First Choice takes off as late holiday bookings rise

Travellers are booking late, but sales are on the up at package holiday giant TUI Travel.

The company behind First Choice today unveiled a 15% jump in underlying annual profit to £366 million, allowing it to up the dividend by 10% to 10.7p.

It has been cutting the number of available holidays to keep prices up but reckons customers are now feeling confident enough to take a second vacation. "We are getting very strong late bookings", says chief executive Peter Long. "Those that feel secure in their jobs are taking the view that life must carry on."

Egypt is popular for holidaymakers keen to avoid a strong euro.

Long says TUI is "well on the journey" to making cost savings of £200 million a year. But analysts warn that if it keeps cutting capacity, profits will eventually be damaged.