BUS company Blackburn Transport has recorded a loss for the third year running just weeks before a council is due to decide whether to sell it.

The company, owned by Blackburn with Darwen Council, was £74,536 in the red for the year to March 2005.

That compares with losses of £68,233 in March 2004 and £462,243 in March 2003, both of which were attributed to the company's battle with the now-defunct Buzy Bus firm.

The 2005 loss is put down to rising fuel costs, which were 55 per cent higher by March last year than they were the previous year.

Although the 2005 loss is heavier than 2004, managing director Michael Morton said they should be interpreted as a year-on-year improvement in normal trading.

The 2004 final figure was boosted by the sale of the company's redundant coach fleet, no longer needed after the closure of the Blackburn Coachlines holiday company.

Mr Morton said: "That disposal amounted to £123,242, so there has been a improvement of just over £100,000 in underlying profitability, which offers some encouragement."

Blackburn with Darwen Council, which is offering up to 90 per cent of the business up for sale to big companies, is due to decide this year if it should go through with the sale. The proposal has split the ruling Labour group, which is expected to discuss it in private later this month.

Only a handful of Blackburn Transport's bus services are profitable, with the money raised from those used to support a dozen more.

Unions fear a private operator will either ditch the unpopular services or demand a greater subsidy from the council.

Coun Colin Rigby, leader of the Tory group, said: "The council needs to decide whether it wants to run a service or a commercial company.

"The management have done an excellent job when you consider it has never been funded properly by the council, and the authority has taken money away at every opportunity." The company accounts also reveal a £100,000 package of compensation from the operators of Buzy Bus.

The money was awarded after a High Court judge backed a claim by Blackburn Transport for lost earning after Buzy Bus began operating identical routes, using buses which had Blackburn Transport' written on the side.

Owners the Baileys face an alleged £500,000 fraud case relating to fuel rebate.