The Iran conflict has carved a deep divide through TUI’s business. On one side, a well-executed hedging strategy has locked in fuel costs and shielded the company from the worst of the kerosene price spike. On the other, the very customers who would have filled those hedged seats are staying home, or at least booking much closer to departure.
The stock has felt the squeeze. Down almost 28 percent since the start of the year, and roughly 15 percent in the last seven days alone, the shares were trading at €6.42 on Friday — perilously close to the 52-week low of €6.15. The relative strength index has sunk to 27, a technically oversold reading that historically has sometimes marked a floor. Whether that floor holds will depend heavily on the quarterly numbers due May 13 and, more critically, on the trajectory of the Middle East crisis between now and then.
The €40 Million March
The conflict, which erupted in late February, has already left a deep dent in the first-half accounts. TUI estimates it incurred roughly €40 million in costs during March alone, driven by repatriation efforts and operational disruptions. Around 10,000 guests had to be brought home, including some 5,000 passengers stranded aboard the Mein Schiff 4 and Mein Schiff 5 in Abu Dhabi and Doha. All sailings through mid-May were cancelled. On April 19, during a lull in the fighting, both vessels slipped out of the Persian Gulf and are now expected to resume Mediterranean itineraries from mid-May.
The financial hit is already baked into the second-quarter outlook. TUI expects an adjusted EBIT for the three months to March 31 of between €5 million and €25 million — a dramatic improvement from the €207 million loss recorded in the same period a year earlier, but still a number that reflects the geopolitical shock. Management attributes the year-on-year improvement to structural cost savings in the Markets & Airline division, not to any recovery in demand.
Hedging as a Shield
Where TUI has been able to protect itself is on the fuel side. As of April 15, the group had hedged 83 percent of its kerosene requirements for summer 2026 and 62 percent for winter 2026/27. In the cruise business, energy costs for the current financial year are more than 80 percent covered. That has kept sudden cost spikes in check — at least for now.
Bernstein analyst Richard J. Clarke, who maintains a "Market Perform" rating and a €9.20 price target, stresses that fuel is not the primary concern. "This is not a fuel problem," he notes. "The issue is on the demand side."
The Summer Booking Squeeze
And demand is where the real damage is visible. In the core Markets & Airline segment, booked revenue for summer 2026 is running roughly seven percent below last year’s level. Hotels & Resorts is seeing a similar decline. The classic Eastern Mediterranean destinations — Turkey, Cyprus, Egypt — are bearing the brunt, as their proximity to the conflict zone spooks travellers.
Customers are also booking later and more hesitantly, forcing TUI to reshuffle capacity on the fly. The group is shifting resources away from the Eastern Mediterranean toward Spain, Portugal and the Atlantic coast of North Africa. Those last-minute adjustments come at a cost: hotel blocks and flight rights bought in real time are more expensive, squeezing margins.
The cruise division offers a partial offset. TUI Cruises and Marella Cruises are reporting robust demand following a strong booking season. But the overall picture remains one of a company navigating a sharp geographic rebalancing of its summer business.
A Cautious Outlook
TUI has suspended its full-year revenue guidance, a clear sign that the board sees too much uncertainty to commit to a number. CEO Sebastian Ebel has struck a relatively calm tone on the operational side, noting that there is no acute kerosene shortage in Germany and describing the supply situation as "relatively comfortable." Should flights be cancelled, the company plans to invoke force majeure to avoid compensation payouts — a stance comparable to that taken during extreme weather events or strikes.
The May 13 release of the full second-quarter and first-half results will be the next major test. By then, investors will want to know whether the shift toward the Western Mediterranean is compensating adequately for the collapse in the East, and whether the hedging strategy can hold under the weight of a prolonged conflict. For now, TUI’s tanker is full — but its order book is leaking.
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