What a mess P&O have got themselves into

Anger, frustration and incredulity are just some of the emotions created by the P&O’s decision to fire 800 staff from its various UK ferry routes last week writes Harry Mottram.

In a rare show of unity both Conservative and Labour MPs condemned the decision to fire and rehire their UK workforce despite the Government talking out a proposed law last year that would have prevented the practice.

The Prime Minister Boris Johnson has declared the decision illegal and during a parliamentary committee meeting P&O Ferries boss Peter Hebblethwaite admitted the firm had broken the law by not consulting the unions.

He claimed that it was the only course of action that could save the firm from collapse explaining the ferry operation was losing money and was no longer viable. By replacing the staff with agency workers on far lower wages he said the firm could survive although it would be paying out £36.5 million in redundancy settlements.

However, the company had other options including calling in administrators to guide the firm through to solvency which may have seen cost savings in the shape of redundancies and scaling back of its services, a sale of assets, negotiating a negotiate a Company Voluntary Arrangement (CVA)  or even finding a buyer.

The parent company DP World based in Dubai could also have continued to subsidise the ferries until business picked up following two years of losses caused by the Covid crisis. MPs pointed out at the committee grilling of Peter Hebblethwaite that DP World had spent £147 million on sponsoring a golf tournament and paying £270 million dividends to shareholders. In 2020 the firm lost £105m according to the accounts – reported The Guardian.

P&O have taken a massive public relations hit over the affair and could end up failing if the Government insists on their £11 million in furlough payments being repaid or they declare the ferries are not seaworthy and revoke their licences. There is also a possibility of a consumer boycott plunging their operation into further problems – while all the time the Danish firm Det Forenede Dampskibs-Selskab (DFDS) and Irish Ferries must be relishing the prospect that their rival for the Dover-Calais crossing is in crisis. Likewise, Brittany Ferries may also pick up trade from P&O with their cross-channel routes to west France – and Stena Line also have ferries connecting to Europe and Ireland from the UK. And of course, the Channel Tunnel may see more business as a result.

If P&O had taken one of the legal routes to solve their financial problems, then the fall-out (which could still include collapse) would have been avoided. It is a lesson in how not to handle massive losses for a business in an industry that should be able to survive as long as England remains separated from France by the English Channel.

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk