Thomas Cook has reported a fall in full-year profits after tough economic conditions and the ash cloud crisis hit summer trading. Europe’s second largest tour operator also revealed plans to cut more than 500 UK jobs due to the slowdown.

Pre-tax profit for the year to the end of September were £41.7m, compared with £45.1m the previous year. Revenue fell by 4 percent to £8.9bn.

The tour operator said the job cuts were made in management and support services positions in the UK, with 120 coming from positions the company decided not to fill.

The company will also upgrade its computer systems and renengotiate contracts with suppliers to bring down costs.

“Tougher-than-expected trading” in the UK offset “substantial” gains made in central Europe and the company’s Airlines Germany business, it said in a statement.

However, Thomas Cook said winter and summer bookings were encouraging.

“Winter bookings have got off to a good start and, although early in the cycle, summer bookings are developing well,” chief executive Manny Fontenia-Novia said.

He added that the company had streamlined its UK business resulting in “significant cost savings”.

“I am confident that the actions we have now taken to reinforce the UK business, together with continued progress on our strategic initiatives, leave us well positioned to make progress in the current year,” he said.
Russian deal

Thomas Cook had warned in August its full-year profits would be at the lower end of market expectations.

Last week, the company announced a joint venture with Russia’s Intourist.

It will take a 50.1 percent stake and pay $45m (£29m) in cash and shares, with an option to purchase the remaining shares in the joint venture over the next five years.