* Year operating profit 304 mln pounds, vs forecast 317 mln
* To close 200 underperforming shops, 500 hotels
* To invest more in online business
* Turnaround plans to boost year profit by 110 mln pounds (Adds CEO comment, current trading, background)
LONDON, Dec 14 (Reuters) - Thomas Cook reported full-year operating profit at the bottom end of forecasts and said it would close 200 underperforming shops, as it looks to cut debt and restore investor confidence.
Europe (Chicago Options: ^REURUSD - news) 's second biggest travel firm by sales, which secured a rescue package from its lenders last month, said the move was part of a turnaround plan that would enable it to deliver an annual profit improvement of 110 million pounds ($171 million).
Thomas Cook said on Wednesday trading had picked up since that agreement was announced with summer bookings in Britain up 8 percent. Its (Euronext: ALITS.NX - news) shares were up 2.9 percent in early trading.
The group's future has been in question since it asked lenders to come to its rescue twice in five weeks, sending its shares into freefall after it warned of a possible debt default.
"We have instigated significant management changes and implemented a turnaround plan in the UK to address our areas of underperformance," acting chief executive Sam Weihagen said.
Aside from closing 200 of its 1,300 shops in Britain, the company plans to reduce its airline fleet to 35 from 41, cut 500 underperforming hotels from its portfolio, and invest more in its online business.
Thomas Cook said operating profit fell 16 percent to 304 million pounds in the year to September. Forecasts were in a 306-321 million pounds range, with the average at 317 million, according to a Thomson Reuters I/B/E/S poll.
It had issued a strong of profit warnings this year leading to the departure in August of chief executive Manny Fontenla-Novoa.
In contrast, TUI Travel (Other OTC: TTVLF.PK - news) , the world's biggest tour operator, reported a better-than-expected full-year profit last week, boosted by strong online sales and demand for exclusive resorts.
Thomas Cook has been hit hard by tough trading conditions, especially in Britain, where its core customer base of families with young children has been particularly affected by tough economic conditions. It has also been impacted by unrest in popular destinations such as Egypt, Morocco and Tunisia.
It said the first quarter of its fiscal year had got off to a slow start with bookings hit by publicity surrounding the announcement it needed to borrow more money from its banks, before picking up since the deal with lenders was agreed.
The company's banks, led by Barclays (LSE: BARC.L - news) , HSBC (LSE: HSBA.L - news) , RBS (LSE:RBS.L - news) and UniCredit (MDD: UCG.MDD - news) , agreed last month to provide a new 200 million pounds credit facility.
The 170-year-old company, the world's oldest travel firm, said on Tuesday it was examining further ways to cut net debt which stood at 891 million pounds at the end of September, up from 804 million a year earlier.
Thomas Cook shares, which have lost over 90 percent of their value since March, closed at 14.82 pence on Tuesday, valuing the business at 132 million pounds. ($1 = 0.6436 pound) (Editing by Rhys Jones and Dan Lalor)
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