TUI Yet To Decide On Summer Boeing 737 MAX Grounding

With summer fast approaching and the height of the peak tourist season nearly upon us, TUI Group CEO, Friedrich Joussen, told CNBC that they will make a decision regarding flying the Boeing 737 MAX-8 by the end of the month.

Tui-737 Max-taking-off
TUI 737-MAX taking off. Photo: Boeing

Joussen knows that 30% of TUI’s revenue comes from it being able to fly passengers to holiday destinations, and that their 737 MAX 8 fleet could still be grounded during July and August.

Here’s what he had to say to CNBC’s Willem Marx last Wednesday.

 “We have to make decisions and we have communicated that we need to make a decision until the end of May in order to decide which of the scenarios is the active one. As a tour operator, we are bringing customers to their vacation and their holidays need to be secured. So we have actually secured capacity in the market in order to make sure that our customers can fly.”

The Anglo-German Group boss then went on to clarify that while a decision on the 737 MAX 8s will need to be taken by the end of May, the actual contracts for wet-leased capacity will have to be extended into mid-July.

TUI is concerned about the 737 MAX 8

Following the crash of Ethiopian Airlines flight 302 that killed 157 passengers and crew, all 15 of TUI’s 737 MAX 8s have been grounded.

Ethiopian 737 MAX taking off. Photo: Ethiopian

TUI is already looking to be compensated by Boeing, after saying in March that it could face crippling costs of up to €200 million if the planes were not flying again before July.

Best case scenario for TUI

Ideally, for TUI, they would like to be given the green light to get their 737 MAX 8s flying before July and lose only €200 million. If the grounding dragged on through the high season, that figure could rise to €300 million.

One of TUI’s 15 737 MAX 8 aircraft. Photo: Flickr

  “We are working against the first scenario, but we have made it clear that providing we don’t have more clarity around the MAX until the end of May, we will make a decision to divert towards the second scenario in order to have firm plans [in place] and flight planning for our customers,” said Mr Joussen adding:

“One thing is very clear: 737 is not a TUI-specific issue. 737 is a Boeing-specific issue.”

Mr Joussen went on to say that TUI was engaged with Boeing on a wide range of issues, including compensation for the grounded 737 MAX aircraft.

 “Of course we will be speaking [about] how we should be distributing the burden between Boeing and ourselves,” he said.

While all this rings alarm bells for investors, TUI has been diversifying their business by branching out into hotels and cruise ships. These new businesses now account for 70% of the travel agent’s revenue.

Would you feel comfortable flying on a TUI 737 MAX?

Following everything we know now about Boeing, the FAA, and the way the 737 MAX 8 was rushed into service, would you feel confident booking your summer holiday with TUI knowing that you might be flying aboard a 737 MAX 8?

Boeing’s CEO Dennis Muilenburg. Photo: Boeing

Boeing CEO Dennis Muilenburg said during a shareholders meeting in April that was reported in the Business Insider that he will be on the first flights of the 737 MAX 8 when it returns to service.

“We will have Boeing teammates deployed with our customers as we bring the [737 MAX] fleet back up, and that will include first flights for many of our customers. So it will include me and many others, and we are going to be doing this in partnership with many of our airlines.”

As for me, I think I will wait awhile to see how the computer fix works, giving pilots enough time to get used to the aircraft. Once six months go by without any problems, then I think I would be ready to fly aboard a 737 MAX 8 once more.