High fuel costs, pressure on consumers pockets and the rise of internet travel bookings were all blamed by Thomas Cook for its £590 million full year loss.
The holiday company has endured a difficult few years, but can take comfort from the fact it has reduced its substantial debts by more than £100m in the past 12 months - from £891m to £788m.
Harriet Green, who took over as chief executive in the summer, said that focusing on efficiency, harnessing the power of technology and delivering on commitments were key to continuing the firm's battle to come out of the recession on top.
Pre-tax losses for the year to the end of September were £485.3m, up from £398.2m the previous year and revenue fell to £9.5 billion from £9.8bn, in what the company described as a "difficult trading environment".
Approximately 23m customers used Thomas Cook in 2012, helped in part by Northern Europe enjoying a strong end to the summer season.
But unrest in the Middle East and North Africa affected its popular holiday operations in Egypt and Tunisia.
2011 was a bad year for Thomas Cook with three profit warnings for its shareholders. In May 2012, it was offered a new refinancing package of £1.4bn, and a further three years to pay off its debts.
Green also insisted the fourth quarter results are trading in line with the same period last year; which is a major improvement on the first three quarters of 2012. But further changes will be needed, including reducing head count, cutting the company's exposure to airline costs and increasing its online business.
Nick Hood, an insolvency specialist at Company Watch, told Huff Post UK: “It’s good news that Thomas Cook's turnaround plan is bearing the first delicate fruits of recovery, but the group's balance sheet remains very fragile. Despite paying back over £100m from asset disposals, the remaining debt mountain of some £800m is still 150% of the shrinking net worth, well outside acceptable financial norms.
"The company is also carrying over £3bn of intangible assets, which is another worrying feature. We calculate health scores based on published accounts, comparing companies' actual results with seven key financial ratios on profitability, assets and funding to rate their financial strength. Unfortunately, Thomas Cook remains rooted deep in our warning area with a H-Score of only 5 out of a possible 100, where it has been ever since 2008.”
However, Charles Stanley's equities analyst Douglas McNeill was more positive, saying: "The interregnum between the Fontenla-Novoa and Green reigns was a dreadful year – but it’s in the past and the relevant question now is whether profits can be restored to a level commensurate with the group's enormous turnover.
"Early indications this morning are modestly encouraging, suggesting that full year 2013 revenue is shaping up slightly better than we had expected."Suggest a correction