The group cut 1,100 jobs as the industry suffered in the wake of the 11 September attacks in the US.

On Tuesday, the firm said it had benefited from planning "prudently" for the summer, and had "resisted any temptation to be over optimistic about trading conditions".

A spokesman for First Choice said: "The business has responded well and we have been encouraged by booking trends."

'Early stage'

Despite its optimism, losses for the firm in the six months to 30 April grew to £59.8m from £46.1m for the previous half year.

First Choice chief executive Peter Long said: "We continue to see a robust level of bookings, have fewer holidays left to sell than the same time last year and remain confident of our full year outcome.

"Looking forward to next year, initial booking levels for winter 2002/03 and summer 2003 are encouraging, albeit still at a very early stage."

Earlier this month, My Travel, formerly Airtours, warned it was likely to end the year in the red, following the post-11 September slump.

First Choice shares stood 6p higher at 114.5p in early trade on Tuesday.