People are waiting longer to book holidays, says MyTravel

The firm revealed it had narrowed its pre-tax loss to �199.6m ($364.5m) for the six months of the year, from �617.9m for the same period in 2003.

The group is currently struggling to manage its debts after a disastrous expansion drive and accounting errors.

Chief Peter McHugh said the turnaround of the business is "well underway" but may take longer than expected.

Mr McHugh added that the level of losses remained too high for the winter period.

High costs

The UK division had a "difficult start" in May with further evidence that customers were leaving their bookings until later.

Although there is still more to be done, we are ahead of schedule on delivering the cost savings and believe that they are now likely to exceed the target of �150m in 2005 Peter McHugh, MyTravel

Travel firms are still fighting to recover from a drop in tourism during the recent economic downturn - which has been exacerbated by terrorism fears.

MyTravel, formerly known as Airtours, was hit harder than most firms during the slump as it had ramped up capacity - buying aircraft, hotels and cruise ships - in an effort to grab market share.

As a result the Rochdale-based firm was lumbered with high fixed costs and was forced to cut prices for its unsold holidays as demand sank.

Since then the firm has restructured its debts, axed around 2,000 jobs, brought in new management and sold off businesses - including its loss making cruise ship fleet and German business.

On the up?

Mr McHugh added that the group had made good progress with restructuring its UK charter and distribution business, and is continuing to cut costs and improve its performance.

"Although there is still more to be done, we are ahead of schedule on delivering the cost savings and believe that they are now likely to exceed the target of �150m in 2005," he said.

But MyTravel hailed its achievements in its North American and Northern European markets, adding that bookings were encouraging.

In the first half, the Northern Europe division made an operating profit before one-off costs of �5.5m , turning around a �25.2m loss from last timer.

Meanwhile, in North America operating profits rose to �98.5m from �2.9m - largely thanks to its Canadian business.