Bargain hunters looking for last minute deals on summer holidays are one of the reasons for falling profits, according to TUI Travel, the owners of Thompson Holidays. The group also blamed the disruption caused by the volcanic ash cloud which drifted into European airspace earlier in the year for a drop off in sales. The disruption cost TUI £105 million.

The World Cup and the surprisingly good weather at the start of the summer were also blamed for a lack of package holiday bookings. The current trend towards later, cheaper holiday bookings will probably mean that TUI will not achieve its aim to hit an average profit of 4.6 per cent on all holidays by 2012. According to Deutsche Bank, the ambition to do this might have to be pushed back by a year.

Paul Bowtell, the company’s financial director, said that he saw no reason for an immediate shift back to the trend of earlier holiday bookings. He added he was confident that booking patterns would eventually return to a more normal state.

TUI said that, mainly because of the volcanic ash cloud, its pre-tax losses for the first three-quarters had jumped to £540 million compared to £411 million for the same period last year.

TUI’s announcement that operating profits would end up being at the lower end of predictions for the full year caused shares to drop by almost 10 per cent. Chief executive, Peter long, said in the present economic climate it was almost impossible to say when the trend for last minute bookings would end.