MyTravel fights for survival

Britain's biggest package tour operator MyTravel has suffered one of the worst ever losses in the history of the European industry after tumbling nearly £1billion into the red.

Chief executive Peter McHugh was forced to concede the group may not return to profit until 2005 at the earliest after a dismal trading-performance in the UK and huge asset write-downs.

The former Airtours faces a frantic fight to convince Britons to book deals for next summer. Bookings are down 17 per cent on a year ago, although the group said sellingprices were higher. But this will be of little interest to City analysts, who were expecting pretax losses of only £600 million.

Pre-tax losses for the 12 months to 30 September came in at £910.9 million against £72.8 million.

And speculation will mount that the Civil Aviation Authority will once more ask for reassurances from MyTravel over its trading and financial position.

MyTravel has has been fighting for survival since a disastrous 2002, when it issued a string of devastating profit warnings and revealed a £50 million black hole in its accounts.

Last month it stunned the travel industry by revealing it had made a loss over the summer period, normally the most lucrative time for the group, after being forced to discount swathes of unsold deals.

Mr McHugh admitted 2003 had been "extremely poor" for the group and blamed huge operating losses of £325.4 million in the UK business, which is best known to holidaymakers through brands such as Cresta and Bridge Travel.

UK turnover fell 5 per cent to £2.3 billion.

While Mr McHugh blamed the Iraq war and the sweltering summer for part of the slide, he said poor management systems within the UK operation had affected its ability to judge the market.

He added: "It is clear that we had significantly under-estimated the extent of the UK restructuring and the scale of the turnaround required is longer than originally envisaged."

Only two years ago MyTravel was making profits of more than £62 million under charismatic chairman David Crossland, who built the business up from the humble beginnings of two travel shops in Lancashire.

MyTravel's shares hit a high of 371/2p in July when it secured a key £1.3billion refinancing package after months of exhaustive talks with its banks. They are now at 9p, valuing the business at £44.5 million.