TUI managed to increase operating profits by 57% to £102 million in the third quarter to June 30.
It said this was helped by £21m of synergy benefits from the merger of First Choice.
The company said demand for summer was as strong as ever, but customers are booking later.
Summer mainstream bookings in the UK are down by 12%, but this has been offset by 15% capacity reductions so that it has fewer summer holidays left to sell than last year.
TUI was less upbeat about winter bookings, which are currently down 21%.
However, it said trading in the last four weeks has improved to show a 6% fall in bookings.
Chief executive Peter Long said: “We anticipate market conditions will remain challenging and expect the later booking pattern to continue in the next financial year.
“We will continue to maintain a high degree of flexibility in our business model to allow us to alter capacity in line with market conditions.â€
UK trading profits were up by £8 million in the quarter, helped by the better timing of Easter.
But this was offset by the impact of the swine flu outbreak, which resulted in a £7 million hit in the third quarter.
By Bev Fearis
