Shares in TUI Travel were down on the FTSE 100 in afternoon trading after the group said that unrest in Tunisia and Egypt could cost it £30 million in the second quarter.
In the first quarter ended 31 December 2010 TUI's revenue was reported as rising six per cent to £2.7 billion, however this was not enough to restore the group to profitability.
The group made a first quarter underlying operating loss of £84 million, although this was still an improvement from the loss of £107 million reported in the previous year.
TUI warned that the ongoing political unrest in Tunisia and Egypt could cost it as much as £30 million in the second quarter.
Peter Long, Chief Executive of TUI Travel, said, "The improvement in the first quarter result was primarily driven by continued delivery of our turnaround plan and final merger synergy benefits, as well as a better trading performance.
"We are closely monitoring events in Egypt and Tunisia and the safety of our customers is our primary consideration. Early indications are that customers are choosing to rebook to alternative destinations and we are taking action to remix our programmes in line with customer demand.
"The progress in the first quarter represents an encouraging start to 2011 and the forward booking position is good. We remain cautious, however, given the current economic and geopolitical uncertainty."
By 14:05 shares in TUI Travel were down 1.46 per cent on the FTSE 100 to 243.40 pence per share.