TOUR operator Thomas Cook has said the impact of unrest in the Middle East and North Africa would be worse than expected as holidaymakers avoided destinations in Egypt, Tunisia and Morocco.
Europe’s second-biggest travel firm said yesterday it expected around £35m to be knocked off its profits in the second half of the year, worse than its initial projection of £20m.
The impact has been compounded by challenging trading conditions in the UK, where Thomas Cook said it expected its performance to be worse than last year as inflation, unemployment and fears of higher interest rates hit sentiment.
The company has been offering cut-price deals in Britain to stimulate demand but still expects its results in the UK to be worse than last year. Chief executive Manny Fontenla-Novoa said: “It’s tough in the UK but you put on top of that what the UK’s facing -- a really tough economic climate. I certainly don’t foresee an upturn in consumer confidence right now.”
The group is looking to ease the drop in demand for trips to the Middle East by offering holidays to other destinations such as Turkey and Spain and has also targeted £30m of cost savings this year through a restructuring that includes more than 500 job cuts.
The group currently expects to offer around 60 per cent of its original programme of holidays to Egypt, Tunisia and Morocco but said that number could be cut further if the political situation does not improve. Thomas Cook said travel restrictions to Egypt and Tunisia had resulted in about 160,000 cancellations.
The cost of the disruption in the second quarter was £22m.
Rival TUI Travel’s chief executive Peter Long, who is due to report results today, has said the company is factoring in a hit of up to £40m each year from conflict and natural disasters to reflect the uncertain situation across the globe.