Europe's travel industry is counting the cost of air traffic disruption caused by a volcanic ash cloud which forced thousands of flights to be canceled and is braced for more stoppages this month.

British travel company TUI Travel and low-cost airline easyJet said on Tuesday the disruption would eat into full-year profits but they hoped to recoup some losses through compensation claims lodged with national governments and the European Union.

Europe has been dogged for weeks by repeated shutdowns of air traffic since an erupting volcano under the Eyjafjallajokull glacier in Iceland started spewing ash in April.

European air traffic agency Eurocontrol said areas of higher ash concentration could move northeast on Tuesday afternoon, cutting across the Iberian peninsula and into southeast France, threatening fresh airspace closures.

TUI Travel, Europe's biggest package holiday company, said the disruption had cost it 90 million pounds ($133 million) after 175,000 holidays were canceled and the company had to help over 180,000 stranded holidaymakers.

Chief executive Peter Long said, however, the worst of the impact was over and he did not expect further disruption to have a material impact on earnings.

The disruption now should be minimal as a result of the new protocols. We have got very clearly designated no-fly zones which can be tracked by satellite and we can re-route our aircraft to avoid these areas, Long told reporters on a conference call.

EasyJet said the ash-related disruption would have a significant impact on its financial performance and cut its expectations for full-year profit.


Without the volcanic ash disruption our full-year pretax profit would have been somewhere between 175 and 200 million pounds but that has now come down to between 100 and 150 million, easyJet chief executive Andy Harrison told reporters.

The ash disruption has cost us between 50 and 75 million pounds and we'll have to see in what shape compensation claims come in, which is why we have given a reasonably wide range on the costs of the volcano.

EasyJet, which posted a smaller-than-expected first-half loss, has so far been forced to cancel over 6,500 flights, disrupting around 850,000 passengers and is currently seeking compensation from governments.

The biggest closure lasted for almost a week from April 15, causing about 100,000 flight cancellations, stranding millions of passengers and costing airlines more than $1.7 billion in lost revenue.

Not only airlines were hit by fallout from the volcanic ash cloud. Italy's Autogrill , the world's top airport retailer, reported a decline in April sales due to flight disruptions but confirmed its 2010 guidance.

Ferrovial-owned British airports operator BAA said the chaos, contributing to a 23 percent drop in April traffic at its airports, cost it around 30 million pounds.

However, Fraport , operator of Germany's Frankfurt airport, raised its 2010 outlook on Tuesday, brushing off concerns over further disruption.

Fraport said its operating profit would take a 20 million euro hit due to the ash cloud. Lufthansa , Fraport's biggest customer in Frankfurt, lost almost 200 million euros.

The German flag carrier's total April passenger number rose 3.7 percent, helped by last year's purchase of Austrian Airlines and bmi. Exluding those carriers, passenger numbers were down 16 percent.

Shares in TUI Travel were down 4.3 percent to 247.5 pence at 1107 GMT (7:07 a.m. EDT) with rival Thomas Cook , which reports first-half results on Thursday down 2.1 percent to 221.5 pence.

EasyJet were 4.6 percent lower at 421.9 pence. Lufthansa shed 2.4 percent to 11.39 euros. Fraport were down 2.6 percent to 37.395 euros, and Autogrill fell 2.5 percent to 8.495 euros.

(Addtional reporting by Maria Sheahan; Editing by Mike Nesbit and Dan Lalor)

($1 = 0.6758 pound)