MyTravel, the debt-laden UK tour operator, has entered talks with its creditors and lenders, led by Barclays Bank and Royal Bank of Scotland, in a bid to swap £710m (€1bn) of its debt into an undisclosed amount of equity.

The junk-rated group, formerly known as Airtours, has been trying to restructure its crippling debts, which stand at £1.3bn. It has already renegotiated an extension with some of its bondholders, who have agreed to extend the maturity of their debt until 2007 in exchange for a higher interest rate on repayments.