Thousands of jobs are set to go at the Channel Tunnel operator Eurotunnel and Abbey, the UK bank now owned by Spain's Santander.
Eurotunnel announced last night that it is shedding 900 jobs - almost one-third of its workforce - between now and June, to try to cut costs and stave off bankruptcy. All the redundancies will be voluntary and Eurotunnel said they would not compromise safety or quality of service in any way.
Meanwhile, City analysts expect Abbey to confirm a further 2,500 job cuts when it gives a strategic update next week. The bank has already announced plans for 4,000 staff reductions.
The job cuts at Eurotunnel will be split evenly between the UK and France and come as the company continues to negotiate a financial restructuring with its banks aimed at reducing its £6.4bn debt mountain by about one-third. They will reduce the headcount from 3,200 to 2,300 and will result in a £36m charge to this year's accounts. Staff with 10 years' service will be eligible for 15 months' pay. The average redundancy package is expected to be about £30,000.
Eurotunnel's operating costs last year were £258m - a large part of which is made up by salaries. But since then it has cut capacity heavily on its passenger shuttle trains to try to match demand better, meaning fewer drivers, guards and back-office staff are needed.
Santander initially planned to slash 3,000 jobs at Abbey after last year's £8.1bn takeover but raised that number to 4,000 in May.
Antonio Ramirez, at Merrill Lynch, said he expected that figure to rise to 6,500 by the end of 2007 - more than double the original estimate and about one-quarter of Abbey's 26,000 workforce at the time of the takeover. Carla Antunes da Silva, at JP Morgan, also thinks cuts of 6,500 are more realistic than the 4,000 target, pointing to Santander's track record of aggressive cost cutting after other acquisitions.
An Abbey spokesman said: "We're on track to cut 4,000 this year and we wouldn't expect anything more of this scale this year. But in future, I wouldn't rule out further job cuts. We want to be the most efficient bank in the UK."
Abbey's chief executive, Francisco Gomez-Roldan, will give a strategic update on Abbey on Tuesday alongside third-quarter results from its parent when analysts expect Santander to announce further cost-saving targets.Reuse content