TUI Travel remains on course to meet full year expectations, despite reporting a widening of financial losses for the first half of financial 2010 today.

Europe’s largest tour operator – owner of Thomson Holidays – reported losses of £397 million for the six months up to March 31st, a ten per cent increase on the previous year.

Despite this, TUI reports an increase in bookings for the summer season and remains buoyant over future prospects.

“TUI Travel has delivered a first half performance in line with our expectations,” said Peter Long, chief executive of TUI Travel.

“Sustained improvements in demand over the last six months, coupled with the benefits of strategic actions we have taken, produced a strong improvement in profitability in the second quarter.”

Results have been hampered by disruption caused by volcanic ash in April – which impacted TUI operations for a total of 12 days.

TUI Travel said the crisis had forced the cancellation of 175,000 holidays – resulting in a “significant loss of contribution”.

First estimates suggest total losses could run to £90 million, with details expected in the third quarter results.

However, TUI also revealed it was seeking to “mitigate” costs through compensation claims to national governments for the closure of airspace.

“While the volcanic ash cloud caused unprecedented disruption in April, booking volumes have improved in May and our customers continue to place great value on their main summer holiday,” continued Mr Long.

“Throughout the crisis, we prioritised the needs of our customers, providing industry leading levels of support and making enormous efforts to repatriate stranded customers by all methods at our disposal.”

Reflecting the buoyant mood at the company following the recent upturn in bookings, the board proposed an interim dividend of 3.2p, an increase of seven per cent on 2009.

“Despite the impact of the disruption, I expect positive momentum in the second half of the year as strong underlying demand improves trading and merger synergies continue to be delivered,” added Mr Long.

“Excluding the impact from the volcanic ash disruption, I remain confident that we can meet the board’s original expectations for 2010.”

easyJet

Also reporting today, easyJet said the volcanic ash cloud had cost between £50 million and £75 million following six days of airspace closures in April.

The additional cost saw the airline lower its profit forecast for the full-year to between £100m and £150m.

easyJet reported a £78.7m loss for the six months to the end of March, against a £129.8m loss a year ago.