By Joanna Plucinska and Linda Pasquini April 22 (Reuters) - Europe's largest tour operator TUI cut its full-year underlying operating profit forecast and suspended its revenue guidance on Wednesday,
Tour operator TUI cuts profit outlook as airlines juggle jet fuel hit
TUI's Profit Outlook and Industry Impact Amid Jet Fuel Challenges
By Joanna Plucinska and Linda Pasquini
LONDON, April 22 (Reuters) - 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% on Wednesday.
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.
Market Reaction and Analyst Commentary
"TUI shares are down 25% in the last 3 months pricing in some of this effect," Bernstein analysts said.
Broader Airline Sector Challenges
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's Revised Earnings Forecast
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 euros to 1.4 billion euros ($1.3 billion to $1.6 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.
Impact on TUI's Business Segments
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.
Jet Fuel Hedging and Operational Resilience
Customer Behavior and Booking Trends
Customers were also showing more caution and booking closer to departure dates, TUI said. Britain's easyJet warned of a similar trend earlier this month.
Second Quarter EBIT Outlook
TUI expects an improvement to underlying EBIT at constant currency of 5 million to 25 million euros on a loss of 207 million euros in the previous year for the second quarter.
Efficiency Programmes and Cost Absorption
It said payoffs on efficiency programmes targeting its airline business should help absorb about 40 million euros in extra costs from the Iran war incurred in March, including repatriation efforts and related operational disruptions.
Jet Fuel Hedging Strategy
TUI said it was 83% hedged for jet fuel for this summer, which was helping it stay resilient despite price volatility.
Repatriation Efforts
Since the conflict began with U.S.-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.
($1 = 0.8511 euros)
(Reporting by Linda Pasquini and Joanna PlucinskaEditing by Miranda Murray, Tomasz Janowski and Alexander Smith)
