European tour operator TUI reported a sharp drop in third-quarter net profit on Tuesday, blaming the continued grounding of its Boeing 737 MAX fleet and fewer summer bookings.
In the third quarter of its financial year from April to June, the global tourism group posted a net profit of 21.7 million euros ($24.3 million euros), plunging 85 percent year-on-year.
“The flight ban on the 737 MAX in March had a significant impact on earnings in the Markets and Airlines segment,” TUI said in a statement, as the group had to find replacement aircraft — costing 144 million euros over the three months.
TUI has 15 Boeing 737 MAX aircraft and had been expected to add eight more this summer.
The new model aircraft has been grounded worldwide since mid-March following two crashes that claimed 346 lives.
Hanover-based group TUI, listed on the London Stock Exchange, generated sales of 4.75 billion euros over the quarter, up to four per-cent year-on-year, supported by cruises and bolt-on extras like excursions or guided tours offered at its destinations, a segment which is growing through acquisitions.
TUI said bookings have shrunk this year as holiday-makers were deterred by uncertainties over Brexit and the weather.
In part due to the Boeing 737 MAX ban, the group’s adjusted operating income declined 46 percent year-on-year to 100.9 million euros.
The group led by Fritz Joussen confirmed that it expects its operating income for the year to decline by 26 percent, compared with 1.2 billion euros last year.
Source: Guardian News