Tour giant TUI allows for £40m disasters hit

The group has seen a reduction in bookings as a result of the unrest in Egypt and Tunisia, where it had to evacuate holidaymakers.

Chief executive Peter Long said the conflict in Libya plus the devastating earthquake and tsunami in Japan had also combined to put customers off booking trips abroad.

“The view we take now is you have got to allow £30m to 40m a year for events. That is the situation and we will absorb that within the business,” said Mr Long.

TUI Travel, which owns Thomson and First Choice, said it expects unrest in Egypt and Tunisia to knock about £20m off its second-quarter profit.

Mr Long said the group would absorb the impact in its profit and loss account and not as an exceptional item.

“Disruption to the programme is a normal course of business. The year it does not come we’ll make £30m to 40m more,” he said.

Last year TUI took a hit of £104m from the impact of the volcanic ash cloud.

Mr Long said the group has no plans to alert the market of any change in its profit expectations for the current year. Market expectations for earnings before interest and tax are between £447m and £493m.

Mr Long said that, leaving aside disruption from global events, demand for annual holidays is proving resilient despite the austerity measures. He said people are reluctant to sacrifice their summer holiday even when they are cutting back on other types of spending.

“We are not seeing a mirror of what is happening on the high street,” Mr Long said. “It is about choices, what you do with your disposable income.”

The group is hoping to see an uplift in bookings as customers take advantage of the extra bank holiday for the royal wedding on April 29 and two Easter bank holidays.