Tui Travel has revealed, in a third quarter trading update this morning, the ash airspace closures in April and May cost it £105 million .
The travel giant estimated 400,000 customers were affected by the closures and that the recent good weather and economic uncertainty further hit trading in the UK.
Among all its source markets booking volumes were “strong” in the third quarter to June 30, Tui said in a statement, except the Netherlands and the UK, where an early summer downturn in trading was particularly marked.
The UK saw bookings volumes decrease 2%, compared to increases in other markets including Germany (21%), Belgium (15%), the Nordics (14%) and France (5%).
Peter Long, Chief Executive of Tui Travel PLC, said: ‘‘The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained throughout the early summer period.
“This was particularly marked in the UK source market where trading was affected by further airspace closures, good weather and post election uncertainty regarding the emergency budget.
“All of these factors have had an impact on consumers’ booking patterns. Consequently, the booking curve has shortened and the mix of lates market sales for Summer 2010 has increased.
“The higher than expected proportion of sales in the lower margin lates period will inevitably affect UK profitability.
“Additionally in Germany, although volumes have been good, there is continued price pressure in commodity segments.
“When we take the later booking curve and the adverse impact of foreign exchange translation into account, we believe that the results for the year will be at the lower end of the range of expectations.
“Furthermore, it remains difficult to predict how the later booking pattern will change over the next 12-18 months in the light of the current economic environment.
“We are, therefore, taking a more prudent view of the outlook, including the timeline for the delivery of our margin roadmap.
“Nevertheless, I have a strong belief that our continued focus on differentiated product, turning around underperforming businesses and growth initiatives will enable us to achieve our medium term margin targets”.
Ash costs
How much did the crisis cost major operators and airlines?
> Virgin Atlantic reported a cost of £30m
> Ryanair reported €50m
> EasyJet reported £65m
> Thomas Cook Group reported £70m
> BA reported £100m