Shares in TUI Travel have fallen sharply this morning following the release of the organisation’s financial results for the third quarter.

While profit at Europe’s largest tour operator increased one per cent to £103 million during the three months to June when compared to the previous year, revenue fell from £3.6 to £3.4 billion.

A fall in booking volumes – down ten per cent when compared to 2009 – was attributed to good weather in the United Kingdom encouraging people to stay at home and uncertainty about the impact of government cuts.

“The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained throughout the early summer period,” said TUI Travel chief executive Peter Long.

“This was particularly marked in the UK source market where trading was affected by further airspace closures, good weather and post election uncertainty regarding the emergency budget.”

Customers were also booking holidays later, explained TUI Travel, hitting revenue in what is usually a strong period for the tour operator.

Following the release of the result, shares in Europe’s largest tour operator fell by eight per cent to 206p.

Volcanic Ash

The figures also excluded the impact of volcanic ash disruption, which closed European airspace for several days earlier this year.

TUI Travel estimates the event cost £105 million, and impacted on almost 400,000 customers.

This is an increase of ten per cent on previous cost estimates.

“We are very disappointed that national governments and the EU are refusing to contemplate compensating the industry for an unjustified airspace closure that was entirely beyond our control,” a statement added.

However, early winter 2010/11 and summer 2011 trading has started positively, said TUI Travel.

Bookings for the seasons over the last four weeks are up four per cent when compared to 2009.