Atrocity in Tunisia could cost TUI €40m this year

The terror attack in Tunisia, which left 38 people dead, will cost the tour operator TUI up to €40m (£28.5m) this year, chief executive Peter Long has admitted.

Gunman Seifeddine Rez-gui’s attack on a Sousse beach in June claimed the lives of 33 TUI holidaymakers, of whom 30 were from the UK.

TUI, owner of Thomson and First Choice, has already taken a €10m hit in cancellation and repatriation costs. But the company manages 24 hotels in Tunisia, now virtually empty as a result of the attack, which will cost it between €25m and €30m in the current quarter.

TUI sends just under half a million sunseekers to Tunisia every year, accounting for around 3 per cent of its overall programme – but Foreign Office guidance now advises against travel to the country.

Mr Long said: “Our thoughts remain with the families whose lives have been devastated as a result of this horrific attack.”

But he added that “we don’t know” how long it will take for tourists to return to Tunisia in significant numbers. “Ultimately, we will not make a decision regarding the recommencement of our programmes until the Foreign Office advice is lifted and it is safe to travel again.”

Holidaymakers were also deterred from booking trips to Greece in late June and early July over concerns of its potential exit from the euro. Sales to German holidaymakers were hit, although bookings have recovered since then.

Rival operator Thomas Cook recently flagged up a £25m profit hit from events in Tunisia and Greece.

However, TUI’s UK business remains strong and it has managed “robust” overall trading, selling 86 per cent of its holidays for this summer, with Ibiza, Cyprus and Turkey in demand.

Underlying profits for the April to June quarter were up 18 per cent to €194m and the company expects to grow full-year profits by between 12.5 per cent and 15 per cent – at the upper end of its previous guidance. Its shares closed up 6.6 per cent at £11.14.

Shore Capital analyst Greg Johnson said: “Overall, we see this as a robust statement from TUI, when set against the geopolitical events in the period.”