Travel industry under pressure: Oil price rise causes Lufthansa and TUI shares to collapse – including US airline shares in red

• Oil price above $100 weighs on travel industry
• Lufthansa and TUI shares are losing significantly
• Investors fear higher costs and weaker demand

While the oil companies are benefiting from the escalation in the Middle East, the shares of Lufthansa and the travel group TUI experienced a price slide. Lufthansa shares fell by 6.38 percent to 7.60 euros on XETRA, while TUI shares also lost 4.43 percent to 6.90 euros.

The combination of skyrocketing fuel costs and massive flight cancellations weighed heavily on prices.

The oil price shock hits the cost base

The main driver for the slump is the sharp rise in crude oil prices. WTI was trading at 104.44 US dollars per barrel in the morning, Brent recently rose to 109.38 US dollars, but prices of over 115 US dollars were even quoted in early trading. This puts the fuel bill back at the center of concern. For Lufthansa, which has secured part of its requirements through hedging transactions, this sharp increase still means a massive burden on the operating margin. Investors fear that the airline will not be able to pass on higher costs to customers through ticket prices quickly enough in an inflationary environment, which could shake up recently presented profit forecasts for 2026

Operational chaos due to airspace closures

In addition to the costs, operational business in the crisis region is causing headaches. Since important air traffic hubs in the Middle East are partially closed or can only be served to a limited extent, Lufthansa has to cancel numerous connections or redirect them to expensive detours. The risk of stranded passengers and the costs of rebooking are also depressing the mood of market participants.

TUI is suffering from the dwindling desire to travel

Geopolitical tensions are also having a full impact on the tourism group TUI, as investors fear general consumer reluctance. The Middle East is an important winter and spring destination for TUI, particularly with a view to Egypt and the United Arab Emirates. Uncertainty about the security of flight routes and fears of a further expansion of the conflict are causing booking numbers for these regions to collapse. In addition, the strong oil price is also putting pressure on the margins of its own holiday airlines and cruise ships, which dampens hopes of a strong operational year in 2026.

TUI and Oman put planned partnership on hold

TUI and Oman’s state tourism company Omran have put their planned partnership on hold for the time being. Omran has announced that the agreed schedule for the project can no longer be adhered to, TUI said.

This means that the planned construction and operation of five hotels in the Dhofar region in the south of the country will be suspended, as will Oman’s planned entry into TUI. Omran wanted to take over 1.4 percent of the shares in the tourism group from Hanover.

Partnership only agreed in September

The partners agreed to work together last September. A joint venture was planned for this purpose. Omran and TUI should each hold 45 percent of this, and a private investor should hold another ten percent.

According to information at the time, Oman wanted to bring in land and capital, while TUI was supposed to organize the booking processes, among other things. There is great demand from holidaymakers for the country, but so far too little supply, TUI strategy chief Peter Krüger said in September.

Both sides wanted to continue their close dialogue, according to TUI.

Lufthansa extends suspension of some flights to the Middle East

Lufthansa Group has extended the suspension of flights to and from Dubai and Abu Dhabi, as well as Dammam in Saudi Arabia, by five days until March 15 due to the crisis in the Middle East. The airline group announced that there will be no flights to Tel Aviv in Israel until April 2nd. Most recently, the suspension was valid until March 22nd.

At the end of last week, the Lufthansa Group announced that its airlines would suspend flights to and from Amman and Erbil until March 15th, flights to and from Beirut until March 28th and flights to and from Tehran until April 30th.

Bernstein raises Lufthansa target to 9.20 euros – ‘market perform’

The US analysis house Bernstein Research has raised the price target for Lufthansa from 7.75 to 9.20 euros, but left the rating at “market perform”. Among European airlines, Ryanair and IAG, followed by Lufthansa and easyJet, appeared best positioned to defy the adversities caused by the Iran war, wrote Alex Irving in his industry assessment on Monday. He sees Air France-KLM and Wizz Air as having the greatest impact. In the wake of lower earnings estimates (EPS), Irving cut his price targets. He justified the increase at Lufthansa with the recently published annual figures and the assessment period that had been postponed further into the future.

US airline stocks also under pressure

US airline stocks are also subject to downward pressure on the market on Monday. American Airlines stocks are losing 2.82 percent to $10.87 on the NASDAQ, United Airlines is also losing 2.01 percent to $90.22, while Delta is also losing 0.31 percent to $58.78 on the NYSE and Southwest Airlines is trading 0.84 percent lower at $41.14.

Editorial team finanzen.net / DOW JONES / dpa-AFX

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