Thomas Cook's share price crashed more than 20 per cent in early morning trading, after the firm was forced to slash its profit forecasts in the wake of a blistering summer heatwave.
The UK travel giant said it expected core earnings (Ebit) would be roughly £280m for the 12 months to the end of September, dropping about 13 per cent below a previous estimate of £323m to £355m range.
Its share price plunged 25 per cent in early morning trading to 59p.
According to Thomas Cook, higher than usual levels of discounting, coupled with increased competition and a fear that the hot summer will have a prolonged effect on winter holidays, has dented profits in what would normally be the firm's busiest business time of the year.
The firm said that customers spent June and July staying at home to enjoy the sunshine, putting off their holidays until later periods in August and September when companies such as Thomas Cook offer discounts.
The company also announced it will replace its chief financial officer (CFO) later this year.
AJ Bell analyst Russ Mould said: “Shareholders…got a nasty surprise this morning as its pre-close trading update was brought forward by a day so a stinker of a profit warning could be served up. Combine this event with the news that chief financial officer Bill Scott is to stand down after less than a year in post – never a development likely to reassure the market – and you have the perfect recipe for a big sell-off."
Boss Peter Fankhauser said the trading performance is “clearly disappointing”.
However, the company added that a return in popularity to holidays in markets such as Turkey, Egypt, Tunisia and Greece has driven a 12 per cent rise in total booking during the summer months when compared with the year before.