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Aviation · Earnings · Finance · Travel
Europe's largest tour operator TUI cut its underlying operating profit forecast and suspended its revenue guidance, citing uncertainty caused by the Iran war and its impact on jet fuel supplies, prompting its shares to fall by 2.6%.
TUI now expects underlying earnings before interest and taxes (EBIT) for its fiscal year ending September 30, 2026, to be between €1.1 billion and €1.4 billion, a significant reduction from its previous forecast of 7% to 10% growth over the prior year's €1.4 billion. The ongoing conflict in the Middle East limits near-term visibility and drives consumer caution, according to TUI.
The company's airline and hotel segments, which comprise over two-thirds of its revenue, have suffered from a partial shift in customer demand from Eastern to Western Mediterranean destinations, specifically impacting Turkey, Cyprus, and Egypt. Customers are also booking closer to departure dates, a trend easyJet also reported.
Bernstein analysts noted TUI shares were already down 25% in the last three months, pricing in some of this effect. Despite these challenges, TUI is 83% hedged for jet fuel for the summer, providing resilience against price volatility.
Efficiency programs are expected to absorb approximately €40 million in extra costs incurred in March due to the conflict, including repatriation efforts for about 10,000 people. The broader European airline sector anticipates broad capacity cuts and further profit warnings as first-quarter results approach, grappling with curtailed jet fuel supplies and escalating costs.
