* Hopes to mitigate impact through alternative bookings
* Greece and Spain seen as beneficiaries from Egypt unrest
* Confident Co-Op travel business will be cleared
* Q1 revenue up 7 percent to 1.8 billion pounds
* Shares up 2 percent
(Adds CEO, analyst comment, shares)
By Matt Scuffham
LONDON, Feb 8 (Reuters) - British travel group Thomas Cook said it expected unrest in Egypt and Tunisia to wipe around 20 million pounds ($32 million) off second-quarter profit with holidaymakers being advised to stay away from the region.
Europe's second-biggest tour operator, which has been taking around a million holidaymakers to Egypt each year, hopes to offset the impact by offering more holidays to alternative destinations such as Greece and Spain.
"We have got nine months to go in our financial year and we have got plenty of time to recover the 20 million and mitigate that impact," chief executive Manny Fontenla-Novoa told reporters on a conference call on Tuesday.
In the last four weeks, Fontenla-Novoa said British bookings to Greece were up 20 percent with bookings to the Balearic Islands rising 30 percent.
"The two destinations which are benefiting the most from these troubles are Spain and Greece. The main beneficiary is Spain, in particular the Canary and Balearic Islands. The second destination is Greece which is seeing a big comeback," he said. Thomas Cook said all travel to Egypt and Tunisia was currently restricted with the exception of travel from Britain to Red Sea resorts such as Sharm el Sheikh, which have been relatively unaffected by the troubles.
Rival TUI Travel said last week the unrest in Egypt and Tunisia could wipe up to 30 million pounds ($49 million) off its profits.
RESILIENCE
Thomas Cook said revenue rose by 7 percent to 1.8 billion pounds in its first quarter to end December. The group narrowed its operating loss by 10 percent to 37.3 million pounds.
Tour operators usually make a loss in this traditionally quiet quarter.
Thomas Cook said it had seen a positive start to summer trading with bookings from continental and northern European markets particularly strong.
Shares in Thomas Cook, which have lost nearly 10 percent of their value over the past week reflecting concerns over the impact of the unrest, were up 2 percent to 197.4 pence at 1000 GMT, valuing the business at 1.63 billion pounds.
"As with TUI Travel, Thomas Cook is showing good underlying resilience and its exposure to strong continental European source markets should prove to be a positive," said KBC Peel Hunt analyst Nick Batram, who rates the stock a 'buy'.
Thomas Cook said it was continuing to work closely with the Office of Fair Trading (OFT) with a view to obtaining clearance for its takeover of the Co-Operative Group's travel business.
Fontenla-Novoa said he was confident the deal would be cleared but was frustrated by the nature of the regulatory process. The OFT is now examining the takeover after the European Commission decided it only affected British businesses.
"We completed this deal in October and here we are at the beginning of February and I have got no certainty about even what the process is. From a business point of view I do not think that is right. I have no doubt we will get there but I have some doubt over the timescale," he said. ($1 = 0.6208 pound)
Editing by Jane Merriman