Tour giant First Choice Holidays is to axe 10% of its global workforce, citing "challenging" market conditions following the terror strikes in the US.

The firm, which estimates it has lost �10m to the post-attack turmoil, is to cut 1,100 jobs, slim down its aircraft portfolio, and reduce tour capacity by up to 40%.

The moves are aimed at saving �20m a year in costs, and preparing the firm for a "new, challenging and uncertain" trading environment, a statement on Thursday said.

Up to half of the losses are expected to be from units in the UK, where First Choice operates 10 offices and more than 330 shops.

The firm, which operates in 13 countries and carried 5 million passengers last year, also hinted that further cuts may follow.

"A further exercise is being conducted which includes a detailed review of all operating and overhead cost lines," Thursday's statement said.

Cuts package

First Choice will introduce many of the cuts by broadening an annual slimdown implemented as the firm prepares for the quieter winter period.

Capacity on winter packages will be cut by up to 40% at two global divisions, including the Canadian unit.

"Given the close proximity to the US, the division is taking significant steps to cut the overhead base," the briefing said.

Programmes next summer will also be pruned, with UK capacity trimmed by one fifth despite little evidence yet of a booking slowdown following last month's attacks.

"The group continues to take a cautious approach to planning," First Choice said.

The firm's Air 2000 aviation business will, through lease expiry and aircraft return, reduce its fleet by six planes to 26 by next summer.

'Disruption costs'

The 28-year-old firm said it had been trading in line with forecasts until the terrorist attacks on the US.

But the firm estimated it has lost �10m to the "disruption costs and the subsequent effects" of the strikes, despite minimal exposure to transatlantic markets.

Travel firms covering US/Europe routes have been among the worst affected by the trade downturn of the last three weeks.

Chief executive Peter Long said the company restructuring would leave First Choice "well placed... to take advantage of the return to normal market conditions once they occur".

The announcement came soon after online travel agency Ebookers revealed it will axe up to one in five staff, after a "substantial" sales drop blamed on the affects of the terror attacks.