First Choice lifts cloud over travel sector

British tour operator First Choice brightened the picture for the holiday sector today after reporting an “encouraging” level of bookings for next year.

The industry has been rocked by the troubles of MyTravel but rival First Choice said in a trading statement that it expected to meet targets for the financial year to the end of October.

The company told the City: “Sales across the group for both the winter 2002/03 and summer 2003 periods are encouraging.”

It also reported a 36% increase in bookings since September 11 this year.

The confidence for the forthcoming seasons comes after a summer in which First Choice adopted a “prudent” approach in the face of tough market conditions.

The company cut capacity and costs and saw UK sales volumes for the summer period fall 11% behind last year, although First Choice said today that this was in line with expectations.

Volumes for forthcoming winter holidays are now only 3% behind last year with the figure for next summer running 2% ahead on this year and 2% down on the 2001 season.

In its statement, First Choice said it continued to see the need to keep a focus on tight cost control and “prudent capacity management” but that it still looked to the new financial year with “confidence”.

It added: “First Choice has a broad portfolio of businesses with strong growth potential.”

The update comes a fortnight after MyTravel – formerly known as Airtours - stunned the market with its third profits warning in five months.

Shares in the group have plummeted, although MyTravel’s problems have stemmed more from internal problems rather than poor customer demand.

First Choice has previously been touted as a bidder for MyTravel but it is thought the stricken group may be about to start talks with private equity houses about selling parts of its businesses to avert a debt crisis.

Shares in First Choice rose 5% to 119.5p following the update.