Despite Boeing Setbacks, TUI Delivers Record Revenues

15.05.2024 - 17:21 / skift.com / Sebastian Ebel / Jesse ChaseLubitz

TUI, one of Europe’s largest tourism companies, detailed the operational challenges posed by ongoing Boeing delivery delays during an earnings call on Wednesday.

The Boeing disruptions have forced TUI to extend leases on older aircrafts, impacting TUI’s financial performance and operational efficiency.

Despite these challenges, TUI had a strong quarter, with 16% revenue growth to $3.9 billion. The group reported its highest-ever results in the hotels, resorts and cruises segments, a 14% year-on-year rise in guests traveling on holiday, and a 9% growth in winter bookings.

TUI CEO Sebastian Ebel said that the company received fewer Boeing aircraft than anticipated, which led to lease extensions on older aircraft.

TUI is in the middle of negotiations for compensation from Boeing.

“We have not planned at the moment for compensation, but definitely, there will be some,” Ebel stated. “This is annoying, but it’s not in our hands.” 

The company faced “significant” costs due to higher lease rates and maintenance expenses associated with the older aircrafts, Ebel said.

TUI also is not expecting future delivery to pan out as planned. Last year, TUI had plans to order several Boeing 737 Max planes, with a planned 7 in its 2024 fiscal year, 24 planes in the 2025 fiscal year, and more aircraft beyond that.

Ebel said it had also hoped to secure access to the Max 10, which has yet to be certified. However, the company is hoping to keep a positive relationship with Boeing.

Ebel added that while TUI also has a good relationship with Airbus, it can’t offer the supply and the prices TUI needs at this time.

TUI is best known as a tourism provider, but it is also dependent on its significant aviation sector. TUI owns five European carriers that collectively operate 130 medium and long-haul aircraft.

TUI’s chief airline officer, Marco Ciomperlik, told Skift in a recent interview that the group plans to integrate the Boeing 737 Max 10 into its fleet to improve efficiency and consolidate operations under one brand.

Hotels, cruises and TUI Musement, the activities arm of the group, are all “very well on track” and delivering “above expectations,” said Ebel. “Strong demand is continuing.” 

The winter spikes were attributed to higher average booking prices and temperate weather that motivated last-minute bookings. TUI was especially successful in the United Kingdom and German markets this quarter, which rose 3% and 7%, respectively.

The company’s “hotels and resorts” segment achieved record earnings of $127 million (€117 million) this quarter. The performance resulted from a 9% increase in overnight stays and higher room rates, particularly at TUI’s luxury Spanish hotel chain, Riu.

The cruise sector saw occupancy rates rise