Europe's largest travel firm said booked turnover for the coming summer holiday season was up a mere 0.9 percent on the year. Booked turnover is currently down 2 percent in its key domestic market, flat in the UK and down 8 percent in France.

"The booking figures have continued to deteriorate since March," said DZ Bank analyst Raimon Kaufeld. "The development in Germany is dramatic. We expect that the utilisation problem that is looming here will lead to massive price reductions in Germany as of June, which will probably ruin margins for 2006."

But TUI insisted a steady recovery was emerging, with Germany, the UK and France showing uneven trends.

"In Germany, the travel business is expected to pick up substantially after the FIFA World Cup," which Germany is hosting from June 9 to July 9, it added.

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