MyTravel's latest share price

Analysts had expected the company, formerly known as Airtours, to post much smaller losses of about �600m.

The results are a further blow to the firm which was demoted from the UK's FTSE all share index on Wednesday.

Chief executive Peter McHugh said: "2003 has been an extremely poor year for MyTravel" but promised customers the firm was not going out of business.

"We have the cash to sustain ourselves through the rest of 2003 and into 2004 and we can see the benefits of the turnaround plan coming through," he told BBC Radio 4's Today programme.

They think they're going to make it; many people in the industry do not agree Jeff Randall, BBC business editor

"Even though the figures are dreadful, we are optimistic at this point."

Mr McHugh also said he could "absolutely guarantee" that holidays which have already been booked are not under any threat.

The reassurance that the company can survive sent the firm's shares up by a third to 12p by the close of trade.

Huge debts

The losses at MyTravel, formerly known as Airtours, were far heavier than the �72.8m loss the company posted last year.

More than half of this year's loss was down to �472.7m of exceptional charges, including the writing-down of the value of those holidays which failed to sell.

Q&A:Is the sun setting on MyTravel?

BBC Business Editor Jeff Randall dubbed the figures "pretty dire".

He added: "It's in a very difficult position. I would say that even the company's top management would admit, from here they're on a knife edge.

"They think they're going to make it; many people in the industry do not agree."

Andrew Monk, joint chief executive of Oriel Securities who used to work with MyTravel, said he believed that with such large losses banks and creditors would now probably decide to let the firm "trade itself out of trouble" rather than "decide to pull the rug" and lose their money

Survival battle?

There has also been a spate of boardroom resignations in recent months, including its former finance director and chief executive.

MyTravel companies Panorama Manos Bridge Travel Cresta Tradewinds Direct Travel Airtours Going Places Escapades

However, the company claimed it was "working towards a significant improvement in 2004 and a return to profitability in 2005".

The group says it has agreed a deal with creditors to refinance its �1.3bn of debt until at least 2006.

MyTravel says its cost-cutting drive is ahead of schedule and is now expected to exceed the �150m it expected to rake back by 2005, while disposals are set to raise more than �144m.

Future bookings

Looking ahead, the firm said company bookings for winter 2003/04 are currently in line with its expectations, and higher than last year.

However, it added bookings for summer 2004, so far, are down on 2003 but in line with the rest of the industry.

MyTravel has been battling for survival in a difficult travel market for the last two years.

The industry's trend away from package holidays and toward no frills independent travel has hit it hard, while the September 11 attacks and war on Iraq have also had a long term impact.

Misjudged?

But MyTravel has compounded the problems with a series of wrong judgements such as selling holidays too cheaply and not matching supply to demand.

Last year, it issued a string of profit warnings, which culminated in the resignation of former chief executive Tim Byrne in October 2002.

It won breathing space in September this year when its creditors agreed to reschedule �221.6m of debts which had been due for repayment next year to January 2007.