German leisure airline TUI fly is making some tough decisions about halving its fleet of 39 aircraft to just 17 Boeing 737-800. The airline doesn’t believe its current fleet is sustainable during this uncertain period, and feels its best chance for a secure future is to move forward as a smaller carrier. The managing director said a more modest operation would bring the airline in line with the rest of the TUI Group.
Future-proofing TUI fly
TUI fly Germany is facing some difficult decisions. Even though travel across Europe is starting to pick up, managing director Oliver Lackmannhas said that the carrier was not managing decent load factors even before the outbreak. The carrier’s fleet of 39 planes has been grounded since mid-March, but before this, it was simply not carrying enough passengers.
Lackmann commented at a supervisory board meeting that for the carrier to recover, it would “only succeed if we adjust the size of the airline to a healthy and future-proof level.” The supervisory board stated that the TUI fly management enter talks with councils and unions as a reduced fleet would mean reduced staff. Some reports say as many as 900 jobs could be lost in Germany.
Any changes to the fleet will understandably be reflected in staff numbers, but employees don’t need to worry just yet. Negotiations are currently “at the beginning, not at the end.” Additionally, an employment-protection scheme means staff cannot be dismissed for operational reasons until 2021.
The airline hopes that by making changes to its fleet, it will be able to secure more staff roles in the future. If the airline doesn’t alter course, it risks financial ruin. The restructuring will focus on operations at Hannover, Dusseldorf, Frankfurt, Munich, and Stuttgart.
The restructuring was also inevitable, regardless of the carrier’s financial difficulties. TUI fly is part of the TUI group. The group consists of five airlines based in the UK, Germany, Netherlands, Nordics, and Belgium. The group wants to bring all its European operations into one business at its main headquarters in Hannover, Germany.
The TUI group
The TUI Group will merge under one airline based in Germany, so we should see it become more competitive with the likes of Ryanair and Eurowings. Previously TUI fly has leased between seven and 14 aircraft to Eurowings and Air Berlin. However, its fleet is still too large for its current customer base.
The group may be reorganizing at just the right time. The airline has said it wants to be as socially responsible as possible when restructuring to allow for future growth. With travel numbers down right now and an uncertain future, the group can use this time to reposition.
The group’s finances were already heavily damaged due to the fact it relied on the troubled Boeing 737 MAX. The group has now agreed on compensation with Boeing for the impact the MAX groundings have had on revenues. Previously the group operated 15 737 MAX aircraft.
TUI fly in the future
If TUI fly can protect itself over this challenging period, there’s no reason why it shouldn’t bounce back rather than be another aviation victim of the virus. The group is Europe’s largest tour holiday operator, and with compensation from Boeing and a €1.8 billion ($2 billion) loan from the German government, it should get through this uncertain time.
Do you think this is a warning sign of things to come for TUI fly? Or are they just preparing for the future? Let us know your thoughts in the comments.