Tui and Boeing agree deal on 737 Max payout and delivery delays
The holiday operator Tui has agreed a deal with Boeing over compensation for the grounding of its 737 Max planes and to delay deliveries of new planes.
Deliveries of 61 new planes to the Anglo-German group will be delayed by two years on average, and Boeing will pay most of the compensation within the next two years. Further details of the compensation have not been disclosed.
All Boeing 737 Max planes have been grounded since March 2019 after design flaws contributed to two fatal crashes.
Shares in Tui rose by 10% on Wednesday as investors welcomed the deal, which the company said would ease financial pressures. Tui has cancelled all holidays until at least 1 July and plans to make 8,000 people redundant.
Fritz Joussen, the chief executive of Tui Group, said: “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.”
The 737 Max crisis had already caused severe difficulties for airlines before the coronavirus pandemic all but wiped out air travel, prompting a scramble for cost savings and efforts to borrow from private investors and governments.
Lufthansa said on Wednesday it would have to implement “far-reaching restructuring measures” to survive, a day after its board agreed a €9bn aid package that will give the German government a 20% equity stake.
The German flag carrier is burning through €800m a month of its cash buffers, which amounted to €4.3bn at the end of March. It reported a net loss of €2.1bn (£1.9bn) for the first three months of 2020, with almost €1bn spent on fuel price hedges rendered worthless when flights were grounded.
Lufthansa’s passenger traffic fell by more than 26% year on year in the first quarter and by 98% in April.
Other European airlines have announced tens of thousands of redundancies. British Airways has proposed cutting 12,000 jobs, Virgin Atlantic and Ryanair have announced 3,000 cuts each, while easyJet is cutting 4,500.
Some airlines have fared better during the crisis. On Wednesday, Wizz Air, the eastern European airline that is listed in London, reported a net profit of €281m for the year to 31 March and said its balance sheet was strong enough to weather the crisis.
Wizz Air has also bucked the trend among the industry by expanding, opening new routes in eastern Europe as it positions for a rebound in travel.
