Middle East unrest knocks Cook for a further £35m

The business, which has already taken a £22m hit after the unrest in Tunisia and Egypt caused bookings to be cancelled, said operating losses increased 36 per cent to £165.8m in the six months to March 31.

The ongoing conflict in Libya meant holidaymakers were wary of travelling to North Africa and the firm said bookings to the continent would be at about 60 per cent of the level originally planned.

This means profits will take an additional hit in the group’s second half.

The UK market remains tough for Thomas Cook and its performance for the full-year is likely to be worse than last year, it warned yesterday.

However, UK bookings for its winter season, which runs until the end of April, were up one per cent after being boosted by the royal wedding as people made the most of four bank holidays.

Bookings for the summer period are flat, but profit margins are lower as the group keeps its prices down to attract cautious consumers.

Thomas Cook is carrying out an ongoing review of its UK business, which saw it make 500 redundancies last year, mainly at its head office in Peterborough.

The company said it is considering reducing its UK airline fleet as it looks to reduce winter losses.

As part of its restructuring the group closed its defined benefit pension scheme to its 19,000 employees in the UK and Ireland on March 31.

Despite the weakness of its UK market, the group said trading in continental and northern Europe was strong with encouraging summer booking levels.

Thomas Cook also blamed the widening first-half losses on Easter falling in its second half this year.

The group said that pre-tax losses increased by 17 per cent to £269.4m for the first half.

James Ainley, an analyst at Citi, said the flat UK sales figures for the summer season were disappointing, compared with a one per cent rise when the company last updated the market in March.