing said it was still trying to secure regulatory approval for the 737 Max’s return to service this quarter, “though it’s the FAA and other global regulators who ultimately will determine the timeline”.
Mr Martin added that Tui had more time to plan if the 737 Max remained unfit to fly next year, which would likely decrease the potential cost impact. This year, it had to take out a number of expensive short notice leases to cover the loss of planes.