First Choice escapes the bloodbath in budget travel

First Choice yesterday allayed fears that the fallout from the "bloodbath" among low-cost airlines had hit its package holidays business by revealing it had fewer mainstream packages left to sell for this summer than a year earlier.

First Choice yesterday allayed fears that the fallout from the "bloodbath" among low-cost airlines had hit its package holidays business by revealing it had fewer mainstream packages left to sell for this summer than a year earlier.

Peter Long, the chief executive, admitted the mainstream summer market was "challenging", with the short-haul destinations served by the no-frills players the worst affected. But he said the group had been protected by its decision to cut capacity to countries such as Spain and Portugal and slash the number of flight-only deals it sells by more than one-third.

"Most of their [the low-cost airlines] problems are created by their over-exposure to markets such as Spain and the Balaerics. It's not spilling into the short-haul holiday segment," Mr Long said.

Asked whether he thought more airlines would collapse, he said: "I wouldn't be at all surprised." Michael O'Leary, Ryanair's chief executive, recently predicted a "bloodbath" among Europe's airlines as the fares war intensifies.

First Choice said bookings and margins across its four divisions ­ mainstream, specialist, activity and online ­ were in line with last year. Mr Long predicted that demand for high season holidays would match supply, disappointing those holidaymakers hoping for a last-minute deal.

He was speaking as the group unveiled interim pre-tax losses of £50.9m against £55.1m the previous year. Its decision to cut the number of holidays for sale in the low-season months of May, June, September and October by 10 per cent and to sell more exclusive packages, such as breaks in one of its Holiday Villages, helped to trim its losses.

Bookings for packages from one of its specialist tour operators, such as Hayes & Jarvis, are up 20 per cent for this summer, while bookings for activity breaks are 8 per cent stronger.

The group, which unveiled a new corporate logo, also rebutted concerns that it had been hit by the recent rise in the oil price. It said its hedging policy meant it had "minimal exposure" to the soaring fuel bills that have forced British Airways and Thomson Holidays to put a £5 surcharge on their flights and holidays.

Nigel Parson, a leisure analyst at Williams de Broe, said: "First Choice has avoided too high an exposure to the mass market and its niche specialist and specialist holidays are performing well."