European leisure airline TUI Group, which had 15 Boeing 737 MAX 8s in its fleet of 150 aircraft when the aircraft was grounded, expects the cost impact to be about $200 million assuming the MAXs will remain out of service through June.

Oliver Lackmann, managing director at TUI’s German operation, TUI fly, revealed the cost estimate and talked about how the company was covering for the MAX in a fireside chat during the Routes Europe 2019 conference in Hannover April 9.

In addition to the 15 MAXs, TUI fly had took delivery of its first MAX 8 on the day of the FAA grounding, so that aircraft remains at Boeing’s factory in Seattle.

The entire MAX fleet was grounded worldwide in March after the crash of Ethiopian Airlines’ flight ET302 shortly after takeoff from Addis Ababa. All 157 people were onboard. It followed the crash of Lion Air JT610, also a MAX, Oct. 29, 2018, killing 189. Ongoing crash investigations have indicated the MAX’s maneuvering characteristics augmentation system (MCAS) anti-stall software is a common link and Boeing is working on a fix that will need to be tested and certified before the MAX can re-enter service.

Lackmann said he estimated the financial burden for TUI would be about $200 million by the end of June.

“We are in regular meetings with Boeing and they are doing it in a good manner,” he said. “We sent two pilots to Seattle last week and [Boeing] explained what had changed, the rational and the difference between the old and the new [MCAS] software. I am pleased with those changes, but we will have to explain them to the pilots, cabin crew and to our customers.”

Lackmann also said that FAA and EASA were working closely together on how the new software would be certified by both agencies. “If everything goes well, we will maybe see the MAX fly again in July,” he said.

In the interim, TUI is filling the gap by keeping some 737-700s that were supposed to go into storage active in its fleet through this summer. It has also managed to extend some 737-800 leases and, via third-party partner providers, has wet leased an Airbus A321 through the summer and an A320 through end of May, with the option to extend.

Asked if he thought there would be lasting damage to the MAX’s reputation, Lackmann said, “It’s all about confidence and trust. We have to be very transparent with our customers and crews and explain to them what has happened, what has been done and why it will never happen again. There is a lot of work to do, but I think it can be done.”

Karen Walker