TUI's Cautious Outlook Amid Record Profits

TUI Group, Europe's largest tour operator, reported record annual earnings of €1.46 billion (£1.27 billion) for the fiscal year ending September 30, 2025, marking a 12.6% increase in underlying earnings on a constant currency basis. Despite this achievement, TUI's outlook for 2026 is more conservative than anticipated, projecting revenue growth of only 2% to 4% and underlying operating profit growth of 7% to 10%. This tempered forecast has led to a decline in TUI's share price, which fell by 3.2% shortly after the announcement.

Tui shares drop despite record €1.46bn profit as €250m cuts loomReuters

Chief Executive Sebastian Ebel acknowledged the challenges posed by the current economic and geopolitical environment, which influenced the company's cautious projections. He noted that while TUI's cruise and hotel sectors performed strongly, the airline segment faced significant pressures, particularly in the German market. Ebel emphasized that the modest outlook was partly due to accounting practices that excluded revenues from joint ventures in the cruise and hotel sectors from TUI's overall figures.

Reuters

In response to the anticipated challenges, TUI plans to implement cost-cutting measures totaling €250 million (£218.5 million) within its airlines and market division. Ebel indicated that these reductions would primarily involve decreasing the number of external IT workers rather than direct job losses. He stated, "There is a big difference in having less jobs versus cutting jobs," highlighting the company's approach to maintaining operational efficiency without significant workforce reductions.

Reuters

The company is also expecting the delivery of 20 new aircraft from Boeing, which is anticipated to contribute to cost savings and enhance fleet efficiency. Ebel expressed dissatisfaction with TUI's current share price and introduced a new dividend policy of €0.10 per share, aiming to improve investor sentiment in the coming year.

Reuters

Despite TUI's record profits, the market's reaction has been cautious. Analysts have pointed out that the company's forecast for 2026 falls short of the double-digit earnings growth achieved in the previous year. Dudley Shanley, an airline analyst at Goodbody brokers, noted that while the results and outlook were overall positive, they reflect the challenges TUI faces in a highly competitive market.

Tui shares drop despite record €1.46bn profit as €250m cuts loom

Sebastian Ebel stated, "In a highly competitive market environment, we achieved the best result in the company's history and exceeded the EBIT forecast for the full year 2025." He also reiterated the company's commitment to enhancing profitability and efficiency across all segments.

Reuters

While TUI's reported earnings and growth figures are strong, the discrepancy between record profits and the conservative outlook for 2026 raises questions about the sustainability of growth in the face of economic uncertainties. Further details on the specific operational challenges affecting the airline segment remain unclear.

Tui shares drop despite record €1.46bn profit as €250m cuts loom

• “There is a big difference in having less jobs versus cutting jobs.” — Sebastian Ebel, Chief Executive Officer, TUI Group

Reuters