EMPLOYEES at troubled holiday giant MyTravel have been warned to expect further cuts in 2004 as the company aims to claw back multi-million-pound losses.

Chairman Eric Sanderson, who replaced Burnley's David Crossland last month, said the group's performance last year was unacceptable.

He told shareholders at the annual general meeting in Manchester: "We have taken and will continue to take the steps necessary to return the company to financial health."

MyTravel, which was formerly known as Airtours, employs hundreds of East Lancashire workers at its former headquarters in Holcombe Road, Helmshore, Rossendale, Accrington's Globe Centre in Scaitcliffe Street and a new purpose built complex in Sandbrook Retail Park, Rochdale.

It has already announced there will up to 700 redundancies this year in a bid to reduce overheads.

And in a far-reaching review of the business, chief executive Peter McHugh warned there would be further cuts.

"We have already taken steps to reduce our administrative and overhead costs in this financial year in an effort to protect our profit position and we are targeting a further significant reduction in 2004.

"Unfortunately, after reviewing all the alternatives, some of these savings, necessarily, result from redundancies." MyTravel also revealed the full cost of last year's management shake-up at the company.

Former chief executive Tim Byrne will receive £1.2million; David Jardine, the former finance director, will be given £840,000; and Richard Carrick, formerly chief executive of the development division, will take home £630,000.

The company stressed that Mr Crossland, who retired as chairman last month, received no compensation.

The company also announced that it would be seeking "substantial damages" from the European Commission after it blocked its takeover of First Choice Holidays in 1999.

Mr Sanderson told shareholders that sales for summer 2003 were encouraging despite difficult market conditions. Bookings were still three per cent ahead of last year and capacity had been reduced by eight per cent. Around 500,000 fewer UK summer holidays were left to sell than at the same time last year.

Mr McHugh warned, however, that trading had been difficult and in recent weeks, bookings had deteriorated.

"Current conditions make it difficult to comment with any certainty on the outlook for the rest of the year," he added.

"With the Iraq crisis developing on a daily basis, this is clearly a very difficult time for the industry."

"We will refocus our energies on the core principle that was the cornerstone of David Crossland's original success - Operate the business every day with a strong, clear trading mentality.

"Somehow, in the expansion and development of new business lines, this critical directive was lost. It has now been found."