The newspaper publisher recorded losses of £90m for the year ending 29 March 2009. Of this loss, £37m came from Guardian News and Media, its national newspaper arm.

Speaking this weekend, chief executive Carolyn McCall said: "Can we afford it this year? Yes. But can we afford it for the next three years? No."

The publisher has already undergone a hefty cost-cutting exercise, which has included a consultation over the future of a quarter of its staff at its London-based Guardian Print Centre.

As well as the national titles losing money, GMG Regional Media's turnover dropped from £120.5m to £94m.

The company sold off half of its stake in Trader Media Group, which was not recognised in the figures.

McCall added: "The sharp decline in the advertising market had an impact on each of the wholly owned businesses. All are reducing costs to a more sustainable level in this harsh new environment."

In addition, it has been widely reported today in the national media, that GMG is toying with the idea of The Observer into a weekly news magazine or keeping it as a newspaper but in a slimmed-down format.

Despite the reports, GMG have refused to comment on the speculation.