But the group said demand remained lower than expected for some long and mid-haul destinations, following the Sars outbreak and war in Iraq.

Ebookers said it remained "extremely confident about the future", thanks to recent acquisitions and the expansion of its back office in India.

But its shares fell 3.5% in early trading as the group described the "very unstable travel environment".

"This summer's been dominated by overcapacity, uncertain demand, the weather (and) the knock-on effect of the Gulf war and Sars," said the group's chief financial officer Nigel Addison Smith.

Indian advantage

For the three months to 30 June, Ebookers reported a 67% rise in sales to �118m.

Its pre-tax loss fell to �0.9m against a loss of �1.7m in the same period a year ago.

Much of the efficiency was driven by the travel group's back office in India - what it calls its Business Process Outsourcing facility (BPO).

Ebookers put the estimated cost savings from the India BPO at �1.4m for the three month period alone - "This is the estimated cost if Indian functions had been carried out in Europe instead," said the group in a statement.

"We will now turn it from a cost centre, to a profit centre," said Ebookers' chief executive Dinesh Dhamija.

"When combined with the high internet growth of an online travel company, we believe that this gives ebookers a unique position to build on the profit potential of the group," added Mr Dhamija.

Online boost

Ebookers added that its acquisition of traditional bricks-and-mortar travel groups Travelbag and Bridge the World, had proved a success after converting them to online sales.

Travelbag's internet sales increased from 16% of all passengers in January to 35% in July.

Ebookers' target is for the group to derive 70% of its passenger bookings from the internet in the next 12 months.