LONDON: Shares in Thomas Cook soared in trading after the British travel firm announced a large reduction in annual losses as a result of deep cost-cutting.

Thomas Cook's share price rocketed 12.64 percent to stand at 172.56 pence in morning trade on London's second tier FTSE 250 index, which was up only slightly.

The surge came after Thomas Cook said net losses dropped to £199 million ($324 million, 239 million euros) in the year to the end of September from £585.7 million in 2011/12.

"I am delighted to report that the first 365 days in the transformation of Thomas Cook have been a great success," chief executive Harriet Green said in the group's earnings statement.

"We've taken out more cost more quickly than originally planned," she added.

The company has earlier this year announced plans to axe 2,500 jobs in Britain as part of its turnaround efforts after being plagued by the eurozone debt crisis, unrest in Egypt and as high fuel costs affected its planes business.

"Compared to last year, (current) winter bookings have been adversely impacted by social unrest in Egypt, which has resulted in significantly reduced demand to that destination," Thomas Cook said.

The company added that earnings before interest payments and tax (EBIT) came in at £13 million compared with a loss of £170 million one year earlier. It was the group's first operating profit since 2010.

Underlying EBIT, excluding exceptional items, stood at £263 million, above market expectations.

"The remarkable change of fortunes at Thomas Cook continued today with both operating profits and stock price surging higher," said Toby Morris, senior trader at CMC Markets.

"I doubt the most optimistic shareholder could have predicted such a run late last year when it looked like the tenure of the world's oldest travel firm was all but over."

Thomas Cook meanwhile added that annual group revenue edged up 1.3 percent to £9.315 billion.

Over the past year, the company launched plans to raise £1.6 billion in a major capital refinancing plan but decided against selling its loss-making French division.