TUI cuts profit outlook as airlines juggle jet fuel hit
Europe's largest tour operator TUI cut its underlying operating profit forecast and suspended its revenue guidance, citing uncertainty caused by the Iran war, prompting its shares to fall by 2.6% today.
TUI, which operates its own fleet of aircraft and is exposed to travel disruptions and tight jet fuel supplies, joined airlines from EasyJet to Wizz Air in warning of the negative impact of the conflict.
"TUI shares are down 25% in the last three months pricing in some of this effect," Bernstein analysts said.
European airlines are set to report first-quarter results from next week and analysts expect broad capacity cuts and further profit warnings as the impact of curtailed jet fuel supplies and spiralling costs roils the sector worldwide.
TUI expects underlying earnings before interest and taxes (EBIT) for its fiscal year ending September 30, 2026 to be in the range of €1.1 billion to €1.4 billion. It had previously expected an increase of 7% to 10% from €1.4 billion in the previous year.
"While continuing to demonstrate strong operational improvement in H1 FY 2026, the ongoing conflict in the Middle East and the uncertainty surrounding its duration continue to limit near-term visibility and drive consumer caution," it said.
TUI said in a statement its airlines segment as well as its hotels business have suffered from a partial shift in customer demand from Eastern to Western Mediterranean destinations, with a drop in demand for Turkey, Cyprus and Egypt in particular.
TUI's markets and airline segment makes up more than two-thirds of its revenue.
Customers were also showing more caution and booking closer to departure dates, TUI said. EasyJet warned of a similar trend earlier this month.
TUI expects an improvement to underlying EBIT at constant currency of €5m to €25m on a loss of €207m in the previous year for the second quarter.
It said payoffs on efficiency programmes targeting its airline business should help absorb about €40m in extra costs from the Iran war incurred in March, including repatriation efforts and related operational disruptions.
TUI said it was 83% hedged for jet fuel for this summer,which was helping it stay resilient despite price volatility.
Since the conflict began with US-Israeli strikes on Iran on February 28, TUI said it had repatriated around 10,000 people in March, including about 5,000 passengers from cruise ships Mein Schiff 4 and Mein Schiff 5.
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