P&O set to axe 1,000 staff as ferry business struggles

Click to follow
The Independent Online

P&O Group, the cross-channel ferry operator, is expected to announce tomorrow that up to 1,000 jobs will go, as it unveils its strategy to take the business forward in the face of increased competition and ailing demand for ferry services.

P&O Group, the cross-channel ferry operator, is expected to announce tomorrow that up to 1,000 jobs will go, as it unveils its strategy to take the business forward in the face of increased competition and ailing demand for ferry services.

The news will mark the conclusion of the company's biggest strategic review, which it began in March after announcing a poor set of annual results.

Its core ferry business turned in a loss of £40m last year, compared with a profit of almost £14m in 2002, and sales have also continued to struggle over the first half of this year. The group has been hit the hardest by increasing numbers of cross-channel passengers turning to the Channel Tunnel and low-cost airlines. The Channel Tunnel accounts for 42 per cent of cross-channel traffic, with P&O's market share down to 32 per cent.

An increase in tax on cigarettes by the French government, of up to 50 per cent, has also depleted the number of day-trippers heading to France. British retailers, who have set up in France to cash in on the thousands of UK visitors on "booze cruises" in recent years, have reported a fall in sales of up to 20 per cent in the past year.

At the same time demand has been falling, P&O has found itself under greater competition, as the likes of Brittany Ferries and SeaFrance, subsidised by the French government, have increased capacity and lowered fares.

During the past few months, cross-channel ferry prices fell to their lowest levels in 30 years as a passenger price war got under way.

The 1,000 job cuts, equivalent to some 15 per cent of P&O's total workforce, will be the second round in less than a year, following the announcement that 600 staff were to be axed last November.

P&O is believed to have held talks with unions in the UK and France ahead of the announcement. However, it is expected that in spite of union protests and potential strike action, compulsory redundancies will be an inevitability. RMT, the main union for P&O workers, is calling on the Government to intervene in the UK shipping industry to stem its decline.

The redundancies will made at P&O bases in Portsmouth and Calais as well as Dover. Gwyn Prosser, the Labour MP for Dover, fears that the job losses could put a severe strain on the local economy. After last year's cuts, all but nine of those made redundant were retrained and found new jobs within three months. But with an even greater number of cuts now expected, he believes the task may prove tougher.

P&O refused to comment, other than to confirm that an announcement would be made by the company chairman, Lord Sterling, tomorrow.

Comments