TUI’s Summer Booking Slump Deepens as Middle East Crisis Triggers a Profit Warning

TUI shares hit six-month low, down 28% YTD, as geopolitical crises and shifting consumer behavior slash summer bookings and force a profit guidance cut.

The travel giant’s stock has been pummelled to a six-month low, shedding nearly 28% since the start of the year as a toxic mix of geopolitical turmoil and shifting consumer behaviour takes its toll. Shares changed hands at 6.42 euros on Friday, just a whisker above the year’s trough of 6.15 euros, after sliding 11% in a single week.

Technical indicators are flashing red. The relative strength index has plunged to 22.3, a level that typically signals extreme oversold conditions, while the stock now trades 19% below its 200-day moving average. A brief recovery attempt towards 7.50 euros fizzled out after US-Iran peace talks collapsed without agreement, leaving the 6.40-6.50 euro band as the last line of defence. If that support gives way, chartists warn of another wave of selling.

A Tale of Two Quarters

Beneath the surface, the picture is strikingly contradictory. TUI surprised analysts by guiding for an operating profit of up to 25 million euros in the second fiscal quarter — a sharp improvement from the loss it posted a year earlier. Yet that headline number masks the true scale of the damage. The company spent 40 million euros in March alone evacuating thousands of guests from the conflict zone in the Middle East, with repatriation costs and operational disruptions eating into margins.

The real headache, however, lies ahead. Summer bookings — the lifeblood of TUI’s annual earnings — are running 7% below last year’s level. Holidaymakers are shunning popular destinations such as Turkey, Cyprus and Egypt, opting instead for the western Mediterranean or booking at the very last minute. That shift is playing havoc with the group’s capacity planning and revenue visibility.

Guidance Cut and a Key Date Ahead

Management has responded by slashing its full-year operating profit forecast to between 1.1 billion and 1.4 billion euros, abandoning an earlier promise of strong growth. The revenue outlook has been suspended altogether. Barclays has trimmed its price target to 9 euros but maintains a buy rating, arguing that the geopolitical headwinds are temporary in nature.

All eyes are now on May 13, when TUI releases its half-year results. Analysts expect second-quarter earnings per share of minus 0.534 euros, a modest improvement from minus 0.60 euros a year ago, with revenue forecast at 3.71 billion euros — barely changed from the prior-year period. The market will be looking for granular detail on forward bookings, particularly for the peak summer season. Should the update disappoint, the freshly lowered targets could face another stress test.

On the operational front, TUI has hedged roughly 83% of its summer jet fuel requirements, providing some buffer against oil price volatility. Its cruise fleet is set to resume normal operations in the Mediterranean from mid-May, after two vessels were pulled from the Persian Gulf. But with consumer confidence fragile and the conflict showing no signs of abating, the road to recovery looks anything but smooth.