Ash cloud hits travel firms' profits

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The Independent Online

Thomson Holidays owner TUI Travel and budget airline easyJet warned today that the impact of Iceland's volcanic ash cloud had wiped up to £160 million off profits.

TUI was forced to cancel 175,000 holidays and repatriate 180,000 customers during April, costing it around £90 million in profits.

Meanwhile, easyJet - which has had to cancel more than 6,500 flights so far - said the disruption would lower its own annual profits by up to £75 million.

It also hopes a more tightly-targeted approach to no-fly zones following the closure should "cause substantially less disruption" in the event of further volcanic eruptions.

TUI's underlying pre-tax losses widened 10% to £361 million in the six months to March 31, although it is still on course to meet expectations for the year overall.

Both TUI and easyJet, who said 850,000 of its passengers were affected, are seeking compensation from national governments over the unprecedented five-day closure of European airspace last month.

EasyJet was hoping for between £175 million and £200 million in profits this year but put the cost of the cloud at between £50 million and £75 million.

The Luton-based carrier now expects lower annual profits of between £100 million and £150 million based on current fuel prices and exchange rates.

The warning over the full-year impact of the disruption came despite lower than expected pre-losses of £78.7 million in the seasonally weaker six months to March 31.

This was driven by an £80 million fall in its fuel bill, although partially offset by a £25 million hit for the impact of heavy snow in December and January.





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