Thomas Cook said it had received multiple bids for its airline unit, but this was overshadowed by what Chief Executive Peter Fankhauser called a "difficult trading environment" despite a delay to Britain's exit from the European Union.
"With a lot of holidays left to sell across the market, there are high levels of discounting at this early stage of the season... This is putting further pressure on margins," Fankhauser told reporters, adding that a delay to Brexit from March 29 until October had brought no respite.
"There's no doubt that we have (had) a decline in consumer confidence during this whole Brexit phase in the run-up to March, but we have seen no material change to booking patterns in recent weeks since the delay to Brexit was announced," he added.
Thomas Cook warned that second-half underlying earnings before interest and tax would be below the same period last year and added it had agreed a 300 million pound bank facility to provide more liquidity for the 2019/20 winter season.
Shares fell as much as 23 percent in early deals to their lowest level since November 2012, taking the value of the company below 300 million pounds ($385 million).
By 1152 GMT they had pared losses to trade 17.4 percent lower at 19 pence. The cost of insuring corporate debt jumped, and credit default swap (CDS) markets implied a 96 percent probability of default over the next 5 years, according to Refinitiv data.
The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last minute deals, leading to two major profit warnings and talk of a need to raise funds.
Thomas Cook said the outlook for bookings across Europe was lower than last year. Germany and Sweden were impacted by economic weakness, with the latter also seeing a growing environmental movement against air travel.
The firm said that it saw stronger demand for travel to Turkey, Egypt and Tunisia but hotel costs were rising.
Thomas Cook wants to sell its airline business, which includes German holiday carrier Condor, to cut debt and allow it to invest in its core holiday operations.
Net debt rose to 1.25 billion pounds by the end of March from 886 million a year earlier. The 2022 euro-denominated bonds were down 14.9 cents at 51.5 cents in the euro at their lowest on record, according to Tradeweb.
Adding to pressure on the company, short-selling of its shares has surged recently. The volume of shares on loan has doubled since May 5, and is about nine times its level on Jan 1. Some 12.1% of shares outstanding are on loan.
"They need to jettison the airline, raise some cash and stop the bleed," one trader said.
Thomas Cook said it had received multiple bids for all and part of a business which consists of Condor, as well as British, Scandinavian and Spanish divisions. Its airline unit is faring much better than its tour operator business.
Lufthansa has said it wants to buy Condor with an option to acquire the remaining airlines, while Virgin Atlantic is also reportedly interested in part of the business.
The company said it made an underlying loss before interest and tax of 245 million pounds ($315 million) in the six months to March 31, compared with a loss of 65 million pounds in the same period a year earlier.
Thomas Cook also took an impairment charge of 1.1 billion pounds relating to a 2007 merger with British package-holiday company MyTravel.
(Additional reporting by Helen Reid and Josephine Mason; Writing by Alistair Smout and Georgina Prodhan; Editing by Mark Potter and Keith Weir)
By Alistair Smout