Thomas Cook, Europe's No.2 travel company, reported strong trading as consumers continued to book holidays despite an economic slowdown stretching household budgets.
However, shares in the group, which had risen by 40 percent over the past month boosted by the weakening oil price, fell 3.5 percent to 236.5 pence by 12.52 p.m. (Malta time) today as some investors took profits.
Investec, which kept its 'buy' recommendation on the stock, cut its earnings forecasts.
"We recognise that uncertainty will remain on bookings for summer 2009 until the end of 2008/early 2009 and, after a 40 percent bounce over the last month, think that some profit taking is possible," said Investec analyst Joe Thomas.
Thomas Cook Chief Executive Manny Fontenla-Novoa told reporters the group, a unit of German retailer Arcandor, has so far seen no evidence of consumers cutting back on holidays or trading down.
"The main holiday is a 'must have' item for consumers. In our experience, people will cut back on all sorts of other things before they cut back on their holiday," he said.
The group, created last year from the tie-up of Arcandor's travel unit and Britain's MyTravel, said trading in the 2008 summer season is strong in all markets and early indications show bookings to be ahead of last year for winter 2008/9 and summer 2009.
Thomas Cook said it is on track to meet its expectations for the current financial year.The average forecast for pretax profit is 426 million euros ($638 million), according to Reuters Estimates.
The group said it has taken steps to increase flexibility for summer 2009 in capacity, accommodation, cost base, and fuel hedging. Fuel has been 92 percent hedged for 2008/9.
Thomas Cook and rival TUI Travel have been cutting capacity, stripping out unprofitable or less profitable lines, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.
They have also been adapting their product offering to sell fewer holidays to expensive euro-denominated countries such as Spain and Portugal and more in non-Euro countries such as Egypt and Turkey, which are rapidly growing in popularity.
Winter bookings to Egypt are 20 percent up year-on-year, with Turkey bookings up 13 percent.
ABN Amro kept a 'buy' recommendation on the stock but said it is "conscious that despite good initial bookings, concerns over the consumer outlook for 2009 are unlikely to go away".
Last month, German carrier Air Berlin scrapped its takeover of Thomas Cook's charter airline Condor, putting the brake on attempts to create a rival network to Lufthansa.
Thomas Cook said, while talks are continuing with Air Berlin about the feasibility of an alternative transaction, it is pursuing other options for Condor.
Sources familiar with the situation told Reuters last month that these could include a three-way merger with fellow charter airline TUI Fly and Lufthansa unit Germanwings.