Struggling Thomas Cook sees underlying losses hit £262m

The 170-year-old company, which came close to collapse last year, said UK bookings for the summer were down 1 per cent on the previous year, slightly better than the 2 per cent decline it reported in March. A reduction in capacity means it has 19 per cent fewer holidays to sell than a year ago.

But the group’s underlying losses for the six months to 31 March widened by 58 per cent to £262.7 million, reflecting difficult trading conditions in most of its markets, particularly the impact of the Arab Spring on bookings to the Middle East and North Africa and poor trading in Canada.

In the UK, losses widened 9 per cent to £173.6m, including £14.9m losses from the Co-operative business it bought in October.

The firm also announced sale-and-leaseback deals on 17 aircraft, which will raise £182.9m to help strengthen its finances. Under the terms of a £1.4 billion debt package agreed with its lenders last week, Thomas Cook can keep the proceeds, at least until a scheduled “cash sweep” of the business next year.

But the transactions will reduce Thomas Cook’s earnings as a result of increased depreciation and the increase in finance costs. It estimates the move to leasing will cost it £10m a year.

Nick Batram, an analyst at Peel Hunt, said: “The sale-and-leaseback provides additional liquidity, but it is simply shifting the debt around. The increased interim loss reflects the scale of the challenge at Thomas Cook, as does the deterioration in the net debt position.

“We believe that it will be a long and painful way back for the group.”