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Last Updated: Friday, 31 August 2007, 09:17 GMT 10:17 UK
Fuel costs hurt Thomas Cook in UK
Thomas Cook sign
The enlarged group has a big share of the package holiday market
Travel firm Thomas Cook has said the performance of its UK-based tour business continues to be disappointing.

It said expensive air travel taxes on holidaymakers hampered its ability to raise prices as much as it would need to offset higher fuel costs.

The comments came as Thomas Cook said cost savings from its 2.8bn MyTravel merger, which will see 2,800 jobs lost, will be higher than originally thought.

In June, the German-owned firm said shop closures may hit 15% of its staff.

"The programme to integrate the former Thomas Cook and MyTravel businesses has continued to make excellent progress in the two months since our interim results," it said.

"We are increasingly confident that the synergies achieved will exceed the 140m euros ($191.2m; 94.8m) predicted in the prospectus for the merger."

Economy of scale

Many tour operators have suffered in recent times as the package holiday market, one of the industry's biggest earning streams, has been hit as more people plan their own holidays themselves through the internet.

This has driven high street travel firms to look for partners to increase market share and cut costs.

The tie up of Thomas Cook - owned by German firm KarstadtQuelle - and MyTravel created Europe's second biggest travel group with a 35% share of the UK package holiday market.

The firm said strong sales in Belgium, Holland and France would offset "challenging" trading conditions in Germany, its largest market, and Britain and enable the business to meet its profit forecast for the year.

Thomas Cook sees 'challenging' UK
27 Jun 07 |  Business
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26 Jun 07 |  Business
MyTravel and Thomas Cook merging
12 Feb 07 |  Business
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14 Dec 06 |  Business
MyTravel 'in First Choice talks'
26 Nov 06 |  Business
Weak spending hits Karstadtquelle
09 Aug 06 |  Business

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