TUI Faces a Two-Front War as Fuel Costs Soar and Crisis Bills Pile Up

When TUI releases its half-year results on Wednesday, the numbers will tell a story of a travel giant squeezed from two sides. Geopolitical turmoil has simultaneously driven up its biggest operating expenses and sapped demand for its core Mediterranean holidays, forcing investors to weigh a modest operational recovery against a deteriorating macro backdrop.

The company is expected to report second-quarter revenue of roughly €3.72 billion, a wafer-thin 0.4% increase from the prior year. Analysts forecast a seasonal loss per share of €0.542, an improvement on the €0.600 loss booked in the same period last year. For the full year, consensus estimates have slipped to an EPS of €1.13, down from €1.25 in 2025, with total revenue projected at around €23.8 billion.

The real damage, however, is buried in the cost lines. Fuel prices surged 26.2% year-on-year in April, while heating oil rocketed 55.1% — the direct result of hostilities in Iran and the ongoing blockade of the Strait of Hormuz. For a conglomerate that runs airlines and cruise ships, that is a direct hit to margins. Germany’s headline inflation rate climbed to 2.9% in April, the highest since early 2024, further crimping household spending power just as the crucial summer booking season gets underway.

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On top of that, TUI has been forced to absorb exceptional costs from the same geopolitical instability. In March, the group repatriated roughly 10,000 guests and 1,500 crew members from crisis zones in the eastern Mediterranean. The evacuation and associated disruption to flight and cruise schedules is estimated to have cost around €40 million. Unsurprisingly, summer bookings are running about 7% below last year’s level, with customers steering clear of Turkey, Cyprus and Egypt in favour of western Mediterranean destinations. The trend toward last-minute bookings is complicating revenue forecasting.

Despite the headwinds, management has struck a cautiously optimistic tone. For the second quarter, TUI expects adjusted earnings before interest and tax of between €5 million and €25 million — a stark contrast to the €207 million operating loss recorded a year earlier. The full-year guidance remains intact, with an operating profit target of at least €1.1 billion. Hedging offers a partial buffer: 83% of kerosene requirements for the summer season are already locked in at fixed prices.

Shares in TUI have lost nearly 28% since the start of the year, trading at around €6.44, some 18% below their 200-day moving average. On a more positive note, the stock has crept up about 4% over the past week, hinting at a tentative stabilisation. With a price-to-earnings ratio below six, valuations look modest — but a sustained recovery will depend on whether Wednesday’s outlook can convince the market that the summer season will overcome the twin shocks of rocketing fuel bills and geopolitical fallout.

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