MyTravel is still feeling the heat

BOMBED-out package holidays group MyTravel is still racking up huge losses after another tough winter, while trading in the summer season suffered a poor start this month.

Formerly known as Airtours, it has been through one of the more spectacular falls in the industry. But, despite debts still rising - up marginally so far this year at £621m - it remains in business pending what is likely to be a debt-for-equity swap which would as good as wipe out the interests of shareholders.

Investors in what was at one time a £2.4bn firm have seen the shares dwindle to all-time lows, opening today at 8p which values the group at just £39m.

Chief executive Peter McHugh, who has survived a huge clear-out of senior management, kicked off plans to restructure the balance sheet in March but said today the review is still at an early stage.

'We are not making any comment on outcome or timing,' he said. 'We have [banking] arrangements in place until May 2006 so, in that sense, there is no urgency. It's a work in progress. We need to be careful that we get it right.'

He reported pre-tax losses of £200m in the six months to 31 March after the group ended up £910m in the red in the previous full year. On a comparable basis, the group's operating losses were almost halved to £150m after good performances from its small operations in Scandinavia and Canada, offsetting a £165m loss from core UK operations.

'The market in the UK for summer 2004 continues to be challenging and margins continue to be under pressure, with a difficult start in May and further evidence that customers are booking later,' he said.

The reduced losses come after the company cut its aircraft fleet from 56 to 44 to match capacity with demand.

'We had misjudged the size of the market and invested too much in fixed assets,' said McHugh. But he denied the seismic shifts in the travel market - where a more empowered consumer delays booking a package holiday, if booking one at all - means long-term decline for MyTravel.

'The fastest growing part of the market is independent travel where people book their own flight and hotel,' he said. 'But, over the last five years, the package holiday has not diminished and still represents 50% of the market.'