Avis Europe warned weak corporate demand was continuing to put the brakes on its recovery from the September 11 terrorist attacks.

Profits at the car hire group fell 22.4 per cent to £32.1 million in the first half of the year as firms across northern Europe tightened their belts.

Chairman Sir Bob Reid said there were no tangible signs of a pick-up in business from corporate clients despite improvements in the leisure market.

Avis revealed it had signed a deal to become preferred partner for Thomas Cook and renewed a contract with holiday operator MyTravel.

It now plans to cut another 150 to 175 management and support positions across its European operations to save more than £6 million a year.

The group has already shed about 500 jobs and reduced its fleet by seven per cent to keep a lid on costs.