Thomas Cook, the travel agent, has axed 5 per cent of the holidays it offers British tourists in a bid to boost profit margins.

The company said it had reduced capacity on sale for this winter to enhance yields in a trading update this morning. The group, which earlier this year merged with MyTravel, had previously reduced holidays on offer for this summer by 5 per cent.

The discontinued holidays will mainly be short-haul, European breaks. Bookings in the UK, which accounts for 38 per cent of Thomas Cook's turnover, lags three per cent on the previous year. It also said it would continue to exit "unprofitable business" for next year's summer season.

It said this morning that its performance for the year would be in line with guidance issued in August, when the German-owned firm warned it faced squeezed margins due to rising fuel costs and air passenger duty.

Since the merger with MyTravel in June, Thomas Cook has cut 2,800 jobs as part of its cost-savings and lost John Bloodworth, head of the British and Irish business and former MyTravel chief executive, due to differences over management approaches.

But the company said there was a positive outlook for next year's UK summer season, as this year's bad weather prompted holiday-makers to book early.

It said that it expects record full-year profits from Northern and Continental Europe and its Airlines Germany operation. Winter bookings across Northern Europe are 13 per cent up on last year and selling prices have increased 7 per cent year-on-year.

Continental Europe has seen a 3 per cent increase in winter holiday bookings, but North America is only now beginning to pick up after a slow start.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax