Bookings are up this year, Thomas Cook said

Europe's second-largest travel firm, owned by airline Lufthansa and retailer KarstadtQuelle, saw annual losses balloon to 251m euros (�169.5m).

Dismissing speculation that it might be broken up, Thomas Cook said it would embark on a tough cost-cutting drive.

The company said it planned to cut 10% of its 5,500 strong German workforce.

Its cost-cutting strategy also involves saving 100m euros in its air transport division, covering the charter airline Condor, and shutting down unprofitable travel agents

Market turbulence

Thomas Cook's internal problems have been exacerbated by a weak global travel industry hit last year by a sluggish world economy, the war in Iraq and the Sars virus.

"Major structural changes are not on the agenda," the company's new chief executive Wolfgang Beeser said.

"We are not selling Thomas Cook UK. Nor will we be disposing of our activities in France, nor any of the group's other main units."

Mr Beeser stressed that the general economic situation had improved, with market growth in 2004 expected to be between 2% and 4%, with bookings already up 3.7% on the previous year.

Thomas Cook's travel empire includes 33 tour operators, around 3,600 travel agencies, a fleet of 83 aircraft and a global workforce of about 26,000.

Last June, a press report said rival group Kuoni had been in merger talks with Thomas Cook.