LONDON (AP) — Thomas Cook Group PLC, Europe's second-largest tour operator, posted better-than-expected full-year results yesterday after reducing capacity and enticing recession-weary customers with better value deals.

Thomas Cook also painted a positive picture for the year ahead, after largely shrugging off the travel deterrent of the swine flue virus, saying that bookings for next summer remained on track and that winter bookings had recently strengthened.

Net profit rose 46 percent to £15.8 million ($26.2 million), from £10.8 million a year ago.

Revenue rose six percent to £9.27 billion from £8.75 billion as the company sold more all-inclusive four- and five-star vacations, while at the same time using its buying power to cut its £3 billion annual spending on accommodation.

Underlying pretax profits came in at £308.2 million, broadly level with last year despite a consensus forecast of a three percent fall.

"While the late booking trend is still evident, our winter 09/10 trading position continues to improve and trend towards our planned capacity," said chief executive Manny Fontenla-Novoa. "It is still early in the summer booking cycle, however we are confident we can manage trading in line with demand."

Fontenla-Novoa said the results were "particularly pleasing" against the backdrop of recession and the swine flu outbreak, which cost it an estimated £8 million in Britain.

Thomas Cook shares were up 1.1 percent at 218.6 pence in mid-morning trade.

"Given the compelling valuation and attractive risk/reward profile we retain our buy recommendation and 310 pence price target," Panmure Gordon stockbrokers said in a note.