Business

Thomas Cook to close 200 UK branches

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Media captionSam Weihagen, interim chief executive: "We cannot have shops that are not profitable"

Thomas Cook has said it will close 200 UK branches over the next two years as part of its UK business turnaround plan - 125 more than previously announced.

Staff at 115 of the affected outlets are expected to learn their fate on Wednesday with the loss of 661 jobs.

News of the closures came as the travel firm reported a £398m ($616m) loss for the year to the end of September.

The world's oldest travel agency has been looking to cut its debts to restore the confidence of investors.

In November, it secured £200m of new financing, just days after seeing its shares plunge 75% in one day.

Its lenders, including Barclays, HSBC, RBS and UniCredit, agreed to provide the new facility until 30 April 2013.

Bad publicity

Thomas Cook has blamed the unrest in Egypt and Tunisia and floods in Thailand, all key holiday destinations for the company, for hitting sales.

"This has been a very challenging year for the group, despite which we still delivered an underlying operating profit of over £300m," said chief executive Sam Weihagen.

Business has also been further hurt by news of the company's financial troubles.

Rival TUI has run adverts under its Thomson brand claiming: "Another holiday company may be experiencing turbulence, but we are in really great shape".

Winter bookings from the UK are down 11% on last year. However, Thomas Cook was keen to highlight that bookings for next summer are 8% up from a year ago.

"Bookings outside the UK were broadly unaffected by the news of our refinancing, and in the UK bookings have recovered well," said Mr Weihagen.

Internet bookings

Thomas Cook's results were at the bottom end of market expectations.

They were hit by exceptional charges of £573m, which included write-downs in the value of its UK and Canadian business.

Shares in Thomas Cook fell about 3.5% in early trading on Wednesday after the results were released.

The company's shares have shed more than 90% of their value since March.

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However, the company said its UK "turnaround plan" was underway, which aims to improve profits by £110m a year.

On Tuesday, Thomas Cook sold Spanish hotel chain Hotels Y Clubs De Vacaciones (ICV) to Grupo Iberostar for 72.2m euros ($95.4m; £61m), as part of its move to sell assets to cut its debts.

The firm also plans to cut its aeroplane fleet from 41 to 35, and drop 500 hotels from its offerings.

Mr Weihagen told the BBC that, despite the planned UK store closures, the company still had a "very strong presence on the High Street".

Of the 200 closures, 75 had already been previously announced following Thomas Cook's merger with the Co-op's travel agency business, which had left it with 1,300 outlets.

Of the closures already planned, 22 were already in progress, affecting 109 employees. The 115 additional closures to be initiated on Wednesday come on top of this figure.

Mr Weihagen admitted that the business had been hit by people booking holidays on the internet, and did not rule out the possibility of further High Street closures as more business moves online.

"I think there will always be a need for shops. You can always discuss how many."

In addition to seeing rising online sales, Thomas Cook also reported record profits at its German and Scandinavian businesses.

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