Thomson counts the cost of Egypt strife

Thomson Holidays owner TUI Travel today warned the political unrest in Egypt and Tunisia could hit earnings by up to £30 million.

The company said it had cancelled holidays to the riot-hit countries, as well as incurred the costs of returning travellers, which could hit its second-quarter results by £25 million to £30 million.

TUI chief executive Peter Long said: "We are closely monitoring events in Egypt and Tunisia and the safety of our customers is our primary consideration."

Violent demonstrations against the government in Egypt have grabbed attention across the world for the last week after similar action in fellow North African country Tunisia. Hundreds of Britons fled both destinations as the disruption unfolded.

The warning came as TUI posted a pre-tax loss of £134 million in the three months to December 31, compared to a £166 million loss in the same period last year.

The company said it had cancelled trips to Egypt from markets including Germany, France and the Netherlands, but it was still operating holidays to Red Sea resorts from the UK.

Even with the UK to Red Sea packages open, if the company is unable to operate holidays from any other markets for the rest of the winter it will cost TUI at least £20 million.

The company said early indications suggest customers are choosing to rebook to alternative destinations, and it is taking action to "remix" programmes in line with demand.

In Egypt, protesters are demanding that President Hosni Mubarak, who has ruled for 30 years, step down immediately. They have clashed with supporters of the president on the streets of Egyptian cities, including the capital Cairo.

Earlier in the month, similar scenes were witnessed across Tunisia, which led to the ousting of President Zine El Abidine Ben Ali.

Last week, TUI said booking volumes for near-term departures since its previous trading statement in early December were down 1% as Arctic conditions shut off British airports and stopped would-be holidaymakers visiting its shops. But the company said total revenues were up 6% in the first quarter to £2.69 billion.

Broker Numis Securities cut its full-year underlying earnings forecast by £30 million to £446.7 million following the update.

Numis analyst Wyn Ellis said he had "little confidence" in the trading outlook, particularly in the UK.