THE GERMAN owner of Thomson Holidays is to axe 2,600 jobs at the travel company, as part of a global restructuring programme.

TUI, which is based in Hanover, said its UK operations would bear the brunt of plans to slash 3,600 jobs across the company as it seeks to claw back sales in its struggling tourism division.

The changes are part of a €250 million cost cutting and recovery plan unveiled by the company today, following a string of poor results.

However, the shares fell 3.9 per cent to €15.42 in early trading in Frankfurt after the company said it would miss its earnings target for 2008. It now expects to record core earnings of between €450 million to €550 million, instead of a previous forecast of €700 million.

Michael Frenzel, chief executive, said he knew shareholders were "disappointed" by 2006, as he said the group would scrap its dividend for 2006.

As part of the recovery plan, TUI said it had placed an order worth €2 billion for 65 new Boeing jets. It will take delivery of the medium and long term jets between 2010 and 2013, and will replace aircraft currently leased by the company.

The company also ruled out a break up of the firm, which has featured on the wish list of some investors. It said it had no intention of demerging its shipping division, which has experienced difficult trading conditions.

Instead, it said it will set up a cruise joint venture with its US rival Carnival, in which it will take a 25 per cent stake by 2010. The duo would operate two cruise brands designed for the German-speaking holiday market, under Carnival’s existing AIDA Cruises and a new TUI Cruises brand.

TUI said it is anticipating "a considerable improvement in earnings" in its shipping division on synergy benefits and the non-recurrence of integrations costs. It added that it expects earnings at the shipping division to come in at €400 million to €500 million in 2008, compared with a previous forecast of €650 million.

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