EUROTUNNEL, the debt-laden Channel Tunnel operator, lost financial ground last year as revenue slipped by four per cent.

Operating revenue fell from £560m in 2003 to £538m in 2004, with a decline across all areas except railways, thanks mainly to a 15 per cent passenger boost for Eurostar.

While operationally profitable, Eurotunnel remains weighed down by its £6.4bn debt.

The new French directors have found it no easier than their Kent-led predecessors to solve the company’s long-term financial crisis.

The former board was kicked out by a shareholder revolt in Paris last April. Its Project Galaxie, a turnaround blueprint, was replaced by Project Dare.

It outlined a new freight strategy based on estimated usage frequency that has upset a number of logistics firms. A new passenger strategy is to be unveiled later in the year.

Eurotunnel suffered from a six per cent dip in the cross-Channel market, blamed partly on the increasing popularity of budget airline travel.

Jean-Louis Raymond, the chief executive, said it was a difficult market for all cross-Channel operators.

Mr Raymond, who replaced Richard Shirrefs, of Canterbury, said the new commercial policy had been dictated by the need by Eurotunnel to remain competitive.

The company’s cost control policy was bearing fruit, he said.

“By combining these initiatives, Eurotunnel has given itself the means to stabilise revenues and to restore margins.”

He was encouraged by the rise in Eurostar traffic but “the development of no-frills airlines is being felt even more strongly".

The number of trucks carried on freight shuttles was flat at nearly 1.3m, but cars fell eight per cent to just over 2.1million.

Eurostar carried 7,276,700 passengers, a 15 per cent rise and due mainly to the faster services on the new rail link through Kent. Rail freight tonnage went up eight per cent to 1.9m tonnes.