Thomas Cook's UK division has announced it will shed 1,500 jobs around Britain, and ask staff to take pay cuts of up to 10 per cent as a result of the impact of the September 11 terrorist attacks on sales.

The job losses, equivalent to 12 per cent of the 12,500 British staff, will be both voluntary and compulsory. In addition, those earning £10,000 or more will be asked to take a pay reduction of between three and ten per cent. The move comes as part of a £140m cost saving exercise, which will span the next 12 months.

The cuts are in addition to more than 600 job losses and voluntary initiatives including unpaid leave and reduced hours announced last month.

Alan Stewart, chief executive of Thomas Cook UK, says these measures are unfortunate, but necessary, and blames very tough market conditions. 'Customers are not currently committing themselves for holidays later this winter and for next summer, and this is clearly having a significant impact on revenues,' he said.