The recent political unrest in Egypt and Tunisia is expected to cost Europe’s largest operator Tui Travel as much as £30 million.
The group said it was “closely monitoring” events in Egypt after incurring costs of around £20 million so far due to the cancellation of holidays from Germany, France, Belgium, Holland and Scandinavia.
It continues to operate from the UK to the Red Sea but said that if UK government guidance changes to stop operations, it will suffer an additional cost of £5 million.
Repatriation and the cancellation of programmes to Tunisia have already cost Tui £5 million. The additional costs will be reflected in the company’s second quarter results.
“Early indications are that customers are choosing to rebook to alternative destinations and we are taking action to remix our programmes in line with customer demand,” Tui said while revealing a 21% reduction in underlying first quarter operating losses to £84 million.
Chief executive Peter Long said: “We are closely monitoring events in Egypt and Tunisia and the safety of our customers is our primary consideration.”
Discussing Tui’s first quarter ending December 31, he added: “The improvement in the first quarter result was primarily driven by continued delivery of our turnaround plan and final merger synergy benefits, as well as a better trading performance.
“The progress in the first quarter represents an encouraging start to 2011 and the forward booking position is good. We remain cautious, however, given the current economic and geopolitical uncertainty.”
The company said better trading in the UK offset costs from severe weather disruption in December, two cruise ships out of operation in dry dock and the introduction of more Boeing 757s for the winter.
Overall group revenue for the three months rose by 6% to £2,694 million helped by stronger mainstream holiday sales and pricing and online accommodation sales.
Increased room nights in the accommodation businesses, which saw a 19% year on year increase by LateRooms.com, helped drive up operating profits in the division from £1 million to £4 million.