TUI & Boeing Reach Boeing 737 MAX Compensation Deal

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Leisure carrier TUI said on Wednesday that it has agreed to compensation, as well as a new delivery schedule, for its 737 MAXs. The “comprehensive package of measures” worked out with Boeing will significantly reduce TUI’s capital and financing requirements in the coming years.

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TUI has reached a deal on compensation for the grounding of the Boeing 737 MAX. Photo: Getty Images

Agreement in two parts

The deal agreed upon by the two companies consists of two parts. Firstly, they have settled on a payment plan for compensation for the economic losses incurred by TUI as a result of the grounding of Boeing’s 737 MAX. In a statement seen by Simple Flying, Fritz Joussen, CEO of TUI Group, commented,

“We have reached a fair agreement that strengthens our long-standing relationship with Boeing. The agreement provides TUI with compensation for a large part of costs that were incurred due to the grounding of the 737 MAX.”

Secondly, they are in agreement on the deferral of deliveries for the MAXs TUI still has on order. New deliveries will be postponed by an average of two years. TUI now expects to get less than half of its new MAXs over the next two years, with payment schedules adjusted accordingly.

“The new delivery schedule gives us considerable flexibility because we will have fewer new aircraft delivered in the next years. This enables TUI to rapidly adapt its fleet growth to the currently challenging market environment,” Joussen continued.

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TUI will receive half of the 61 MAXs it has on order over the next two years. Photo: TUI

Welcome cash injection

The compensation will come as a welcome cash injection for the struggling leisure travel group. Earlier this month, it announced it would be cutting, or not recruiting, around 8,000 staff. 

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TUI said that the financial details of the agreement would remain confidential, but that it covers a significant portion of the economic impact suffered as a result of the aircraft’s grounding.

15 in the fleet at the time of grounding

When the 737 MAX was grounded in March 2019 following two lethal accidents, the TUI Group had 15 of the model in its fleet. Furthermore, it had another eight scheduled for delivery in 2019. In total, the order placed by the carrier back in 2013 was for 60 of the aircraft.

Meanwhile, the agreement also entails credit for future aircraft orders. Although, TUI has plans to reduce the size of its fleet across all of its European airlines as a result of the present crisis. New orders may have to wait for Boeing from one of its largest European 737 customers.

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Boeing 737 MAX TUI London Gatwick
TUI had 15 MAXs in its fleet at the time of its grounding. Photo: Boeing

A complicated relationship

TUI has a complicated relationship with the Boeing 737 MAX. Not that any airline would be particularly pleased with the way things have turned out, but TUI even refuses to say its name. At least for internal purposes, the plane is referred to as the 737-8.

However, the company has promised that it will call it MAX officially and that customers will be fully aware of what model they are flying. Some may feel that once it is re-certified, it will be the safest plane in the sky. Others may have reservations. Time will tell.

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