MYTRAVEL came close to breaking even on its UK operations after three years of painful restructuring, 12-month figures revealed last week.

But hopes of turning a profit were hindered by the high cost of fuel.

The company recorded an operating loss of £29.5 million in the UK for the year to the end of October, down by almost half from £57 million in 2004.

Its overall losses fell to just over £18 million, compared with a loss of £190 million in October 2004.

But MyTravel’s operations in northern Europe and North America turned in healthy profits, giving it an operating profit across the group of £55 million.

The company suffered more than most from the rise in fuel prices because the banks,which now own it, would not authorise additional lending to spend on hedging fuel – paying in advance to offset price increases. MyTravel estimates this cost it an additional £28 million in the UK alone.

Chief executive Peter McHugh said: “Without the impact of fuel, we would have been a year ahead of turnaround targets.”

He revealed the group has managed to hedge 57% of its fuel requirements for summer 2006, but remains likely to spend 11% more on fuel in 2006 than in 2005.

Its fuel costs for this winter are estimated to be 23% higher than last year.

The company saved £46 million in the UK through cuts in sales and marketing, and administrative costs. These measures included the restructure of Bridge, Cresta and Tradewinds, a reduction in the airline fleet and cuts in its call centres.

MyTravel revealed the succession of natural disasters and terror attacks, such as the bombing in Sharm el-Sheikh, cost it a further £6.8 million, while it incurred £7.7 million in costs due to fluctuations in foreign exchange rates.

UK managing director John Bloodworth hailed “a strong performance in the UK”, but admitted there was more work to do to achieve profitability in the UK next year and an hoped-for average margin of 3.5% in 2007.

In its financial statement, the group warned: “Fuel continues to be a risk to the achievement of our performance targets in 2006.”