Tui Reports Slump in Quarterly Profits Amid Geopolitical Uncertainty and Rising Costs

Europe's largest travel operator Tui reported a 43% slump in year-on-year pre-tax profits, falling to £131 million in the three months ending June, attributed to rising fuel costs and geopolitical uncertainties. Underlying earnings missed forecasts, decreasing by 27% to £199.7 million in the third quarter, with customer numbers down 3% to 9.9 million. Revenue saw a 5.6% decline, reaching £5 billion.

Chief executive Sebastian Ebel described the 2026 financial year as 'no ordinary year,' highlighting the company's navigation of a 'challenging market environment and ongoing geopolitical uncertainties.' Tui incurred a £69.2 million impact in the first nine months of its financial year due to the Middle East conflict and hurricanes in Jamaica. The Iran war alone directly affected Tui's cruises arm by an additional £17.1 million in the June quarter. In March, the company had to repatriate approximately 5,000 passengers from two cruise ships docked in Abu Dhabi.

Despite the challenging figures, signs of improved momentum were noted, with Tui's markets and airlines booked revenue showing an increase from -7% in May to -6%. Ebel indicated that the ongoing conflict has influenced consumer sentiment and the timing of booking decisions, reporting a 7% rise in bookings over the preceding four weeks. However, analysts suggest that last-minute bargain hunters may be disappointed due to a strategy of disciplined pricing.

Bookings for the 'shoulder seasons' are showing an uptick, bolstered by warmer weather, with increased demand for destinations like Greece, Turkey, and Spain. Tui anticipates an additional week of favorable booking conditions in certain destinations. Winter sales are in their nascent stages, with limited visibility as customers remain focused on summer holidays and continue to book closer to departure dates.

The company stated that recent heatwaves have had a limited impact, as the number of European wildfires has been lower than in previous years. Tui does not operate in regions heavily affected by recent fires, such as Bordeaux or north of Madrid. The company reaffirmed its adjusted operating profit outlook of £930 million to £1.2 billion for the 2026 financial year. Tui had previously lowered its profit forecast and suspended revenue guidance in March, citing escalating jet fuel costs and the instability surrounding the Iran war.

Shares in Tui fell by 0.57%, contributing to a 19.27% loss for the year. Analysts noted that the weak quarter increases pressure for a strong finish to the year, though the path ahead is described as potentially 'tricky.'