TUI avoids another profit warning as Iran war further dents travel bookings

By Joanna Plucinska and Paolo Laudani

LONDON, Aug 12 (Reuters) - TUI, Europe's largest travel company, missed third-quarter operating profit forecasts but avoided issuing another warning on Wednesday as bookings continued to fall and jet fuel prices remained high due to the Iran war.

Germany's TUI, which runs cruise ships, airlines and hotels, ​cut its profit forecast and suspended its revenue guidance in March due to spiralling jet fuel costs and the uncertainty ​surrounding the Iran war.

TUI said on Wednesday it faced the additional challenge of increased capacity amid low demand as it received new deliveries of cruise ships, but did not adjust its outlook.

"2026 is no ordinary year. TUI has held its own well in a difficult global environment. Our business model is proving to be resilient," TUI CEO Sebastian Ebel said in a statement.

Although TUI shares initially fell more than 1%, they later stabilised as investors were reassured by the company maintaining its outlook and a 7% boost in booked revenue in the last four weeks as tourists booked closer to travel.

"Travel remains highly relevant to people's lives, but the timing of travel decisions has shifted," Ebel added.

The results reaffirm warnings by European airlines and travel companies that tourists are hesitating over holidays given the ongoing uncertainty stemming from the Iran war.

"TUI is keeping its chin up, saying people are still travelling, they’re just booking at the last minute," said Dan Coatsworth, head of markets at trading platform AJ Bell.

Major airlines including British Airways-owner IAG, Lufthansa and Air France-KLM said they were either cutting capacity or keeping it flat for the year ahead in an effort to mitigate a broader fallout on their bottom line.

'ABLE TO FLY ALL OUR AIRCRAFT'

Ebel later told journalists that TUI had cut its airline risk capacity by 5%, which signifies pre-booked guaranteed seats, in an effort to mitigate damage from unsteady demand and be able to fill space based on immediate need.

"We were able to fly all of our aircraft. I think we even had one aircraft more in the UK than the year before," he said.

TUI reported an operating profit of €234.6 million ($270.6 million), down almost 27% from last year and lower than the €274 million projected by analysts polled by LSEG.

It confirmed its adjusted operating profit outlook of ⁠€1.1 billion ​to €1.4 billion for the 2026 financial year.

Ebel said TUI was still seeing a reduction in bookings to the eastern Mediterranean and that central European tourists in particular were booking fewer trips to the United States.

TUI's shares are down more than 12% since the Iran war began on February 28 with U.S. and Israeli strikes.

($1 = 0.8671 euros)

(Reporting by Joanna Plucinska and Paolo Laudani; Editing by Milla Nissi-Prussak, Harikrishnan Nair and Alexander Smith)