Thomas Cook is preparing to bid for First Choice Holidays‘ mainstream division, according to group chief executive Manny Fontenla-Novoa.

Unveiling strong group financial results in Frankfurt on Thursday, Fontenla-Novoa said: “First Choice has confirmed it is in discussions with MyTravel and at least one other company for its mianstream package holiday division.

“We are a major player in the UK, in great shape financially and we can’t sit back and just see what happens. We have all the ingredients in place to take part in consolidation.”

Fontenla-Novoa, recently installed as head of Thomas Cook’s German parent group, reported a 2.8% rise in passengers to 13.6 million across the business for the 12 months to the end of October 2005.

Turnover rose 1.6% to Є7.78 billion, giving a record group profit before tax of Є206 million. The group only returned to profit 12 months ago after four years of losses.

Profits in the UK were up for the third year in succession to £87 million, compared with £83 million in 2005, despite a 1.8% fall in passenger numbers to three million.

Fontenla-Novoa blamed a series of familiar factors for the fall in UK sales – including the avian flu outbreak in Turkey, the World Cup, the hot summer and security concerns.

However, he claimed the company had out-performed the market in both the UK and Germany, and hailed an increase in the profit margin on UK sales to 5.1%. He said the UK market overall in 2006 was down 5.4% year on year.

The group’s financial position has been bolstered by a substantial reduction in debt and consolidation of its ownership in the hands of German retailer KarstadtQuelle, which previously held a half-share with Lufthansa.