Holiday giants Thomas Cook and Thomson owner TUI Travel came under pressure today after gloomy comments from analysts on prospects for the tour operators.

A research note from Morgan Stanley said: "Demand is still weak, cost pressures remain and capacity getting harder to cut."

Shares in the two companies led the FTSE 100 Index lower - with Thomas Cook and TUI Travel down 4% and 2% respectively - as the broker also expressed concerns over rising debt levels.

Other headwinds for the groups could include higher fuel costs as well as low-cost carriers seeking to grab more of a share of medium-haul routes, it warned.

Analysts are also concerned that UK holidaymakers will be deterred from European destinations by the weakness of the pound against the euro. The pound lost 14% against the euro in 2008 and another 13% so far this year.

"Many Britons had yet to feel the 'euro shock' from the weak pound when they booked their 2009 holiday," it said.

Depressed economic conditions could weigh down on the family finances, while next summer's World Cup could prompt would-be holiday markets to just stay at home in front of the television, Morgan Stanley added.

"There is a lag between unemployment and holiday demand as the annual holiday seems to be one of the last things to be cut back. Many operators will only suffer the full impact of the economic recession this season," the note said.

Both companies undertook major mergers in 2007 before recession struck to combat declining package tour business due to competition from low-budget airlines.

Thomas Cook merged with the former Airtours business MyTravel, while TUI tied up with First Choice.

But the note added: "The mainstream tour operators have been aided by substantial merger synergies, which are now running out."