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Travel operator TUI issues profit warning over 737 grounding

Travel operator TUI issues profit warning over 737 grounding
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BERLIN - European travel operator TUI Group warned Friday that its profits this year could be a quarter lower than anticipated as a result of the grounding of Boeing 737 Max jets.

TUI, which is headquartered in Germany and has operations in several European countries, has 15 737 Max aircraft. The planes have been grounded after two deadly crashes within five months.

Another eight planes were scheduled for delivery by the end of May.

TUI said that, so far, it has taken precautions until mid-July. If the planes can fly by then, underlying earnings will be about 200 million euros ($230 million) lower than previously expected because of costs including the lease of additional aircraft and extending expiring leases for planes that were supposed to be replaced by the new jets.

The company cautioned that there is “considerable uncertainty” about when the 737 Max will return to service and said it will need to extend its precautions until the end of the summer season in September “should it not become clear within the coming weeks” that the planes will be able to fly by mid-July. That extension could cost another 100 million euros.

TUI previously forecast that earnings this year would be “broadly flat” compared with last year’s level of 1.18 billion euros. It said they could now be between 17 and 26 per cent lower, depending on when the planes can fly again.
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