Thomas Cook has begun a “fundamental strategic and operational review” of its UK business after issuing a profit warning. In a trading update, it warned that it had underestimated the impact of the political unrest in Egypt, Tunisia and Morocco and the difficult trading conditions in the UK

The unrest in North Africa and the Middle East was also having a greater impact on bookings to popular tourist destinations such as Tunisia, Egypt and Morocco than was previously estimated.

Operating profits are about £40 million lower than a year ago for the first three quarters of its financial year. The company now expects full-year profits of around £320 million whereas previously the City had predicted a figure in the region of £380 million.

“As a result, it is now appropriate that we revisit the effectiveness of our UK business model,” said the update. “The UK’s new management team, which we announced at the time of the interim results, has begun a fundamental strategic and operational review of the business.”

Average UK selling prices for the summer are up 4% as customers opt for better value all-inclusive deals, such as packages that provide food. Despite the "difficult trading conditions", bookings by UK customers are up by 1% for the key summer season.

The number of holidays Thomas Cook has left to sell is 5% lower than a year ago, but this is partly because it has reduced the number of packages to UK consumers by 1%.