THE embattled Lancashire holidays group MyTravel today announced a £200million loss for the first six months of the year and warned that the summer market remained "challenging."

But company bosses insisted the company was back on track and stressed the losses had fallen considerablly from the £618million

recorded for the same period last year.

"Our turnaround of the business is well under way," said chief executive Peter McHugh in a statement to th Stock Exchange. " The UK business was in a worse state than we appreciated and will take longer to turn around than originally expected."

"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 £150 million in 2005."

MyTravel, formerly Airtours, employs more than 500 people at call centres in Accrington and Helmshore.

Mr McHugh admitted the company's losses over the winter remained too high but there had been an improvement in North America and Northern Europe, which both made small profits.

"The market in the UK for summer 2004 continues to be challenging, with a difficult start in May and further market evidence that customers are booking later," he added.