TUI Travel buoyed by strong summer 2008 trading

By Matthew Scuffham

LONDON (Reuters) - TUI Travel (TT.L: Quote, Profile, Research), Europe's biggest travel firm, said demand for summer holidays remained strong as it reported a lower first half loss, sending its shares over 3 percent higher on Tuesday.

The group, created last year from the tie-up of TUI (TUIGn.DE: Quote, Profile, Research) travel division and First Choice, made an underlying loss before tax of 294 million pounds in the six months to March 31, versus a 339 million loss the year before.

It said the improvement reflected strong performances in the UK and Nordics and a "significant turnaround" in France.

TUI Travel said summer 2008 UK mainstream sales are up 8 percent while it has 21 percent less product left to sell compared with the previous year. The group added that it has achieved "strong pricing" over the last six weeks.

Trading for winter 2008/9 has also started strongly, it said, with sales up 15 percent in the UK on 16 percent less capacity.

The group said it is seeing "no indication that customers are trading down or altering their holiday plans as a result of economic conditions".

TUI Travel said discussions are continuing with Germany's Lufthansa LHAGe.DE regarding a potential merger of Lufthansa's Germanwings airline with TUI's TUIfly.

The talks have been ongoing since January and have taken longer to reach fruition than sector followers had expected.