What cost gap emerges if 737 MAX returns by April?

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TUI faces a €130 million profit reduction if the 737 MAX returns by April

European tour operator TUI has projected that its adjusted operating profit (EBIT) for the 2019-20 business year will be reduced by €130 million (US$144 million) due to the continued grounding of its 15 Boeing 737 MAX aircraft, should they be cleared to fly by the end of April. This figure does not account for any potential compensation from Boeing.
Financial Impact of Grounding

The grounding of the Boeing 737 MAX fleet has a significant financial implication for TUI. If the aircraft are able to resume operations by the end of April, the adjusted operating profit is expected to decrease by €130 million. This cost burden is a direct result of the operational limitations imposed by the global flight ban.
Extended Grounding Scenarios

Should the 737 MAX remain grounded for the entirety of TUI's financial year, extending through September, the projected additional costs would escalate to a range of €220 million to €270 million. This scenario highlights the escalating financial strain the prolonged grounding places on the company's profitability.
Boeing's Efforts and Regulatory Hurdles

Boeing has developed an updated version of the 737 MAX, featuring modifications to its Maneuvering Characteristics Augmentation System (MCAS), which has been identified as a factor in recent fatal crashes. Despite Boeing's hope for regulatory approval, including from the US Federal Aviation Administration, before the end of the current year, the resumption of commercial flights has been delayed until January to accommodate pilot training.
Previous Financial Performance

In the 2018-19 financial year, TUI reported a net profit attributable to shareholders of €416 million, marking a 42.8 per cent decrease compared to the previous year. While revenues saw a 2.5 per cent increase to €18.9 billion, adjusted operating profits (EBITA) declined by 25.6 per cent to €893 million. Excluding the impact of the 737 MAX grounding, TUI's adjusted EBITA remained stable at €1.186 billion, consistent with the prior year's performance.

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What cost gap emerges if 737 MAX returns by April?

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