* Reiterates 2010 EBIT target of 480 million sterling
* Confident of meeting 2009 forecasts
* Business picked up over past 4 weeks
* Shares up over 6 percent
(Adds CEO, analyst comment, shares, background)
By Matt Scuffham
LONDON, March 19 (Reuters) - Thomas Cook, Europe's second-biggest travel firm, said on Thursday it is confident of meeting full year expectations and reiterated its earnings target for 2010, sending its shares higher.
Thomas Cook, in which Germany's Arcandor has a 53 percent stake, said its performance had strengthened for both the winter 2008/9 and summer 2009 seasons since its last trading update on Feb 12, with selling prices higher amid a flurry of bookings.
On a conference call with reporters, Chief Executive Manny Fontenla-Novoa said the group still anticipates hitting its target for earnings before interest and taxation (EBIT) of 480 million pounds ($683.8 million) in 2010.
"We're encouraged by the current trading, what's happening across both seasons, and what's happening across our major markets. Because of that, we still feel very confident about our abilities, even in these times, to hit our financial targets," he said.
Along with its main rival TUI Travel, Thomas Cook has responded to the recession by reducing the amount of holidays it has on sale, enabling it to increase average selling prices and avoid discounting heavily in the late bookings market.
Europe's two major operators began to reduce capacity following their creation through industry-transforming mergers in 2007.
They also benefited from the collapse of Britain's third-biggest operator, XL Leisure, which fell into administration last September.
"A huge factor in our sector is the consolidation that's taken place and the capacity that's been taken out. In the UK alone, there's been something like 25 percent of capacity taken out of two years.
"Thank God we consolidated and thank God we've taken that capacity out," he said.
Shares in Thomas Cook, which have outperformed the FTSE All Share Travel & Leisure Index by 24 percent over the past year, were up 6.6 percent at 243 pence at 1252 GMT, having earlier been as high as 252 pence.
MANAGING DOWN CAPACITY
"It remains apparent that the main summer holiday vacation remains a priority for many consumers," said Numis analyst Wyn Ellis.
"Thomas Cook and TUI Travel continue to manage down capacity in the face of declining demand and by maintaining a reasonable supply/demand equilibrium they are ensuring a positive margin outlook," he added.
Thomas Cook said winter 2008/9 bookings had improved significantly in the last four weeks, particularly in continental and northern Europe.
Bookings for winter 2008/9 were down 7 percent overall but up 12 percent over the past 4 weeks. The group had planned to take out 5 percent of capacity.
Average selling prices were up 4 percent on last year and load factors on departed flights remained at least at last year's levels, the group said.
For summer 2009, Thomas Cook said bookings remained behind the prior year but had also strengthened over the last four weeks.
Bookings overall were down 16 percent, with bookings for the last 4 weeks 10 percent lower. The group had planned to take out 11 percent of capacity for summer 2009.
Average selling prices for the season were up 5 percent.
The consensus expectation for 2009 EBIT stands at 393 million pounds, according to Reuters Estimates.
Fontenla-Novoa said the group had based its future assumptions on the likelihood of unemployment being around the 3 million mark in Britain.
On Wednesday, Britain registered unemployment over two million for the first time since 1997.
($1=.7198 Pound) (Editing by Hans Peters, John Stonestreet)