TUI Travel’s losses increase but the airline says that it is still on course for growth this year.

TUI Travel, the UK tour operator which owns the Thomson and First Choice holiday brands, posted better than expected first half losses ahead of the holiday season, and remains on target to meet its full year profit predictions.

TUI, which is Europe's largest tour operator by revenue, reported an operating loss of £298m ($502.8m) in the six months to end-March, compared to the £289m it lost in the same period last year.

Analysts at Morgan Stanley predicted first-half losses of £305m for TUI, Reuters reported. This forecast factored in the impact of Easter falling outside the reported period, which was estimated at £25m pounds; Deutsche Bank estimated losses for the period to be £315m.

The firm said unique holidays grew by 3% and accounted for 70% of sales in the six months prior to 31 March. It said 38% of bookings were made online, a 4% increase on the same time last year.

Peter Long, chief executive of TUI Travel, said the group had seen a strong growth in online bookings. He said the group remains confident of delivering its predicted underlying profit growth of between 7 and 10%.

TUI's arch-rival Thomas Cook reports its six month results later this week.

TUI Travel shares dropped by 1.45% to 435.20p.