The group, which also owns First Choice, said it is outperforming the UK market and it has seen strong online growth.
The group made an underlying operating loss of £317m in the six months to the end of March, against a £307m loss in the 2010/11 period.
Tour operators traditionally make a loss in the first half of the year, which does not include the key summer period.
First half revenues rose five per cent to £5.44bn and the group said it is on track to meet expectations for the full year.
TUI said overall trading for summer 2012 is good with booking volumes well ahead of last year.
Chief executive Peter Long said: “We have seen improved summer 2012 trading performance in all other mainstream markets except France which remains difficult.
“Given the challenging economic environment, we remain cautious. However, overall trading performance continues to be in line with the board’s expectations.”
TUI has benefited from the difficulties experienced by main rival Thomas Cook, which issued a string of profit warnings last year before securing a three-year funding lifeline worth £1.4bn last week.
TUI said summer bookings are being driven by demand for holidays exclusively available through the company.
Exclusive holidays accounted for 62 per cent of UK bookings over the winter, up 12 percentage points on the prior year, while the proportion of holidays sold online increased to 47 per cent compared with the previous winter.
Wyn Ellis, an analyst at brokers Numis Securities, said “there are grounds for optimism”.
He said there is “increasing evidence that TUI is benefiting from its enhanced competitive position versus Thomas Cook and that the strategy of more differentiated product is delivering”.
Simon French, analyst at Panmure Gordon, said further market share gains may be limited now Thomas Cook has secured a significant refinancing deal.
TUI’s performance has been held back by its French market, which has seen a steep decline in holidays to North Africa although there has been a recent pick-up.