TUI Travel reports jump in profit

The merger with First Choice generated cost cuts for TUI

Europe's biggest travel firm, TUI Travel, has said its full-year pre-tax profit rose 43% to �319.7m ($489.5m) as a result of cost cuts.

The group was created last year through the merger of German operator TUI AG and Britain's First Choice.

It said its profit margins improved after it cut loss-making flights and sold fewer holidays at higher prices.

It added that winter bookings were going well despite a 10% increase in average prices due to reduced capacity.

"Our customers continue to regard their main holiday as an essential, not a luxury, which they are reluctant to forgo," said TUI Travel's chief executive Peter Long.

He also said that it has seen promising signs in early trading for the summer of 2009 in a further indication that the company is resilient to the economic downturn.

TUI Travel plans to implement further post-merger cost-saving measures worth 175m euros (�146m), 16% more than its previous target.