Thomas Cook on track as Europe shows signs of improvement

(Adds dropped phrase "in Continetal Europe" in paragraph 4)

By Neil Maidment

LONDON, March 31 (Reuters) - British holiday company Thomas Cook is confident of meeting its full-year expectations, buoyed by higher winter bookings and improved trading across Europe ahead of its key summer season, it said on Tuesday.

For the summer, when holiday companies make the bulk of their profits, Thomas Cook (Xetra: A0MR3W - news) said it had sold 54 percent of its holidays, 2 percent higher than this time a year ago, with tour operator bookings and average prices down 1 percent.

UK demand remained healthy, Thomas Cook said, with trading in Continental (Swiss: CONT.SW - news) and Northern Europe gradually improving.

Summer bookings in Continental Europe were 4 percent lower than a year ago, versus 6 percent lower when the firm last reported in February. Similarly the decline in Northern Europe improved from 7 to 5 percent.

The company said its winter season was 95 percent sold, with bookings up 1 percent and average selling prices down 2 percent.

Chief Executive Peter Fankhauser, who replaced Harriet Green in a surprise announcement last November, said the improvements in trade, combined with new products and cost savings would help offset industry pricing pressures and deliver growth.

"We continue to expect further growth in 2014/15, consistent with our expectations at our full-year results," the firm said.

Last Wednesday, rival TUI (LSE: TUI.L - news) said holiday sales for its winter season rose 1 percent, while holiday prices for the coming summer were also 1 percent higher, with summer bookings up 1 percent.

Thomas Cook, the world's oldest travel group, is facing a renewed challenge from TUI, the world's largest travel group which was formed from the merger of London-listed TUI Travel and German majority owner TUI AG in December.

In a tie-up that should give Thomas Cook a boost, it entered a partnership deal with China's Fosun International earlier in March, to help accelerate the development of higher-margin premium resort hotels.

Since the Fosun deal was announced, shares in Thomas Cook have risen almost 19 percent. Shares (Berlin: DI6.BE - news) in the firm were up 3.1 percent to 147.5 pence in early trade on Tuesday.

Thomas Cook, which is on average expected to post a full-year operating profit of 358 million pounds ($529 million), according to Reuters data, posts half-year results on May 20.

($1 = 0.6770 pounds) (Additional reporting by Sarah Young; Editing by Mark Potter)