Ash cloud hits travel firms' 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.

TUI - which experienced 12 days of disruption as a result of the 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 per cent 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 175 million and 200 million in profits this year but put the cost of the cloud at between 50 million and 75 million.

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-losses of 78.7m in the seasonally weaker six months to March 31.

This was driven by an 80m fall in its fuel bill, although partially offset by a 25m hit for the impact of heavy snow in December and January.