CRISIS-HIT Lancashire tour operator MyTravel today announced a shock pre-tax loss of £910million for the last year - but vowed it would continue trading.

The scale of the company's financial plight stunned City experts as it admitted difficulties had spread throughout its once-mighty empire.

It blamed much of the loss on the Iraq war, the SARS epidemic in Canada and unusually hot weather in the UK deterring people from travelling.

The figure eclipsed the losses of more than £600million for the first six months of the year, announced in June, but the company insisted it had secured its future until 2006.

More than 300 people work at MyTravel's offices at Helmshore and the Globe Centre at Accrington and several hundred more East Lancashire workers are based at its headquarters near Bury.

The pre-tax loss included an operating loss of £358million, with much of the rest made up of exceptional items, including £70million loss on the sale of the company's German business and restructuring and exchange rate costs.

The company has made 2000 of its employees redundant in the UK, which included some in its local operation, in the last two years.

Earlier this week, the company confirmed that Bill McGrorty, the aviation director, and Bill Allen, overseas purchasing director, had left - days after UK chief executive Duncan Wilson quit saying his current role had come to a "natural conclusion"

The departures took the tally of departed directors in the past 12 months to seven - all but one of them executive directors.

The holiday empire, which includes the Airtours and Going Places names, was founded by David Crossland, a former office tea boy from Burnley.

It employs 25,000 people across the world and was once worth more than £1billion.

It has 100 different travel brands, 1,900 retail travel agents, 49 aircraft, four cruise ships, over 100 resort complexes and has serviced 12 million customers.

Mr Crossland retired from the business he launched than 32 years ago in February this year.

Today Eric Sanderson, chairman of MyTravel, said today: "We have never been close to going bust - and we will still be here next year.

"Earlier this year we managed to extend our banking and bonding facilities. We have always had access to sufficient resources."

He stressed the firm was not in danger of losing its licence to run holidays and said the company expected to have paid back the money it owes by mid-2006.

And he also moved to ease holidaymakers' fears about losing holidays they have booked. He said: "They should not be concerned about it, their holidays are safe. We are still the UK's largest operator."

Chief executive Peter McHugh admitted that 2003 had been an extremely poor year for MyTravel. "During the year, we formulated a strategic plan which identified actions which had to be achieved to turn around the business - reducing the proportion of fixed costs, improving utilisation of assets and restructuring the UK charter and distribution business. We are vigorously implementing these actions.

"However, it is clear that we had significantly under-estimated the extent of the UK restructuring issues and the scale of the turnaround required is larger than originally envisaged.

"Bookings for winter 2003/04 are currently in line with our expectations, with margins improved over the prior year. Bookings for summer 2004 are currently down on the prior year but in line with the rest of the industry.

"Although the Group faces significant challenges, which will take time to overcome, the turnaround can be achieved, and we are working towards a significant improvement in 2004 and a return to profitability in 2005."

One worker at the Globe Centre-based Traveline in Accrington, part of the MyTravel empire, said staff did not fear for their jobs on the back of the announcement.

He explained the company sells holidays for MyTravel as well as other tour operators.

The man, who refused to be named, said the mood inside the building remained optimistic.

He added: "We sell holidays for firms other than MyTravel so we are confident we will not lose our jobs."

Hyndburn councillor Janet Storey, who works for the company, said she had recently returned from holiday and was unable to comment.