Holiday operator Tui has reached a compensation deal with Boeing that includes slower delivery of the aircraft maker’s grounded 737 Max planes, bolstering its balance sheet during the coronavirus crisis.
Tui’s earnings have been hit by the extended grounding of the 737 Max, and today said Boeing would pay compensation to cover “a significant portion” of the financial impact.
The manufacturer will also deliver only around half of Tui’s 61 ordered planes over the next two years.
By delaying the deliveries by around two years, Tui hopes to “significantly reduce” its capital and financing requirements for aircraft in the coming years.
Last month TUI said it needed to slash 8,000 jobs and cut 30 per cent of its costs after coronavirus led to global travel bans.
Regulators grounded Boeing’s 737 Max plane in March 2019 after two crashes killed 346 people.
Fritz Joussen, CEO of Tui, called the deal with Boeing a “fair agreement”.
“The agreement provides TUI with compensation for a large part of costs that were incurred due to the grounding of the 737 Max,” he 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. And it supports our plan to downsize the aircraft fleet and reduce the capital requirements for aircraft investments in the group.”
Boeing has also been badly hit by coronavirus as well as the 737 Max grounding.
In April, the planemaker said it would cut 10 per cent of its 160,000 global workforce this year due to the crisis. And it has raised $25bn in debt to weather the pandemic.
Tui kept details of the compensation confidential.