TUI Travel has announced a 5% year-on-year growth in profits to £287 million.

The growth for the year, which ended September 30, was largely driven by the group’s specialist sectors which grew 36% to £129 million while the mainstream sector dropped 12% to £162 million due to cost and yield pressures in the UK and Germany.

Despite the drop in mainstream, TUI Travel chief executive Peter Long said trading for winter 2007/08 and summer 2008 are both strong while UK mainstream trading is up 5% for winter and 11% for summer.

He added: “As we approach the key booking period for both Winter and Summer 2008, we are encouraged by our performance to date and the ongoing level of demand for our portfolio of package and specialist holidays.

“The integration programme continues to advance as planned, with excellent progress made in the UK and across other businesses. We are confident that the combination of organic and acquisition led growth, coupled with the synergy benefits arising from integration, will deliver superior returns for our shareholders.

“Furthermore, by delivering both underlying growth and synergies, we are building a platform from which we can deliver sustainable long-term earnings and margin growth.”

Long added the UK 5% trading growth for the current winter season is happening despite a 5% drop in volume. This is following capacity cuts in short haul for both brands – a 30% reduction in Thomson and 22% in First Choice.

Summer 2008 is looking stronger in the UK with load factors for TUI Travel up 4% although total capacity for next summer has been reduced by 25%. Overall this has led to a 4% drop in sales off 13% lower volumes.