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Iceland ash cloud batters airlines

London - British airlines and travel companies are losing tens of millions of pounds a day from Europe's airspace paralysis, increasing the pressure on officials to give the all-clear for planes to fly again.

The closure of most of Europe's airspace because of a huge cloud of ash from an Icelandic volcano has cost Britain's airlines well over £100m so far, analysts say.

"I think this is costing British Airways somewhere in the region of £20m a day in revenues and about half that on a profit level because they won't have to be paying fuel costs, route charges or handling fees," said Davy Stockbrokers analyst Stephen Furlong.

"It will be less for budget carrier airlines because their bottom line is less and they have lower fixed costs but there's no real end is sight."

Low cost airline easyJet, which has cancelled all flights in affected areas until Tuesday afternoon, is losing around £7m a day in passenger revenues.

Officials hope to significantly increase flights at the start of Europe's new working week on Monday and the EU summoned ministers for talks as pressure builds for a solution to the 5-day-old air travel crisis.

'Unlikely to stimulate consumers into booking'

Europe's biggest travel firm TUI Travel said the crisis had so far cost it around £20m in lost revenues and that its estimated daily costs would run at £5m to £6m thereafter.

The group said it was working with other tour operators and airlines to ensure that both regulatory authorities and governments across its source markets permit the resumption of flights as soon as possible.

KBC Peel Hunt analyst Nick Batram said the cost for rival travel firm Thomas Cook is likely to be similar, adding that the impact on summer bookings is a concern.

"My concern is who is going to go out and book a summer holiday now? Scenes of empty airports and stories of the volcano eruption potentially lasting years are unlikely to stimulate consumers into booking," he said.

The fallout hit airlines' and travel companies' shares on Monday with BA down 3% and easyJet 3.3% lower by 08:10 GMT. TUI Travel and Thomas Cook were 3.1% and 3% down, respectively.

TUI Travel said that, on Sunday, it had about 100 000 customers who were due to have returned home from holiday and that, in the UK, 90% of customers who had been due to go on holiday but whose flights were cancelled had chosen to re-book for a later date.

- Reuters

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