Losses at Thomas Cook narrowed in the first half of the year but the travel giant flagged that the UK is still causing it a headache.
The group posted a £303 million loss in the six months to March 31, which compares to a £314 million loss in the same period last year.
Revenue rose 5% to £3.2 billion, driven by growth to Egypt and long-haul destinations.
Thomas Cook boss Peter Fankhauser said that the firm continues to experience “margin pressure” in the UK, due to a combination of “hotel cost inflation in Spain, currency impact and capacity increases in the market”.
Shares were down over 3% in morning trading.
Nevertheless, the travel firm’s summer programme is 59% sold, with Thomas Cook seeing strong demand for Turkey, Greece and Egypt.
Bookings to Spanish islands are lower than last year following a decision to reduce capacity.
Mr Fankhauser added: “Thomas Cook has had a good first six months of the year, delivering improved financial results combined with tangible strategic progress.
“The work we’ve done in the past two years to improve customers’ experience of our flights and our holidays is bearing fruit with revenue growth of 5%, and a positive booking position for the summer.
“As we enter our busiest period, I see positive momentum across all of our markets.”