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Holiday operator Tui has seen its quarterly earnings drop sharply as cautious consumers continue to delay booking their trips until the last minute amid ongoing uncertainty surrounding the Iran war.

Pre-tax profits for Europe’s largest travel company fell 43 per cent to €153.4 million (£131 million) during its third quarter to the end of June.

The business was hit by escalating fuel costs caused by the Middle East conflict, alongside pressure to drop prices due to subdued demand and heightened competition.

Underlying earnings decreased 27 per cent over the latest quarter to €233.8 million (£199.7 million), while overall customer numbers dropped 3 per cent to 9.9 million.

Tui reported an €81 million (£69.2 million) financial hit across the first nine months of its financial year so far, stemming from the Iran war and Jamaican hurricanes. This included a €20 million (£17.1 million) “direct” impact on its cruise division during quarter three from Middle East conflict.

During March, the company had to repatriate roughly 5,000 guests from two cruise liners moored in Abu Dhabi, which then stayed in Gulf ports until the middle of May.

Sebastian Ebel, chief executive of Tui, stated that the group has navigated these difficult trading conditions, though travellers are continually leaving bookings until closer to departure.

He said: “2026 is no ordinary year.

“Tui has held its own well in a difficult global environment.

“Our business model is proving to be resilient. Travel remains highly relevant to people’s lives, but the timing of travel decision has shifted.”

Mr Ebel added: “Wars and geopolitical tensions, consumer caution, economic weakness and rising inflation in Europe’s core markets – all these factors have influenced consumer sentiment and the timing of purchasing decisions.”

Tui’s markets and airline business, which includes its traditional tour operator division, swung to a €17.4 million (£14.9 million) underlying loss from profits of €49.7 million (£42.4 million) a year earlier.

Its holiday experiences arm – which includes its differentiated cruise liners and hotels as well as TUI Musement tours and activities – proved more resilient with underlying earnings slipping 5.6 per cent to €277.8 million (£237.3 million).

Tui kept its full-year outlook unchanged as it said bookings were improving.

Booked revenues in the firm’s markets and airline business were 6 per cent lower over the summer season – marginally improved since May – while it has seen a 7 per cent rise in the past four weeks “indicating a recovery in demand”.

Greece and Spain – including the Balearic and Canary Islands – continue to be in high demand, while destinations in the Eastern Mediterranean have also started to pick up again in recent weeks, according to Tui.