First Choice Holidays is in talks with a number of parties, including rival MyTravel, over the possible sale of its package holiday business, it said on Monday.

Analysts said a deal was likely to be pitched at around 500 million pounds and would allow First Choice to develop its adventure and short-breaks businesses, while giving MyTravel plenty of scope for cost savings.

"The market has moved on. A lot of people do things for themselves and you've got a whole range of online travel agents in the market," said Panmure analyst Gert Zonneveld.

Package tour firms have been hit hard by competition from low-cost airlines and the Internet, and MyTravel came close to collapsing under the weight of its debts in 2003.

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