First-half loss for First Choice

First Choice is relying less on traditional package holidays

New accounting rules led to bigger first-half losses at UK travel firm First Choice, but it said strong summer bookings would boost earnings.

Pre-tax losses for the six months to 30 April rose to £78.2m, from £66.7m a year earlier.

But First Choice said the new accounting rules would boost profits during the peak July-August period.

It has been cutting its package holiday capacity and focusing more on long-haul and specialist holiday destinations.

"As expected, First Choice has today generated its usual losses over the first-half period, complicated by the switch to the new accounting rules (IFRS)," said Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers.

"Although losses have been extended when set against last year, this appears to be due to the inclusion of various costs which would have once impacted later on under the old accounting rules."

Diversification

First Choice said its mainstream holiday revenues were up 4% for this summer, with long-haul revenues and bookings up 38% and 30% respectively.

Chief executive Peter Long said First Choice's strategy of moving its focus away from traditional package holidays was paying off.

"Having a diverse portfolio of businesses and a flexible business model means that we are not over-reliant on any one single destination or source market."

The company said this flexibility was vital during the winter period when bookings were hit by outbreaks of bird flu in the eastern Mediterranean, terrorism in North Africa and hurricanes in the Gulf of Mexico.

First Choice has identified North American student and escorted tours holidays as a growth market and has acquired a number of companies in this field.

The group's brands include Unijet, Falcon and Sovereign.