| 16.9°C Belfast

Thomas Cook counts cost of hotspot unrest

Tour operator Thomas Cook has warned that political unrest in travel hotspots Egypt and Tunisia would hit second-quarter profits by around £20m.

The group said that, while Government travel advice on Tunisia had improved, restrictions to Egypt were ongoing for all but the Red Sea resorts amid escalating anti-government protests.

Thomas Cook said it was switching its travel programme to other holiday destinations to help offset the financial impact.

Riots on the streets of Tunisia last month forced 3,000 British citizens to return home, while the uprising in Egypt has prompted the Foreign Office to advise against all non-essential travel to the cities of Cairo, Alexandria, Luxor and Suez.

Manny Fontenla-Novoa, group chief executive of Thomas Cook, said: "The situation in Tunisia and Egypt is fast-moving and our principal concern is for the well-being and safety of our customers.

"We continue to monitor the situation closely and contingency plans have been implemented to redirect our holiday programme to other destinations and help mitigate the financial impact."

Larger rival TUI Travel said last week that the disruption in the two countries could cost it up to £30m in lost earnings after it cancelled trips.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

Thomas Cook sells a million holidays to Egypt and an estimated 600,000 to Tunisia every year.

Thomas Cook said that, even before the riots, bookings to Egypt from the UK for the winter season were already down 4% due to higher air passenger duty charges to that region compared with those to Europe.

Its first quarter figures to December 31 showed revenues up 7% to £1.8bn and a 10% reduction in seasonal underlying operating losses to £37.3m after strong performances in Germany and northern Europe - and as it reaped the benefits of a cost-cutting drive.

It recently announced plans to axe 500 back-office roles in the UK to help cut costs by up to £50m.

Thomas Cook said it remained cautious over the outlook for the UK business, with consumer confidence shaky following Government spending cuts and tax hikes.

But its bookings for the summer 2011 season have picked up since New Year across all markets and the group is adding capacity.

It has increased capacity winter 2010/11 in the UK by 4% and by 3% for summer 2011.

Despite consumer uncertainty, UK summer holiday bookings are up 6% and selling prices up 5% - the highest of any of its markets.

The group said much of the increase in prices is down to a shift towards more expensive all-inclusive deals.