Struggling tour operator MyTravel says bookings for both summer and winter holidays are trailing behind last year's figures.

It still has 40% of its UK summer charter capacity left to sell compared with 49% at the same point last year, although the firm has made big reductions in capacity so there were fewer holidays on offer.

The chief executive Peter McHugh said that trading conditions made it difficult to comment with any certainty on the outlook for the rest of the year although bookings had picked up in the past two weeks.

"Following the cessation of major hostilities in Iraq we have seen a recovery in bookings in all our major markets.

"Although in some markets in northern Europe and North America the effect of the hostilities was more marked and there is ground to make up."

Accounting hole

MyTravel has been in talks with its banks about the company's finances and it said good progress was being made on a proposal to extend all its credit facilities to May 2006.

Last month it said it was cutting 2,000 jobs as part of its effort to stem losses.

The Rochdale-based company's business has been hit by aftermath of September 11 and by the war with Iraq, which put people off travelling.

Last year the company uncovered a 'black hole' in its balance sheet which meant profits came in much lower than expected.