Last checked at 
* FY earnings down 26 pct to 863 mln euros
* Sees 2020 earnings in range of 950 mln euros to 1.05 bln
euros
* 2020 forecast includes 130 mln euro hit from 737 MAX
grounding
* Headwinds of up to 400 mln euro if 737 MAX grounded beyond
April
(Adds CEO comments)
By Sarah Young
LONDON, Dec 11 (Reuters) - Holiday company TUI Group
said the grounding of its Boeing 737 MAX
planes would continue to drag on profits, with a hit of up to
400 million euros possible in its 2020 financial year if the jet
does not come back into service by May.
The company, whose main rival Thomas Cook went out of
business in September, said on Wednesday that earnings forecasts
for the 12 months to end-September 2020 assumed a 130 million
euro hit from the grounding.
But it added that forecast earnings growth of at least 6
percent was based on the 737 MAX being back in service by the
end of April and that an additional 220 million to 270 million
euros could be wiped off profits if it was not.
"April is what we expect," CEO Fritz Joussen told reporters.
"Our core guidance is the end of April".
The 737 MAX was grounded globally in March after two crashes
attributed to anti-stall software in which a total of 346 people
died.
TUI said the groundings had already cost it 293 million
euros in the financial year to the end of September 2019 as it
paid out to replace the capacity of the 15 MAX planes it
operated - 10% of its fleet, with another eight on order.
The boss of budget airline Ryanair on Tuesday warned
that the model was likely to remain grounded in Europe until
April or May, cautioning that it was also possible it would not
have any MAX planes for the summer season.
Joussen said he was not in a position to answer questions
about TUI's expectations for compensation from Boeing over the
grounded aircraft.
"It will be interesting discussions. It's already
interesting discussions and I can guarantee you that we are
taking it very seriously," he said.
OVERSHADOWED
Analysts at Stifel said the MAX uncertainty was
overshadowing a time when TUI should be "emerging from a period
of capital intensive transition to a brighter future."
The company's London-listed shares fell 1.1 percent to trade
at 932 pence by 1449 GMT.
TUI said it would have matched 2018's record earnings had it
not been for the 737 MAX grounding. Instead, full-year earnings
before interest, tax and amortisation (EBITA) were down 26
percent to 893 million euros.
It also faced headwinds from overcapacity on routes to
Spanish destinations and Brexit uncertainty, factors that were
partly behind the failure of Thomas Cook.
TUI, which owns its own cruise ship business, said that it
was benefiting from Thomas Cook's demise, with an increase in
bookings and higher prices for the current winter and coming
summer seasons.
There is still plenty of competition in the European travel
market, however, with rivals such as On The Beach and
Jet2 also looking to cash in on Thomas Cook's collapse,
as well as the relaunch of budget airline easyJet's
holiday business.
Barclays analysts said a change to TUI's dividend policy
would lower the consensus forecast payout for 2020.
(Reporting by Sarah Young; editing by Alistair Smout and
Kirsten Donovan)
