TUI takes off on 12bn-dollar modernisation journey

TUI Travel has committed to spend 6.1bn dollars on 60 new aircraft with the option to acquire the same amount again at the same price.

TUI Travel has committed to spend 6.1bn dollars on 60 new aircraft with the option to acquire the same amount again at the same price.

As part of the modernisation of its Mainstream European travel business the group has secured "significant" discounts on 60 Boeing 737 MAX aircraft, but will require shareholder approval for the transaction.

TUI said the new planes are more fuel-efficient and cost-effective, with a 13% increase in fuel efficiency and 40% decrease in noise levels over its current fleet.

The aeroplanes will be delivered between January 2018 and March 2023 as part of TUI's fleet renewal strategy.

The group also has the option to acquire a further 60 Boeing 737s on the same terms, as well as being offered the right to purchase a further 30 Boeing 737s on new terms to be agreed.

TUI explained that five of its six Mainstream Sector European airlines use narrow-body aircraft such as the Boeing 737 Max for short and medium-haul destinations, representing roughly 80% of the group's airline passengers during the last financial year.

"Having a modern, cost-efficient and reliable fleet is strategically important to the group."

"In order to maintain cost competitiveness and support TUI Travel's aim to minimise the environmental impact of its activities, the existing narrow-bodied aircraft will need to be replaced in the next decade."

"The proposed transaction will ensure that the group has sufficient aircraft to fulfil its long-term plans and that the expected accrued value justifies the cost of the purchase."

Peter Long, Chief Executive of TUI Travel PLC, said: "A major part of TUI Travel's strategy is to provide our customers with unique holiday experiences they can only get from us.

"This multi-billion pound investment in the B737 MAX - representing the future generation of more fuel-efficient aircraft for our short and medium-haul programmes - will be a further driver in delivering this."

A circular will shortly be sent to shareholders to determine their approval of the deal.

OH

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
Nuclear power might never be popular – but now looks a good time to invest
Commodities

Nuclear power might never be popular – but now looks a good time to invest

Nuclear power gets a very bad press, but it is the ultimate renewable energy source. Interest in it is perking up again, says John Stepek. Which means…
9 Apr 2021
How to find companies that can thrive in the post-Covid world
Advertisement Feature

How to find companies that can thrive in the post-Covid world

Many sectors of the global economy will return to something resembling pre-pandemic status, but others will take far longer to recover.
8 Apr 2021