Belfast Telegraph

Sunday 20 April 2014

Thomson and easyJet curse cost of volcano

Thomson Holidays owner TUI Travel and budget airline easyJet have warned that the impact of Iceland's volcanic ash cloud had wiped up to £160m off profits.

TUI was forced to cancel 175,000 holidays and repatriate 180,000 customers during April, costing it around £90m in profits.

Meanwhile, easyJet - which has had to cancel more than 6,500 flights so far - said the disruption would lower its own annual profits by up to £75m.

Both companies do significant amounts of business in Northern Ireland.

The announcements came as a flight operated by budget airline Ryanair was forced to turn back to Belfast on precautionary grounds after a burning smell was noticed on the plane, which had previously been grounded to have traces of volcanic ash cleaned from its engines.

TUI - which experienced 12 days of disruption as a result of the ash cloud - said that while many customers chose to rebook later in the year it still suffered a "significant loss of contribution".

The company added that bookings recovered in May while the crisis had underlined the increased security of booking through a tour operator.

It also hopes a more tightly-targeted approach to no-fly zones following the closure should "cause substantially less disruption" in the event of further volcanic eruptions.

TUI's underlying pre-tax losses widened 10% to £361m in the six months to March 31, although it is still on course to meet expectations for the year overall.

Both TUI and easyJet, who said 850,000 of its passengers were affected, are seeking compensation from national governments over the unprecedented five-day closure of European airspace last month.

EasyJet was hoping for between £175m and £200m in profits this year but put the cost of the cloud at between £50m and £75m.

The Luton-based carrier now expects lower annual profits of between £100m and £150m based on current fuel prices and exchange rates.

The warning over the full-year impact of the disruption came despite lower than expected pre-tax losses of £78.7m in the seasonally weaker six months to March 31.