The company, Europe's second-biggest tour operator, said forward bookings had risen by about 8% over the past few weeks as the end of the war in Iraq boosted holidaymakers' confidence.

Thomas Cook chief executive Stefan Pichler said the increase had been closer to the 20% mark over the past two weeks.

He added that while sales for the full year may fall by up to five percent, profits before tax ad financial charges would come in ahead of last year's figure of 62 million euros ( �43.5m ; $74.4m), as previously forecast.

Thomas Cook's optimistic outlook for the full year stood in sharp contrast to quarterly figures showing that the firm had lost 136 million euros before tax in the three months to the end of April, compared with a loss of 97 million euros one year earlier.

Uncertain times

Sales for the first quarter fell sharply, tumbling 19% to 1.2 billion euros.

The travel sector has been hit hard this year by the war in Iraq and the Sars outbreak in Asia, with many holidaymakers deferring or cancelling their travel plans.

Thomas Cook's full-year results are also expected to get a boost from a cost-cutting drive which has seen it take eight planes out of its 87-strong aircraft fleet.

The firm said on Wednesday that it planned to mothball another four or five aircraft.

Mr Pichler also reiterated the firm's earlier denial of speculation that it had been in merger talks with Swiss-based rival Kuoni.

Analysts believe that while the travel sector is ripe for consolidation, heavy debts and an uncertain outlook have put most potential merger plans on ice for now.

Shares in Thomas Cook's owners, airline Lufthansa and retailer Karstadtquelle, were slightly lower in Frankfurt.