TIDMTT.
RNS Number : 9775F
TUI Travel PLC
31 May 2013
31 May 2013
TUI Travel PLC
Proposed Purchase of 60 Narrow-Bodied Boeing 737 MAX
Aircraft
- Commitment to purchase 60 Boeing 737 MAX aircraft (subject to shareholder approval)
- Option and right to purchase up to a further 90 Boeing 737 MAX aircraft
- Multi-billion pound investment in the future of the business
- Continuation of unique holidays strategy
TUI Travel PLC ("TUI Travel" or "the Group"), one of the world's
leading leisure travel companies, is pleased to announce, subject
to shareholder approval, a commitment to purchase 60 narrow-body
Boeing 737 MAX aircraft from The Boeing Company ("Boeing") as part
of its fleet renewal strategy and move to Modern Mainstream.
Key points of the proposed transaction:
- TUI Travel will purchase 60 Boeing 737 MAX aircraft powered by
LEAP-1B engines manufactured by CFM International ("CFM").
- TUI Travel has secured a significant discount to the list
price of each aircraft through various concessions, allowances and
support from Boeing. At current list prices, the value of 60 Boeing
737 MAX aircraft that TUI Travel is committed to purchase is $6.09
billion (GBP GBP4 billion).
- TUI Travel has the option to acquire up to a further 60 Boeing
737 MAX aircraft on the same terms as the committed 60
aircraft.
- TUI Travel has been offered the right to purchase a further 30
Boeing 737 MAX aircraft on terms to be determined at the time of
exercising this purchase right.
- The delivery period for the 60 committed aircraft will start
in January 2018 and run until March 2023.
- 40 of these aircraft will be the Boeing 737 MAX-8 variant and
20 of these aircraft will be the Boeing 737 MAX-9 variant. The 737
MAX-9 variant offers circa 10% more seat capacity than the 737
MAX-8.
- The Group will also be required to purchase eight spare
LEAP-1B engines from CFM to support the committed 60 aircraft at an
aggregated list price of $104 million (GBP GBP68.7 million). TUI
Travel has, however, secured substantial price concessions against
this list price.
Benefits of the proposed transaction:
- Following the delivery of the aircraft, TUI Travel will
continue to enjoy the benefits of a modern, fuel-efficient and
cost-effective aircraft fleet.
- The 737 MAX aircraft utilise a new technology engine type from
CFM which Boeing asserts results in a 13% improvement in fuel
efficiency and a 40% noise reduction over today's main
competitors.
- Lower per seat costs than current generation aircraft and competitor products.
- The 737 MAX aircraft incorporate the best future engine
technology for unprecedented levels of efficiency, reliability and
passenger appeal.
TUI Travel owns and operates six European airlines across its
Mainstream Sector - Thomson Airways, TUIfly, TUIfly Nordic,
ArkeFly, Jetairfly and Corsair - with 141 aircraft in aggregate.
Five of these airlines operate 114 narrow-body aircraft between
them serving short and medium-haul destinations. Approximately 80%
of the Group's airline passengers travelled on narrow-bodied
aircraft to short and medium-haul destinations for their holiday
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. It comes as the first of our Boeing 787s
touches down in the UK to commence replacement of our long-haul
fleet with best in class aircraft. We are leading the way in
re-defining mainstream holidays and putting our customers at the
heart of everything we do is integral to our continued growth. I
can confidently say that being able to offer our customers the most
advanced, comfortable aircraft, whether they are travelling with us
to short or long-haul destinations, while reducing our
environmental impact, will only strengthen our position."
Shareholder Approval The proposed transaction is a Class 1
transaction for the purposes of the UK Listing Rules and
consequently is subject to the approval of TUI Travel shareholders
to whom a circular setting out details of the proposed transaction
will be sent to in due course. Lazard is acting as Sponsor to TUI
Travel for the purposes of the UK Listing Rules in relation to the
proposed transaction.
Enquiries:
Analysts & Investors
Andy Long, Director of Strategy Tel: +44 (0)1293 645
& Investor Relations 795
Tej Randhawa, Investor Relations Tel: +44 (0)1293 645
Manager 829
Sarah Coomes, Investor Relations Tel: +44 (0)1293 645
Manager 827
Press
Lesley Allan, Corporate Communications Tel: +44 (0)1293 645
Director 790
Mike Ward, External Communications Tel: +44 (0)1293 645
Manager 776
Michael Sandler / Kate Hoare (Hudson Tel: +44 (0)20 7796
Sandler) 4133
TUI Travel PLC
TUI Travel PLC is one of the world's leading international
leisure travel groups operating in approximately 180 countries
worldwide. It serves more than 30 million customers in over 31
source markets. Headquartered in the UK, the Group employs
approximately 54,000 people and operates a pan-European airline
group consisting of 141 aircraft. The company is organised and
managed through three business Sectors: Mainstream, Specialist
& Activity and Accommodation & Destinations. In the
financial year ended 30 September 2012 TUI Travel had revenues of
GBP14.46 billion and an underlying operating profit of GBP490
million.
For more information visit www.tuitravelplc.com
Lazard & Co., Limited is acting exclusively as sponsor to
TUI Travel for the purposes of the UK Listing Rules in connection
with the proposed transaction and is acting for no-one else and
will not be responsible to anyone other than TUI Travel for
providing the protections afforded to clients of Lazard & Co.,
Limited or for providing advice in relation to the proposed
transaction. Neither Lazard & Co., Limited nor any of its
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Lazard & Co., Limited in connection with any statement
contained herein or otherwise.
The GBP to $ exchange rate is as derived from Bloomberg on 30
May of GBP1 to $1.5140.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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