The company, whose brands include Airtours and Going Places, made a pre-tax loss of �618m ($1bn) in the first six months of the financial year.

But it said it had signed a �1.3bn refinancing deal with its lenders which would allow it to turn the business around.

MyTravel said that war in Iraq and uncertainty about the group's financial position has contributed to its poor performance.

Impossible to predict

Last autumn the company uncovered a 'black hole' in its accounts and in February the founder and chairman, David Crossland, left.

The tour operator said it had reduced the number of holidays available by 12% to try to limit the effect of a downturn in tourism and a drop in demand.

Even so, the number of bookings was 5% lower than last year.

Chief executive Peter McHugh said the agreement with the group's bankers would provide stability to MyTravel, its customers and its staff.

He said that recent booking trends were generally encouraging but it was impossible to predict what would happen in the peak summer period.

And he warned: "We do not expect to fully recover the operating losses suffered in the first half."

The group made an operating loss of �591m in the six months to the end of March.