Thomas Cook today (14 December) reported the dramatic loss in the year to end of 30 September 2011, compared to £42m profit the year before.
The company has been hit by poor trading in the UK and the recent troubles in North Africa, which put tourists off travelling to popular destinations such as Tunisa and Egypt.
The group's results were hit by exceptional charges totalling £573m, which included write-downs in the value of its UK and Canadian business.
Thomas Cook said it will close 200 stores over the next two years, as part of its UK turnaround plans.
The troubled holiday provider had already said it expected to close 75 outlets following its merger with the Co-op's UK high street business. It will now close a further 125 over the next two years.
The £398m loss contrasts markedly with the relative health of arch rival Tui, which undertook a knocking press campaign, highlighting its competitor's woes.
In a further move to reduce costs, Thomas Cook has agreed to sell its 51% stake in Hoteles Y Clubs De Vacaciones (HCV) to Grupo Iberostar, in a deal which could net it £61m in cash.
The sale brings proceeds from Thomas Cook's £200m asset disposal programme up to around £120m, after earlier sales of hotel in Tenerife and Mexico.
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This article was first published on marketingmagazine.co.uk