Europe's largest travel operator Tui reported a slump in quarterly profits as the Iran war continues to pile pressure on fuel costs and customers leave bookings until the last minute.

The German holiday firm saw year-on-year pre-tax profits plummet by 43 per cent to £131million in the three months to the end of June, as rising fuel costs and increased pressure to cut prices hit its bottom line.

Underlying earnings missed forecasts, falling 27 per cent in the third quarter to £199.7million as customer numbers fell 3 per cent to 9.9million. Revenue fell 5.6 per cent to £5billion.

Chief executive Sebastian Ebel said 2026 had been 'no ordinary year' as the firm battled a 'challenging market environment and ongoing geopolitical uncertainties'.

Tui revealed it had suffered a £69.2million hit in the nine months of its financial year so far from the Middle East conflict and hurricanes in Jamaica. It flagged an additional £17.1million direct impact from the Iran war on its cruises arm in the three months to June.

In March, Tui was forced to repatriate around 5,000 passengers from two cruise ships in Abu Dhabi.

Despite the headline figures, there were signs of improved momentum, with Tui's markets and airlines booked revenue improving from -7 per cent in May to -6 per cent. 

Ebel said that the war had 'influenced consumer sentiment and the timing of purchasing decisions' with bookings over the last four weeks up 7 per cent. 

'The narrative around disciplined pricing, however, suggests that those waiting for a last-minute bargain may be a little disappointed,' said Derren Nathan, head of equity research at Hargreaves Lansdown. 

Bookings for the 'shoulder seasons' – the travel period between peak and off-peak season – had started to pick up because of the warmer weather, with growing demand for Greece, Turkey and Spain.

'Every year, we have one week more in a few destinations,' Ebel told reporters.

Sales for winter are at an early stage, with 'limited visibility' as customers remain focused on summer holidays 'and continue to book closer to departure'. 

The recent heatwaves have had limited impact on Tui, which runs cruise ships, hotels and airlines, with the number of European wildfires 'less than the years before,' Ebel told reporters. 

Tui does not operate in Bordeaux or north of Madrid, which have been ravaged by fires in recent weeks. 

Tui confirmed its adjusted operating profit outlook of ⁠£930million to £1.2billion for the 2026 financial year.

It had cut its profit forecast and suspended its revenue guidance in March on the back of spiralling jet fuel costs and the uncertainty surrounding the Iran war.

Nathan added: 'The weak quarter adds more pressure for a clean landing in the final stretch of the year, and while the runway still remains relatively wide, management is likely to be buckling up for a tricky approach.' 

Shares fell 0.57 per cent, bringing this year's losses to 19.27 per cent.