Europe's biggest travel agent lost £300 million (Dh1.74 billion) from its market value yesterday after issuing a profit warning as customers avoided travel to the Middle East and North Africa (Mena).
Thomas Cook shares plunged as much as 30 per cent following the announcement.
"The Mena impact will be substantially higher than previously estimated, with our French business in particular seeing further reduced demand and lower margins during peak season for its key destinations of Egypt, Tunisia and Morocco," the company said.
Thomas Cook offers package deals for French tourists that include flights and accommodation to various destinations in the Mena region, such as Sharm El Sheikh, Luxor and Tunis. The company now expects profit for the year to be £320m, £60m less than analysts previously expected. The comparable profit for the previous year was £362m.
Simon French, the executive director for travel and leisure at the London broker Panmure Gordon, said Thomas Cook had hoped for a wave of late tourists booking after last month, but those orders never materialised.
The company also lost more than £22m in three months after the start of the political unrest as 160,000 holidays to Egypt and Tunisia were cancelled.
"Clearly, the Middle East and North Africa are popular destinations," Mr French said. "It will take some time for consumer confidence to return."
Mr French said one third of the profit shortfall was because of the unrest.
The scale of the downgrade, as well as analysts' predictions that Thomas Cook is now unlikely to pay a final dividend, were the main reasons for the sharp sell-off in the company's shares, he said.
Thomas Cook said "difficult trading conditions" in the UK business also contributed to the forecast profit shortfall.
"It is now appropriate that we revisit the effectiveness of our UK business model," the company said. "The new management team has begun a fundamental strategic and operational review of the business."
Its shares have lost about half of their value this year.