Tour operators count the cost of Tunisia terror attack and Greek crisis

Global tour operators have started to count their losses from a recent terror attack in Tunisia and economic turmoil in Greece.

UK-based Thomas Cook estimates that its earnings before interest and taxes for the financial year ending in September would fall £25 million (Dh143.4m) because of the events in the two countries.

Its shares dipped 1.19 per cent to £1.24 in early trading.

For the third quarter ending last month, Thomas Cook swung to an operating profit of £3m from a loss of £42m during the same period last year, and it reduced its net debt by £111m to £392m.

For the year ending last month, it reported an operating profit of £163m.

In line with caution against travel to Tunisia from the United Kingdom’s foreign and commonwealth office, Thomas Cook cancelled all bookings to Tunisia until the end of October.

Last month, a gunman attacked tourists on a beach in the resort city of Sousse. He killed more than 40 people, most of whom were British.

Thomas Cook evacuated more than 15,000 guests on about 60 flights across third-party carriers such as Nouvelle Air and its scheduled flights on Thomas Cook Airlines.

“We estimate that the net impact of loss of business to Tunisia will be about £20 million, including the margin from cancelled trips, the impact of reconfiguring our summer flying programme and the cost of repatriating our customers to the UK,” the company said yesterday.

“We believe that there may be some continued adverse impact on the group’s FY16 results, in the event that foreign-office advice remains negative and demand does not return to former levels.”

Thomas Cook staff had contacted tens of thousands of customers to amend and rebook their holidays, said Peter Fankhauser, the company’s chief executive.

In Greece, customer demand declined during the period while it was uncertain whether Greece would remain in the euro zone. Although Thomas Cook had sold the holidays ahead of the crisis and bookings picked up once an agreement was reached, the events led to a higher level of discounting than anticipated.

As a result, it estimated that the Greek debt crisis would wipe £5m from fourth quarter earnings.

The impact on earnings is slightly higher than expected, said Stuart Gordon, a senior analyst at Berenberg Bank.

“Summer season is 81 per cent sold compared to 83 per cent last year, so well below, although recent bookings have improved,” he said. “These are weak numbers and we would expect the shares to be down.”

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