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Europe's biggest tour operator TUI Travel said today it remained confident of meeting expectations for 2010 with second-quarter trading showing a significant improvement on the first quarter.

The group, formed in 2007 through a tie-up between TUI AG's travel division and Britain's First Choice, reported an increased operating loss of £107 million (€122 million) in its first quarter to December 31st, after a £35 million loss the previous year.

Tour operators traditionally make a loss in the half year which does not include the key summer period.

TUI Travel said it had faced a tough comparative period, particularly for winter bookings, as the first quarter in 2009 had come before the worst impact of the recession.

The group said it had seen a significant improvement in profitability in the second quarter with improving trading trends in each of its major markets, and it had fewer holidays left to sell than at this stage last year. Bookings for summer 2010 had risen by 6 per cent in the UK and 40 per cent in the Nordic countries.

"Trading has been difficult, especially against a tough comparative period, but sustained improvements in demand over a number of months leave us more confident that the worst is behind us," said Chief Executive Peter Long.

Economic sentiment in the euro zone strengthened much more than expected in January and December while German unemployment rose less than forecast this month, pointing to continued economic recovery.

British consumer confidence rose in January but households showed less desire to spend than normal for the start of the year. The consensus forecast for TUI Travel's full-year pretax profit currently stands at £352 million, according to a Thomson Reuters I/B/E/S poll of 20 analysts.

Shares in TUI Travel were up 1.2 per cent to 261 pence at 8.06am.

Rival Thomas Cook gives a trading update on Thursday.