P&O cuts 1,200 jobs in revamp of European ferries arm

P&O cuts 1,200 jobs in revamp of European ferries arm    London-based Peninsular & Oriental Steam Navigation Co. (P&O) said today it will revamp its money-losing European ferries business, P&O Ferries, with job losses affecting 1,200 of its 6,130 employees.
   Under the reorganization plan, subject to employee consultation and other approvals, P&O Ferries wants to reduce the number of ships it operates from 31 to 23 and close four of its 13 routes.
   The plan would reduce the cash operating costs of the roll-on/roll-off ferry business by more than '100 million ($181 million) a year, or 20 percent. It would improve profits by '55 million ($99 million) a year, before taking into account an implementation charge of about '60 million ($109 million).
   P&O said freight accounts for half of P&O Ferries’ net revenue. This market has been growing at 6 percent a year. Tourist traffic accounts for the other half of total net revenue, but has declined due to competition from low cost airlines and other factors.
   P&O Ferries has been a drag on the profitability of the P&O group, which also owns P&O Ports as well as a 25-percent stake in Royal P&O Nedlloyd. In the first half of 2004, P&O Ferries lost '25 million ($45 million), as compared to a deficit of '20 million in the first half of 2003.