TUI could suffer £30m hit from the unrest in Africa

The company, Europe's biggest tour operator, said cancelled holidays to the riot-hit countries plus the cost of bringing people back home could hit its second-quarter results by 25m to 30m.

It expects the loss of holidays to Egypt to hit profits by at least 20m and the impact from Tunisia to be at least 5m.

TUI chief executive Peter Long said: "We are closely monitoring events in Egypt and Tunisia and the safety of our customers is our primary consideration."

Violent demonstrations against the government in Egypt over the last week followed similar action in fellow North African country Tunisia.

Hundreds of British citizens fled both destinations as the disruption unfolded.

The warning came as TUI posted a pre-tax loss of 134m in the three months to December 31, compared to a 166m loss in the same period last year.

The company said it had cancelled trips to Egypt from markets including Germany, France and the Netherlands, but it is still operating holidays to Red Sea resorts from the UK.

This is in line with advice from the British Government, which has said it is monitoring the situation.

If the company is unable to operate holidays from any other markets for the rest of the winter it will cost TUI at least 20m.

If it has to cancel holidays from the UK, this would rise to at least 25m.

The company, which also operates tour operator First Choice, said early indications suggest customers are choosing to re-book to alternative destinations, and it is taking action to "remix" programmes in line with demand.

In Egypt, protesters are demanding that President Hosni Mubarak, who has ruled for 30 years, step down immediately. They have clashed with supporters of the president on the streets of Egyptian cities, including the capital Cairo.

Earlier in the month, similar scenes were witnessed across Tunisia, which led to the ousting of President Zine El Abidine Ben Ali.

Last week, TUI said booking volumes for near-term departures since its previous trading statement in early December were down one per cent as Arctic conditions shut off British airports and stopped would-be holidaymakers visiting its shops.

The company said total revenues were up six per cent in the first quarter to 2.69bn.

Broker Numis Securities cut its full-year underlying earnings forecast by 30m to 446.7m following the update.

Numis analyst Wyn Ellis said he had "little confidence" in the trading outlook, particularly in the UK.

Shares in TUI Travel, which have risen nearly 25 per cent since mid-November on hopes that TUI AG will bid to buy the business outright, dropped 1.58 per cent last night to close down 3.90p at 243.10p.

"The short-term impact from the events in North Africa is overshadowing the underlying strategic progress that is being made at TUI Travel," said Peel Hunt analyst Nick Batram.

"We still see a potential bid from TUI AG as a strong possibility, and this should limit the downside."

Group narrows operating loss

TUI Travel said its underlying operating loss in the quarter to the end of December narrowed to 84m from 107m in the same period the previous year.

Tour operators usually make a loss in this traditionally quiet quarter.

Revenue rose six per cent to 2.7bn, driven by demand for specialist holidays.