Thomas Cook has reported pre-tax losses of £485.3 million for the year to September 30th, up from £398.2 million the previous year.

The widening annual losses are partially due to reduced capacity and higher fuel costs.

Revenue fell to £9.5 billion from £9.8 billion, in what the tour operator described as a “difficult trading environment”.

Despite the loss, the company said the final quarter had been a “major improvement” on a year ago and added it was “optimistic about the future”.

“These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter,” said Harriet Green, who took over as chief executive in the summer.

The company also said it had reduced its debts by more than £100 million over the period, to £788 million from £891 million, largely through the sale of assets..

In May this year, the group secured a £1.4 billion refinancing package, giving it a further three years to repay its debts.