* Winter 2009-10 UK bookings down 21 percent
* Q3 EBIT 102 mln pounds, vs mkt range 98-102 mln sterling
* Summer 2009 bookings in line with expectations
* Summer 2010 trading started positively
* Shares down 2.8 percent
(Recasts, adds shares, analyst, CEO comment)
By Matt Scuffham
LONDON, Aug 12 (Reuters) - TUI Travel, Europe's biggest tour operator, reported a sharp decline in winter bookings, overshadowing third-quarter earnings ahead of market expectations on Wednesday.
TUI Travel, created two years ago from the tie-up of TUI AG's travel division and Britain's First Choice, said bookings for the winter 2009-10 season were down 21 percent on the previous year in Britain. In the last four weeks, the trend had improved, with winter bookings down 6 percent.
Shares in TUI Travel, which have outperformed the FTSE All Share Travel & Leisure Index by 40 percent over the last year, were down 2.8 percent at 245 pence at 0839 GMT.
Rival Thomas Cook, which is due to give a trading update on Thursday, was down 2.1 percent at 231 pence.
"The surprise in today's statement is weakness in winter 2009 trading in the UK activities," said Deutsche Bank analyst Simon Champion. "This is an early stage for the period, but nevertheless may put some pressure on underlying margins."
TUI Travel said it had cut the amount of winter holidays on sale by 15 percent to adjust to falling demand.
It said it had taken a cautious approach to the season as winter holidays can be more discretionary for consumers because they are often second holidays following a main summer vacation.
"We anticipate market conditions will remain challenging and expect the later booking pattern to continue in the next financial year," said Chief Executive Peter Long.
TUI Travel reported a 57 percent rise in third-quarter operating profit to 102 million pounds ($168 million), at the top of market forecasts, which ranged from 98 million to 102 million, according to a Reuters poll of four analysts.
TUI said it was well placed to meet expectations for its current financial year to end-September.
The consensus forecast for TUI Travel's full-year operating profit is 425 million pounds, according to Reuters Estimates.
TUI Travel said the summer 2009 season was in line with its hopes, while summer 2010 had started positively in Britain.
TUI and rival Thomas Cook have reduced the number of holidays they sell by more than a quarter in the past two years, enabling them to raise selling prices and avoid offering heavy late discounts to fill empty slots.
This has helped them to increase their profits while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.
The performance of Europe's two biggest tour operators has been more resilient than the bigger hotel operators, who are more heavily reliant on corporate trade.
On Tuesday, InterContinental Hotels, the world's biggest hotelier, said a recovery for the hotel industry might be two years away. TUI AG, which holds a 51 percent stake in TUI Travel, reports third-quarter results on Thursday. (Editing by Will Waterman) ($1 = 0.6059 pound)