Tui Travel faces a hit of up to £30 million as a result of the political unrest in Tunisia and Egypt. The company said an impact of between £25 million and £30 million on the second quarter of its financial year was expected, a level it said that was “in line with expectations”.
This compares to an estimated £20 million cost to rival Thomas Cook revealed earlier this week. Tui has shifted capacity to Spain, Greece and Turkey while ensuring prices of holidays to Tunisia and Egypt are on offer at “exceptional value” – with cuts of up to £300 on packages to Sharm el Sheikh.
However, outside of these destinations, summer bookings from the UK are 1% down since the company’s last update on February 3, a position it said was satisfactory given geo political issues.
Describing underlying overall summer trading as “satisfactory”, the company said in a trading update this morning that bookings for its differentiated holiday product were up by 18% from the UK.
But Tui said that “recent booking volumes are ahead of the prior year in all markets with the exception of the UK and France which were the two markets most affected by the [Egypt and Tunisia] situation.”
Winter business from the UK was flat as of March 27 over the previous year. The company has introduced fuel supplements in certain source markets including the UK and Germany to mitigate rising fuel prices.
“Jet fuel costs account for approximately 10% of our cost base and at current market rates, we estimate our fuel costs would increase by circa 30% for 2012,” the company warned.
Chief executive Peter Long said: “Since our last update, trading has been in line with our expectations against a tough comparative period. Following the political events in Egypt and Tunisia our experience has been that customers continue to want to go on holiday with us, albeit to alternative destinations.
“The flexibility we have in our business model has allowed us to actively re-shape our programmes across all our source markets to satisfy this demand and we have moved significant capacity to a number of other destinations including Spain, Greece and Turkey.
“We are also working closely with our suppliers in Egypt and Tunisia to ensure that the programmes which are on sale offer extremely good value for our customers. We have very few holidays left to sell for the winter.
“As we approach the summer season, having re-shaped our programmes and in the light of recent geo political events, we are pleased with our trading particularly for differentiated products where demand is high and which tend to achieve higher margins.”
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