TUI Reaches Comprehensive Settlement Agreement With Boeing Over 737 MAX Grounding
TUI announced on Wednesday that it had reached a comprehensive agreement with Boeing over the grounding of the 737 MAX. TUI will be compensated for most of the financial impact over the next two years and will also defer aircraft deliveries.
Today, the TUI Group announced that they have reached a comprehensive agreement with Boeing over the financial impact of the 737 MAX grounding since March 2019. TUI will receive most of the compensation over the next two years, which will strengthen the Group’s liquidity position as they weather the global COVID-19 pandemic. Although the details of the settlement are confidential, the Group states that the agreement covers a “significant portion” of the company’s MAX-related costs as well as credits for future aircraft orders. Additionally, the agreement on a new delivery schedule will allow TUI to postpone new aircraft deliveries an average of two years. TUI currently has 61 737 MAX aircraft on order and with the agreed upon deferrals, will also benefit from a delay of the associated payment schedules. In Wednesday’s announcement, TUI Group’s CEO, Fritz Joussen said,
“We have reached a fair agreement that strengthens our long-standing relationship with Boeing. The agreement provides TUI with compensation for a large part of costs that were incurred due to the grounding of the 737 MAX. The new delivery schedule gives us considerable flexibility because we will have fewer new aircraft delivered in the next two years. This enables TUI to rapidly adapt its fleet growth to the currently challenging market environment. And it supports our plan to downsize the aircraft fleet and reduce the capital requirements for aircraft investments in the Group.”
When the Boeing 737 MAX was grounded in March 2019, TUI had 15 of the aircraft in their fleet, with eight more scheduled for delivery by the end of 2019. The TUI Group has five airline subsidiaries in Europe based in Germany, the UK, the Netherlands and Sweden and is one of Boeing’s largest European 737 Family aircraft customers.
Source: TUI Group