TUI’s Twin Crisis: Blocked Ships and a Broken Summer Booking Season

TUI suspends revenue forecast and cuts profit guidance after Iran conflict traps cruise liners and drives a 7% drop in summer holiday bookings.

The Iran conflict has dealt TUI a double blow. While two of its cruise liners were trapped in the Persian Gulf for seven weeks, the company’s core package holiday business has seen a sharp drop in summer reservations. The result: a suspended revenue forecast and a share price that has been pummelled to within striking distance of its 52-week low.

TUI’s stock closed at €6.46 on Monday, down roughly 27% since the start of the year. The relative strength index has sunk to 22, a level that technical analysts consider deeply oversold and indicative of sustained selling pressure. The equity now trades about 31% below its 52-week peak of €9.41.

Cruise Ships Take the Long Way Home

On April 18, Mein Schiff 4 and Mein Schiff 5 managed to slip out of the Persian Gulf during a brief lull in hostilities. Travelling at high speed and in close coordination with local authorities, they transited the Strait of Hormuz. Rather than risk the Suez Canal, both vessels are now steaming south around Africa, with a scheduled stop in Cape Town at the end of the month for fuel, provisions and crew changes.

TUI aims to have both ships back in service in the Mediterranean from mid-May. Mein Schiff 5 is slated to depart Heraklion, Crete, on May 22, while Mein Schiff 4 is due to start Adriatic cruises from Trieste two days later. Official confirmation of those itineraries is still pending.

The disruption has already been costly. In March alone, TUI repatriated roughly 10,000 guests — including about 5,000 passengers from the stranded ships. All scheduled sailings for both vessels have been cancelled through mid-May.

Summer Bookings Slide as Customers Stay Home

The conflict’s impact extends well beyond the cruise division. Booked revenue in TUI’s airline and markets segment for the summer season is running 7% below last year’s level. Hotel occupancy for the second half has weakened by a similar margin. Customers are shunning traditional Mediterranean destinations such as Turkey, Cyprus and Egypt, while a hurricane in the Caribbean has added further pressure.

Holidaymakers are booking much closer to departure, making capacity planning far more difficult. The company estimates that repatriation flights and operational disruptions cost it roughly €40 million in March.

Profit Guidance Cut, Revenue Forecast Suspended

Faced with the deteriorating booking picture, TUI’s board has slashed its full-year operating profit forecast to between €1.1 billion and €1.4 billion. The original target had called for slight growth on the prior year. The revenue outlook has been withdrawn entirely until the operating environment stabilises.

Analyst reactions have been mixed. JPMorgan maintains an “Overweight” rating with a €13.50 price target. Deutsche Bank has trimmed its target from €12.00 to €10.50 but kept a “Buy” recommendation. Bernstein Research holds at “Market-Perform” with a €9.20 target, noting that the profit warning is not primarily fuel-driven — TUI has hedged 83% of its jet kerosene for the summer.

Cruise Division Offers a Rare Bright Spot

Not all parts of the business are struggling. TUI Cruises and Marella Cruises have reported strong demand following a solid booking season. That relative resilience provides some cushion, though it is unlikely to offset the broader weakness in package holidays.

Investors will get a clearer picture on May 13, when TUI publishes its second-quarter results. The market expects adjusted operating profit of between €5 million and €25 million — a dramatic improvement on the €207 million loss recorded in the same quarter last year, but still wafer-thin given the headwinds. Management will need to deliver concrete data on peak-season demand to shore up confidence in the remaining annual targets.