Yahoo Finance Tui and travel stocks slammed by new 737 Max warnings
Tui stock plunged by about 10% on Friday morning after the travel group said it was bracing for a €200m (£172m) hit if it was forced to keep its Boeing 737 Max planes grounded for the next few months.
Boeing (BA) 737 Max planes were grounded worldwide after two of the jets crashed within the past five months, killing 345 people. The most recent Ethiopian Airlines crash occurred in March.
Tui (TUI.L) grounded all 15 of its 737 Max planes, or 10% of its fleet, and has scrambled to make alternative arrangements, saying it was incurring “costs related to the replacement of aircraft, higher fuel costs, [and] other disruption costs.”
Shares in competitor Thomas Cook (TCG.L) were down by as much as 9% as investors worried that the tour operator would have similar problems.
Shares in large European carriers were also down by as much as 3.5%. Norwegian (NAS.OL), Ryanair (RY4C.IR, RYA.L) and EasyJet (EZJ.L) were some of the worst affected. National carriers Air France-KLM (AF.PA), Lufthansa (LHA.DE) and British Airways owner IAG (IAG.L) saw a much smaller impact.
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Tui said the potential €200m hit would mean pre-tax profits in 2019 would be about 17% lower than 2018. If the planes remain grounded throughout the busy summer season, Tui predicts the costs would rise up to €300m and annual profit would be 26% lower than last year.
“No dates have yet been announced for modifications of the existing aircraft model by the manufacturer, neither for approval of such modifications by the Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA),” the group said.
In North America, Southwest Airlines (LUV), United (UAL) and Air Canada (AC.TO) also warned of a hit to their business as they grounded some of their fleet.
