EUROTUNNEL is still losing money after being hit by a downturn in cross-Channel traffic.

As the cross-Channel operator battles to stave off bankruptcy, the company made a £570m loss last year.

Revenues slumped by four per cent to £555m, partly due to the fierce price war with the ferries in passenger and truck markets.

Shuttle traffic fell seven per cent in a declining market. Shuttle revenue at £285m was hit by the fierce price war with the ferries in both truck and passenger markets.

Railways revenue mainly covering Eurostar services rose slightly to £234m but remains protected by the minimum usage charge, worth £67m last year. However, this deal will go by the end of November next year and will put Eurotunnel revenues under further pressure.

The company is pinning its hopes on Project Dare, a turnaround strategy, to produce better results. It involves better matching of capacity to demand and agreeing long-term deals with hauliers.

But it could hit jobs in Cheriton and Calais, and Eurotunnel says it has set aside £36m to meet "the consequences of this on staffing levels and for the early termination of certain subcontracts."

Eurotunnel is talking to creditors about rearranging its £6.4bn debts.

They recently agreed to waive existing credit agreements and Eurotunnel has to put a plan in place by July 15.

Jacques Gounon, chairman of Eurotunnel, blamed the company’s latest problems on "insufficient reaction to major evolutions in the cross-Channel market over the past few years."

But he expected Project Dare, the company’s turnaround strategy, to start to bear fruit during 2005, with its full impact felt next year.

He said: "I am determined to protect the interessts of this company and to reduce the burden of financial charges on Eurotunnel to a level that the company can support, thus ensuring its future growth and development."

While operating profits rose slightly by two per cent to £171m, margin was down six per cent.

Because of the high level of debt, Eurotunnel had to shell out £298m in interest charges, although this was five per cent lower than the year before.