- Travel agency Thomas Cook Group warned its annual operating earnings would fall 19% in its second downgrade in two months, blaming heavy discounting at its tour operating business.

The company also suspended its full-year dividend.

Underlying earnings before interest and tax for the year through September were expected to fall to £250m, down from £308m on-year, the company said.

The fall would come despite revenue on a like-for-like basis rising 6% to £9.58bn.

Thomas Cook blamed the profit warning on several factors, including an £88m hit to its tour operating business, which it said was hurt by discounting in the late summer booking market.

A warmer-than-usual UK summer had prompted more people to consider staying at home than travelling, it explained.

The result would also include £28m of legacy and non-recurring charges.

The company's net debt had risen to £389m, due to delayed bookings and 'higher non-cash items'.

However, Thomas Cook said it remained compliant with its banking covenants and had headroom for future covenant tests.

'2018 was a disappointing year for Thomas Cook, despite achieving some important milestones in our strategy for transforming the business,' chief executive Peter Fankhauser said.

'After a good start to the year, we experienced a larger-than-anticipated decline in gross margin following the prolonged period of hot weather in our key summer trading period.'

'Our final result is expected to be around £30m lower than previously guided, due to a number of legacy and non-recurring charges to underlying EBIT.'

'Within this, profit in our tour operating business fell £88m as the sustained heatwave restricted our ability to achieve the planned margins in the last quarter.'

'The UK was particularly hard hit with very high levels of promotional activity coming on top of an already competitive market for holidays to Spain.'

'Despite the impact of the hot summer, our Northern European tour operator achieved a near record performance, albeit lower than that expected at the end of May.'

'Meanwhile, our Group Airline delivered strong growth in customers and profit, benefitting from increasing capacity in a turbulent European aviation sector.' Story provided by