Sunny side up at TUI and Thomas Cook despite woes

The sunny outlook from both companies comes in a trading update ahead of full-year results and follows an eventful summer.

With airlines such as XL and others tumbling out of business, firms that sell package holidays such as TUI and Thomas Cook are strongly in favour.

Both say that less competition has left them with fewer last-minute deals to sell, meaning they have been able to keep prices high.

For holidaymakers, the cheap package deal bought hours before departure could be a thing of the past. TUI has pushed up selling prices in the UK by 18% in the past seven weeks.

Thomas Cook chief executive Manny Fontenla-Novoa admits recent airline failures will help profits, but believes customers of failed airlines should get more help.

"We were quick to react when XL's customers were stranded, not only by assisting with the repatriation but also by urging the UK government to undertake an immediate review of consumer travel protection, update it and address the anomaly that seat-only customers are unprotected in the event an airline ceases trading," he said.

Thomas Cook has 24% fewer holidays on sale compared with the same period last year, with prices 15% higher.

Both companies have claimed to be near-recession proof, insisting that a foreign holiday in the sun is now regarded as a necessity by most families, who will cut back on most other things first.

Holidaybreak, which specialises in weekend breaks and adventure holidays, also said it is in line to meet City profit forecasts.

Chief executive Carl Michel says the economic environment is "difficult" but the business is diverse enough to thrive.

Sales are up 9% at the Education Division this year, 5% at the Hotel Breaks arm, and 3% at the Adventure Travel business.