Travel firms' shares fall after flights to Sharm el-Sheikh are suspended
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Version 0 of 1. Travel company shares have fallen sharply after Britain suspended flights to the Egyptian resort of Sharm el-Sheikh. The move came amid fears that the crashed Russian airliner flight 9268 may have been brought down by a bomb planted by Islamic State. Related: Egypt plane crash likely to have been caused by bomb, says David Cameron Thomas Cook’s share price lost around 7% on Thursday, closing at 112p, wiping more than £135m off its stock market value, while shares for Tui, whose brands include Thomson, fell about 1% to £11.52. Analysts said the cost of refunding passengers and finding alternative holidays would hit company profits, although they said Tui routinely set aside provisions for such disruption, so was less likely to face unexpected losses. Abta, the travel agents’ trade body, estimated there were about 9,000 UK customers on holiday at the popular Egyptian destination. Thomas Cook has about 1,700 people in Sharm at the moment, with Egypt accounting for around 4% of its total business, analysts believe. The percentage for Tui is thought to be similar. Both companies said they had cancelled all flights and holidays to Sharm until 12 November. They said customers who were booked to fly out during the flights suspension would be refunded. Thomas Cook said in September it had seen a significant increase in the number of customers travelling to Egypt after a period of unrest during which the country became a less popular holiday destination. Greg Johnson, an analyst at Shore Capital, said the latest disruption could cost the companies about £20m or so each, based on previous situations such as the terrorist attacks in Tunisia. But he added: “It really depends on how long it goes on for.” If the situation went back to normal after 12 November the impact would probably be manageable, he said. “The issue would be if Egypt was off the agenda for, say, the winter, they would have to find short-term accommodation elsewhere and hoteliers would put up their prices, which would hit their margins.” But even if it cost Thomas Cook £20m, a £135m fall in its market value seemed “a bit extreme”, said Johnson. |