The Anglo-German group, which recently received a 1.8 billion-euro ($2 billion) bailout from the German government, said the deal was confidential but it offset a "significant" portion of the costs incurred because of delayed deliveries. The 737 MAX, which is still awaiting regulatory clearance, was grounded after twin crashes in close succession killing all crew and passengers on board.
The compensation package, which also provides credits for future aircraft orders, has been designed to pay out over the next couple of years, according to a statement. A revised delivery schedule has been agreed for 461 aircraft as part of which TUI will receive fewer 737 Max deliveries over the next several years.
Specifically, over the next two years, the German group will take delivery of less than half the number of aircraft it would have received as per its original agreement with Boeing. On average, compared with the original scheduling, each of the 737 MAX deliveries will be pushed back by about two years.
TUI, which owns five European airlines, said the deal would "significantly reduce" its capital and financing requirements in the coming years and support its plan to reduce the size of its fleet in the wake of the coronavirus crisis and its impact on demand for travel and tourism in the short- to medium-term.
The new delivery schedule "enables TUI to rapidly adapt its fleet growth to the currently challenging market environment," Fritz Joussen, chief executive officer, said in the update. "It supports our plan to downsize the aircraft fleet and reduce the capital requirements for aircraft investments in the group."
Reporting its first-quarter results last month, TUI said a plan to reduce its cost base by almost a third could potentially result in as many as 8,000 job losses following the "greatest crisis" in the history of the tourism industry.
Group underlying loss before interest and tax came in at 680.9 million euros compared with a loss of 218.5 million euros in the prior-year period. The loss was due also to additional replacement lease costs relating to delayed deliveries of 737 MAX.
As part of the bailout agreement, the firm said its annual dividend would remain suspended during the course of the credit line.
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