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Avis Europe has reported an increase in first-half losses, with growing fleet costs having hit the car rental firm.

In a statement today, Europe's largest car rental company confirmed that its net loss after tax was €12.8 million (£8.7 million) for the six months to June 30th.

That compared to a loss of €8.6 million (£5.8 million) for the same period in 2006.

Avis said that fleet costs had risen by 9.3 per cent, or €16.9 million (£11.5 million), during the first half of the year, while staff costs also increased slightly – up by 0.3 per cent, or €0.5 million (£0.3 million).

The Bracknell-based firm said that savings from an overhead restructuring programme and lower pension costs, stemming from changes to the company's retirement schemes, had been offset by an increase in staff numbers.

Nonetheless Avis stressed that its overheads fell by €4.3 million (£2.9 million), or 5.1 per cent, over the first half. The reduction was largely driven by savings achieved as a result of the company's restructuring programme and from the closure of its Manchester call centre.

Meanwhile the roll-out of the company's new web site led to an increase in internet reservations during the first six months of the year. Online reservations accounted for 31 per cent of the total reservations Avis received over the first-half, with the company revealing that a number of the new staff employed by the firm had been working on web development.

Avis added that the turnaround of its Budget car hire brand was also continuing, while the company stressed that it was satisfied with its current performance.

"In July and August to date, part of the key summer-trading period, revenues remained strong as planned, with both good volume and continued improving pricing trends," said Avis group chief executive Murray Hennessy.