More than �230m was wiped off the market value of MyTravel after the UK holiday company admitted there were problems with its accounts.

There's still huge uncertainty regarding the extent of the black hole and that's reflected in the weak share price

Jeremy Batstone, NatWest Stockbrokers

The company, formerly called Airtours, is best known for its Going Places chain of travel agents.

MyTravel warned investors that profits could be �50m lower because of the accounting problems and a drop in sales.

The news sent the company's shares diving 82% to 13 pence in early trade.

The stock closed down 47p, or 62%, at 28.5p.

Second warning in two weeks

Despite the share slump, the firm was not widely thought to be on the brink of collapse.

"There's still huge uncertainty regarding the extent of the black hole and that's reflected in the weak share price," said Jeremy Batstone, head of research at NatWest Stockbrokers.

I have... instigated a comprehensive review of our commercial activities and financial processes

David Crossland, chairman

"But one has to remember the potential financial accounting problems are non-cash items."

He said the company was continuing to trade, had not defaulted on any debts, and had reported strong sales of summer 2003 holidays.

But shareholders took fright, not only because of the accounting problems but because Thursday's warning about profits was the second in two weeks.

After the last warning the chief executive Tim Byrne resigned.

MyTravel said that since that last trading update, on 30 September, "a number of additional matters have come to light".

Accounting hole

MyTravel said profits would be �12m lower than expected because trading in the UK at the end of this summer had been worse than anticipated.

And a further �8m would be wiped off profits because of a hole in the accounts.

MyTravel Group

MyTravel package holidays Late Escapes holiday business Going Places travel agents MyTravel and MyTravel Lite airlines North European and US travel businesses

As well as those amounts, the company said it might have to make revisions to accounting estimates.

Those revisions could take �15m-30m off profits.

The move comes days after corporate troubleshooter David James warned, in an exclusive interview with BBC News Online, that accounting errors were set to prompt a spate of "major crises" in UK firms.

In-house review

MyTravel chairman and founder David Crossland saw his 10% shareholding in the company fall on Thursday morning to about �6m from almost �40m the evening before.

He said he had instigated a detailed review of the group's commercial activities and financial processes.

Mr Crossland has delayed his retirement by at least a year to deal with the group's problems and Peter McHugh, the head of its North American operation, has been appointed chief executive.

Mr Batstone said shareholders should be reassured by Mr Crossland's decision to stay on.

"He's actually such a credible figure," Mr Batstone said.

"He owns a 10% interest in the company and it's in his interest to secure a turnaround."