The Sunderland-based travel company said the Government's decision to advise against non-essential travel and reimpose quarantine requirements for holidays to Spain "triggered the cancellation of hundreds of thousands of holidays".
In a statement, owners John and Irene Hays said: "We are devastated that after all of our efforts and the huge investment we've made we now face losing some of our valued employees, through no fault of their own.
"Following the decision to ban travel to Spain and the changes in furlough conditions coming at the same time, we have had no choice.
The four South Tyneside premises recently awarded four-star food hygiene ratings
Where is the cheapest petrol in South Tyneside? Eight stations to fill up at across the borough on August 8
South Shields and Boldon Asda community champions raise £18,000 for two good causes on their doorstep
South Shields manager and Sunderland legend Kevin Phillips thanks sponsors for backing club
South Shields brick company experiences record-breaking year
"We are also devastated for everyone who may lose their job and we will do all we can in consultations to help them, as we focus on retaining as many people as possible and rebuilding consumer confidence through our renowned friendly and knowledgeable customer service."
It comes just days after the firm, which bought Thomas Cook late last year after its collapse, said it was looking to expand its homeworking team, looking to take on self-employed staff who had no previous experience of the industry, adding to the 200 consultants it employs on that basis.
In that announcement, made on Thursday, July 23, it also said it was continuing to recruit experienced travel agents and apprentices for roles in shops across the UK and at the head office in Keel Square in Sunderland.
It said it had retained the majority of its 3,000 retail staff working from home during lockdown and had now re-opened the majority of its 650 branches around the UK.
The firm has also introduced a comprehensive insurance package which covers Covid-19 and other pandemics as standard as it looked to support customers as they were able to book up for foreign travel again.
The company, launched by John 40 years ago as he set up a desk in his mother’s shop in Church Street in Seaham, has previously said it was looking to bounce back from the coronavirus crisis with refund guarantees and UK breaks.