TUI says the Icelandic ash cloud has knocked £90m off its profit

EUROPE’S biggest travel firm TUI Travel said disruption caused by the volcanic ash cloud had so far hit profits by around £90m as it reported widening first-half losses.

The group, in which Germany’s TUI AG has a controlling stake of 54 per cent, said yesterday it had to cancel over 175,000 holidays as a result of the widespread closures of European airspace.

It also provided welfare to, and repatriated, 180,000 customers who were stranded in resorts.

TUI Travel said its first-half pre-tax loss widened to £367m from £333m the year before.

Tour operators traditionally make a loss in the first half of the year which does not include the key summer period.

The group said demand for summer holidays had improved again in May following a slowdown after the disruption and that it was confident of meeting its expectations for 2010. Analyst expectations for the full-year range between £650m and £746m before interest, tax and depreciation (EBITDA).