TUI Group has adjusted its earnings guidance for 2020 to reflect the ongoing impact of the grounding of its Boeing 737 MAX jets.
As part of its Q1 2020 earnings statement, the tour operator estimated earnings before interest and income tax of between €850 million and €1,050 billion for the full year ending September 30, 2020.
Guidance includes the financial impact of the Boeing MAX grounding of around €130 million for 2020, if the fleet returns to service by the end of April, and between €220 million and €245 million if the problems continues throughout 2020.
For the quarter, the grounding of the 737 MAX cost the company €45 million.
TUI reported an increase in turnover for the quarter to €3.9 billion compared to €3.6 billion year-on-year.
Overall for the quarter, underlying EBIT was reported as a loss of €147 million compared to an €83 million loss year-over-year.
EBIT for the company’s holiday experiences division was down about 33% to €75 million attributed to a higher cost base, foreign exchange loss, higher fuel costs in the cruise business and investment in the Musement digital platform.
Destination experiences made a loss of €8.9 million compared to a loss of €4.8 million year-on-year.
The company says it will “flexibly accelerate” its investment in Musement and increase the number of tours and activities offered as well as expand third party distribution.
It also plans to invest in its GDN-OTA platform - a global distribution network for hotels and flights.
The markets and airlines division reported a loss of €198 million compared to a loss of €156 million year-over-year.
TUI says it plans to continue working towards its strategic initiatives and becoming a “digital tourism platform business remains the priority.”
Despite the headwinds, TUI CEO Friedrich Joussen, describes trading as “very good” and it has never had a "stronger" January in the company's history.
He added that the company’s forecast of a high single-digit percentage revenue growth was the company taking a “cautious approach."