Thomas Cook, Europe’s second-biggest travel company, is reducing capacity as the head of its German business forecasts the tourism market will worsen through 2010. Next year “will be even more difficult than this year,” Peter Fankhauser said in an interview with Bloomberg at ITB Berlin. The tour operator wants to cut costs as bookings decline, he added.

Bookings had recovered in recent weeks after a “very bad” January, the most important month for summer holiday reservations, according to Fankhauser. The company may still meet its sales targets this summer if last-minute bookings come through, he said. The shares of UK-based Thomas Cook have gained 30% this year, resisting the bear market and slumping consumer demand after rivals’ bankruptcies last year reduced capacity and discounts in the industry.

Thomas Cook, and its larger competitor TUI, last month extended the discount period for early package tour bookings in Germany. Thomas Cook prolonged its offering of discounts of as much as 30% until the end of March. In Germany, Thomas Cook also allows customers of its main local brand, Neckermann, to cancel bookings as late as six weeks before travel time if they lose their jobs or have their hours reduced.

Fankhauser told Bloomberg that the tour operator has no plans to cut its workforce or to introduce shortened working hours for its 2,600 German employees. Thomas Cook is controlled by Arcandor AG, Germany’s largest department store owner. The company was formed in 2007 when Arcandor combined its tourism unit with the MyTravel Group to fend off competition from budget airlines and web-based travel agents.