Europe’s biggest travel company, TUI Group , said it has struck a deal with Boeing for compensation and deferred deliveries of the grounded 737 MAX jet, boosting its finances as it seeks to survive the coronavirus pandemic.
Shares in TUI rose 7% on news of the deal.
The company’s London-listed shares have halved in value since the beginning of the year, after TUI was hammered by the coronavirus outbreak which halted its activities in March.
TUI said last month it needed to cut 8,000 jobs and shed 30% of costs to survive, amid forecasts that travel will take years to recover to 2019 levels.
Germany-based TUI said the details of the Boeing deal were confidential but a company insider said it was receiving around 300 million euros ($336 million).
The amount represented “a significant portion” of the financial impact of the grounding of the MAX plane, it said, and would be realised over the next two years.
The financial impact of the grounding to TUI has been around 370 million euros.
Boeing will also provide it with credits for future orders and agreed that TUI will get fewer 737 MAX aircraft over the next few years with deliveries of the 61 planes it has on order delayed by about two years, reducing TUI’s expenditure at a time when cash is tight.
The company said the agreement with Boeing would help it shrink its airline businesses over the coming years, as it seeks to resize to fit the smaller travel market expected to emerge from the pandemic.
The 737 MAX was grounded in March 2019 after two crashes in five months killed 346 people. TUI had 15 MAX-es before the grounding. Prior to the pandemic, TUI’s earnings had been hampered by the grounding as it had to lease other planes.