'2026 is no ordinary year': Tui profits slump as Iran war hits demand
Holiday firm Tui has seen quarterly earnings plunge as cautious consumers continue to leave holiday bookings until the last minute amid uncertainty over the Iran war.
Pre-tax profits at Europe’s largest travel operator tumbled 43% to 153.4 million euro (£131 million) in its third quarter to the end of June, with the group hit by rising fuel costs due to the Middle East conflict and pressure to lower prices because of weak demand and increased competition.
Underlying earnings fell 27% in the latest quarter to 233.8 million euro (£199.7 million) as it said customer numbers fell 3% to 9.9 million.
Tui revealed it suffered a hit of 81 million euro (£69.2 million) in the nine months of its financial year so far from the Iran war and hurricanes in Jamaica, including an extra 20 million euro (£17.1 million) “direct” impact from the Middle East conflict on its cruises arm during the third quarter.
In March, the firm was forced to repatriate around 5,000 passengers from two cruise ships anchored in Abu Dhabi, which remained in the Gulf ports until mid-May.
Sebastian Ebel, chief executive of Tui, said the group has weathered the tough trading conditions, but that holidaymakers are increasingly booking trips later towards their departure date.
He said: “2026 is no ordinary year.
“Tui has held its own well in a difficult global environment.
“Our business model is proving to be resilient. Travel remains highly relevant to people’s lives, but the timing of travel decision has shifted.”
Mr Ebel added: “Wars and geopolitical tensions, consumer caution, economic weakness and rising inflation in Europe’s core markets – all these factors have influenced consumer sentiment and the timing of purchasing decisions.”
Commenting on the results, Derren Nathan, head of equity research at investment and savings platform Hargreaves Lansdown, said: “TUI investors may feel they need a holiday after today’s results, but it wasn’t all bad news.
"Geopolitical uncertainty is rarely good for the travel business, but the group’s Holiday Experiences division, which includes its differentiated cruise liners and hotels, put up a resilient performance.
“The more commoditised Markets & Airline arm swung from a 50 million euro profit to a 17 million euro loss, impacted by softer demand, high fuel prices and a competitive market.
"Despite the nosedive in earnings, it’s still all to play for with TUI typically making most of its money in the fourth quarter, which covers the peak summer trading period.
Mr Nathan added: “Here, there are signs of improving momentum, with Markets & Airlines booked revenue improving from -7% in May to -6%, Germany stable at -3%, and the UK picking up from -10% to -8%.
"Management pointed to conflict in the Middle East as a drag on demand, but a spell of ideal staycation weather may also have played a part.
"Bookings over the last four weeks are up 7%, as holidaymakers are holding out longer before making a reservation.
"The narrative around disciplined pricing, however, suggests that those waiting for a last-minute bargain may be a little disappointed.
"The weak quarter adds more pressure for a clean landing in the final stretch of the year, and while the runway still remains relatively wide, management is likely to be buckling up for a tricky approach.”