Holiday stocks fall after UK warning over Egypt resort

By Sarah Young

LONDON (Reuters) - Shares in holiday companies Thomas Cook (TCG.L) and TUI Group (TUIT.L) fell on Thursday after Britain stopped flights to a major Egyptian tourist resort, raising the possibility of cancellations and a drop in demand for holidays to Egypt.

Britain said on Wednesday it believed there was a significant possibility that an explosive device caused the crash of a Russian plane in Egypt on Oct. 31, and advised against travel through the Red Sea resort of Sharm el-Sheikh.

Shares in Thomas Cook fell 5.8 percent to 113.9 pence in early trading, while bigger rival TUI lost 1.9 percent to 1,138 pence on the anticipated hit to their businesses.

British travel association ABTA estimated there were about 9,000 customers currently on holiday in Sharm, plus an unknown number of holidaymakers who had travelled there independently.

Thomas Cook and TUI, Europe's two biggest holiday companies, said in statements they had cancelled all flights and holidays from Britain to Sharm el Sheikh, a popular destination for Northern Europeans seeking winter sun, up until Nov. 12.

Both companies said customers who had booked during that time would be refunded.

"Sharm el Sheikh being closed is undoubtedly going to cost them (Thomas Cook and TUI) some money," said Numis analyst Wyn Ellis.

Thomas Cook had said in September it was seeing a pick-up in demand for holidays to Egypt, which hosted 14.7 million tourists in 2010 but has seen those numbers fall to around 10 million due to unrest since then.

British low-cost airline easyJet (EZJ.L) said it cancelled five flights to Sharm from Britain on Thursday.

(Reporting by Sarah Young, Additional reporting by Victoria Bryan; Editing by Mark Potter)