German holiday group Tui reported a 43 per cent slump in quarterly pre-tax profits to £131 million as rising fuel costs and geopolitical conflict weighed on performance.
Europe's largest travel operator saw underlying earnings fall 27 per cent in its third quarter to £199.7 million, missing financial forecasts as total customer numbers dropped 3 per cent to 9.9 million. Revenue for the three months to the end of June fell 5.6 per cent to £5 billion.
Chief executive Sebastian Ebel said 2026 had been "no ordinary year" for the firm, which operates integrated airlines, hotels, and cruise ships across major global destinations. Ebel noted that the business has been forced to navigate a "challenging market environment and ongoing geopolitical uncertainties."
The company disclosed that it suffered a £69.2 million hit across the first nine months of its financial year, caused by the conflict in the Middle East alongside severe weather from hurricanes in Jamaica.
For the three months to June, Tui flagged an additional £17.1 million direct financial impact on its cruises division stemming from the Iran war. The operational disruption previously forced the firm to repatriate around 5,000 passengers from two cruise ships docked in Abu Dhabi in March.
Despite the sharp drop in quarterly profitability, Tui reported signs of improving operational momentum heading into the peak holiday period. Booked revenue across the firm's markets and airlines divisions recovered slightly from minus 7 per cent in May to minus 6 per cent.
Geopolitical Conflict and Consumer Trends
Ebel explained that the ongoing war in the Middle East had "influenced consumer sentiment and the timing of purchasing decisions," leading many holidaymakers to delay booking their summer trips. However, demand over the last four weeks showed renewed growth, rising by 7 per cent as travellers finalised late bookings.
Derren Nathan, head of equity research at UK investment firm Hargreaves Lansdown, noted that customers hoping for steep price cuts close to departure might be disappointed. "The narrative around disciplined pricing, however, suggests that those waiting for a last-minute bargain may be a little disappointed," Nathan said.
Tui noted growing customer demand during the shoulder seasons, the transitional travel periods occurring between the high peak summer months and the quieter off-peak season. Warmer climate conditions helped boost bookings for shoulder season breaks, with strong demand recorded for core Mediterranean destinations including Greece, Turkey, and Spain.
"Every year, we have one week more in a few destinations," Ebel told reporters, pointing to the extended window for sunshine holidays in Southern Europe.
Wildfire Impacts and Financial Outlook
Sales for the upcoming winter season remain at an early stage with "limited visibility," as consumers remain focused on current summer travel "and continue to book closer to departure."
Addressing environmental concerns, Ebel told reporters that recent heatwaves across Europe had exerted a limited impact on company operations. He stated that the total number of European wildfires was "less than the years before," noting that Tui does not operate in Bordeaux in France or in regions north of Madrid in Spain, both of which were ravaged by fires in recent weeks.
Tui reaffirmed its full-year guidance, confirming an adjusted operating profit outlook of £930 million to £1.2 billion for the 2026 financial year. The company had previously cut its profit forecast and suspended revenue guidance in March following spiralling jet fuel prices and heightened market uncertainty caused by the Iran war.
Commenting on the company's full-year targets, Nathan warned that the firm faces a challenging final quarter. "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," Nathan added.
Following the earnings announcement, shares in Tui fell 0.57 per cent, bringing the stock's year-to-date losses to 19.27 per cent.
