EUROTUNNEL, the debt-crushed Channel Tunnel operator, is seeking Government help to boost traffic.

The Anglo-French company with its British base in Cheriton, Folkestone, has outlined a series of proposals to the British and French Governments that it hopes will ease its crippling £6.4bn debt burden and enable it to slash charges to passenger and freight operators.

The size of Eurotunnel's financial crisis emerged after it disclosed an operating loss of £34m -- or £1.3bn after a so-called impairment charge.

It claimed high access charges were making it hard for operators like Eurostar to sell their services to customers but its current financial structure prevented it from slashing charges on its own.

Eurotunnel has reason to worry about lower-than-expected traffic because it loses its guaranteed minimum usage charge in November 2006 and is desperate to increase rail travel, and revenue, by then.

But Eurostar, operator of 186mph trains through Kent, denied that high charges were holding back traffic growth. Communications director Paul Charles said: "We are working on and succeeding in growing our traffic, independently from the level of access rates.

"We have just announced a record fourth quarter for the number of customers carried, and the substantial increase in passenger numbers is continuing into 2004."

Eurotunnel's so-called Galaxie Project seeks to restructure debt and interest payments and help it "emerge from its financial difficulties once and for all”.

Bosses cite under-use of expensive infrastructure -- the Tunnel cost £10bn to build -- financial losses and conflicting contractual relationships.

Richard Shirrefs, chief executive, said: "We have made proposals to the UK and French Governments and our industry partners which seek to stimulate growth in rail passenger and rail freight volumes, improve our profitability, and get our financing onto a sensible and sustainable basis once and for all."

He added: "The £10 billion cost of the Channel Tunnel was financed entirely by the private sector. In addition, taxpayers have directly or indirectly put around £15 billion into the infrastructure surrounding the Tunnel.

"However, traffic growth for Eurostar and rail freight is strangled by high tunnel access charges and we have too much debt to reduce them unilaterally.

"Taxpayers are not getting the benefit they should for their money and Eurotunnel's shareholders have seen a substantial loss on their investment.

"To enable reductions in Tunnel access charges, we need a definitive solution which improves our profitability and gets our financing onto a sensible and sustainable basis once and for all."

Charles Mackay, Eurotunnel chairman, said: "Ten years after opening, it is clear that the contractual and financial arrangements originally put in place for the cross-Channel rail industry have failed to create an environment where the Channel Tunnel can realise its full potential.

"It took courage, imagination and real political will to build the Channel Tunnel. We need a little more of each to finally get the most out of one of the great engineering triumphs of the 20th century."

Eurotunnel made a net loss of £34m, although this rose to £1.3bn when a so-called impairment charge was taken into account.

Turnover plunged by four per cent to £584 million. Revenue from Shuttle Services fell by 11 per cent to £309 million. But rail revenue rose slightly to £232m. An operating profit of £170 million was down 18 per cent.

Truck market share went up by four per cent to 43 per cent. Car market was level at 47 per cent, coach market up four points to 36 per cent.