Key facts
- Tui's airlines business reported a €17m loss in the six months to June, compared to a €50m profit a year earlier.
- The company cited geopolitical developments, particularly the Iran war, and higher fuel costs as drivers of weaker demand and increased price pressure.
- Tui's airline revenue decreased by 8% to €4.9bn, while overall group revenue fell by 6% to €5.8bn.
- Underlying group profit declined 27% year-on-year to €235m, missing analyst expectations.
- The tours and activities segment ('musements') was a bright spot, with a 9% increase in underlying profit to €22.7m.
- CEO Sebastian Ebel stated that customers are booking holidays last minute to avoid travel disruptions.
Tui has reported a significant downturn in its airlines business, swinging to a €17m loss in the first six months of the year, a stark contrast to the €50m profit recorded in the same period last year. The company attributed this decline to the ongoing Iran war, which has disrupted global tourism routes and led to increased fuel costs. This geopolitical instability, coupled with economic weakness in Europe and consumer caution, has negatively impacted demand and revenue.
Airline revenue fell by 8% to €4.9bn, although turnover in Tui's hotels, resorts, and cruise divisions saw increases. Overall group revenue declined by 6% to €5.8bn, and underlying group profit dropped 27% year-on-year to €235m, falling short of analyst expectations of €274m.
Despite the challenging environment, Tui's 'musements' arm, which handles tours and activities, performed well, posting a 9% rise in underlying profit to €22.7m. Chief Executive Sebastian Ebel expressed confidence that the company is "holding its own" and noted a recent pickup in last-minute bookings as travellers attempt to navigate travel chaos.
Shares in Tui experienced a 3% drop in early trading, extending their year-to-date decline to 21%. Analysts at Hargreaves Lansdown suggested that investors might be feeling the strain, likening the situation to needing a holiday themselves. The report also noted that InterContinental Hotels Group (IHG) has faced similar challenges, with a 19% year-on-year slip in revenue per available room in its Middle East operations due to the ongoing conflict.