P&O Ferries spent more than £47m summarily sacking hundreds of seafarers in 2022, helping it cut losses by more than £125m and putting it on a path to profitability, according to accounts due to be published in the coming days.
The dismissal of 786 mainly British seafarers, and their replacement with largely non-European agency staff earning as little as £4.87 an hour, was hugely controversial, drawing criticism from across the political spectrum and threats of a consumer boycott.
The controversy was rekindled last month when Sky News revealed that DP World, P&O‘s Dubai-based parent, considered withdrawing a £1bn investment at its London Gateway port following criticism of P&O by the Transport Secretary Louise Haigh.
Read more: Why P&O Ferries’ pariah status may never change
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Chancellor quizzed over P&O ferries
P&O has always maintained the restructuring was necessary to allow it to compete with its rivals on cross-Channel routes, and prevent a total collapse of the company with the loss of more than 2,000 jobs.
In financial statements for P&O Holdings, filed 11 months late and seen by Sky News, the company says the restructuring cost £47.4m including legal fees and consultants, allowing it to cut the overall wage and salary bill by £21.3m.
In a note accompanying the accounts submitted to Companies House, P&O’s directors describe the restructuring as part of a “transformational journey” that will help it return to recording a profit before tax this year.
“The business has been on a transformational journey as it has recovered from the challenges of the global pandemic, Brexit and the impact of disruption caused by the change in the crewing model,” the directors say.
“The group believes that the transformational actions that commenced in 2022 and continue through into 2024 will equip the business to grow profitably when demand rises in the coming years.”
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Brexit and COVID financial distress
The accounts reveal the financial distress in which P&O found itself in 2022.
Having recorded losses of £375m the previous year as it struggled to recover from the pandemic-era decline in passenger numbers and post-Brexit complications, it was in breach of its covenants to external lenders underwriting the construction of new hybrid cross-Channel ferries.
Despite the restructuring costs, revenue increased by £83.3m to £918m in the financial year, but the company still recorded a loss of £249m and was reliant on loans totalling £365m from parent company DP World to remain a going concern.
An additional £70m was made available this year, with 4.5% interest rolled up and not requiring any repayment until 2028 at the earliest.
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The financial statements also reveal that P&O was forced to sell one of the new cross-Channel ferries to a French subsidiary to pay off an external financing loan of £76.9m, and then lease the vessel back from its ultimate owner.
In a statement, P&O Ferries said: “Our 2022 financial accounts show the challenges faced by the business at that time, and why the business needed to transform into a competitive operator with a sustainable long-term future.
“P&O Ferries has taken steps to adjust to new market conditions, matching our capacity to demand, and adopting a more flexible operating model that enables us to better serve our customers.”
P&O Ferries’ summary sacking of hundreds of seafarers in March 2022 was and remains perhaps the most ruthless act of “restructuring” in British corporate history.
From the furthest left of the trades union movement to the right of the Conservative government, P&O and its lightning-rod chief executive Peter Hebblethwaite were condemned for shamelessly putting profit before people, without the courtesy of notice and due consultation.
Two years on, the company remains unapologetic and a pariah to some, including the transport secretary. That may never change. But long-overdue accounts for 2022 do illuminate why the company acted as it did.
In 2022, buffeted by Brexit and with passenger numbers devastated by COVID, P&O was holed below the water line, leaking cash and sinking fast.
Losses in 2021 had swelled to £375m, with payroll costs for 3,018 employees – 859 of them seafarers – of more than £132m.
It was also in breach of its covenants on more than £70m of loans from an external lender underwriting the cost of new hybrid cross-Channel ferries.
Read more: P&O spent £47m sacking and replacing 800 British workers
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Chancellor quizzed over P&O ferries
Only rolling and increasing loans from parent company DP World were preventing P&O from going under.
As well as earning at least the UK minimum wage, those seafarers were bound by work patterns negotiated with unions, including the RMT, that P&O says lacked flexibility and left some crossings unprofitable.
By contrast one of their competitors on the Dover-Calais route, Irish Ferries, was exploiting international maritime law to pay agency seafarers far less.
Peter Hebblethwaite, chief executive of P&O Ferries. Pic: PA
Mr Hebblethwaite’s response – and DP World insists it was his call – was breathtaking. The unionised workforce was fired by video call, escorted from vessels and, after a four-week shutdown, replaced by workers largely flown in from beyond Europe for rosters involving months at sea.
That move saved more than £21m from the payroll and helped a turnaround the company says will see a return to pre-tax profit this year.
Ask P&O executives in Dover or those from its parent company in Dubai, and they will tell you the ends justified the means, and point out that passenger numbers are increasing.
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New laws that came too late for sacked workers
And these accounts have been filed just as legislation takes effect that would have removed any advantage from the sackings.
Since May, French law has required the minimum wage to be paid in French waters, and from December, UK law will require the same, making the Channel a haven of relatively high pay in a maritime industry overwhelmingly fuelled by cheap labour sourced from Asia.
It is an irony unlikely to be lost on seafarers who paid with their jobs.
UK
Man jailed for more than three years for loading illegal streaming services on to Amazon Fire Sticks
A 29-year-old man has been jailed for more than three years for loading illicit TV streaming services onto Amazon Fire Sticks.
Jonathan Edge, from Liverpool, pleaded guilty to three offences under the Fraud Act.
He was sentenced to three years and four months in prison, which included a separate concurrent sentence of two years and three months for accessing and viewing the content he was supplying.
Edge ran a service uploading illegal services to Fire Stick devices in return for cash-in-hand payments at his home, Liverpool Crown Court heard.
He used Facebook advertising and word-of-mouth recommendations to run his operation.
He ignored multiple warnings about the illegal activity, which were referenced by the judge and treated as an aggravating factor in sentencing.
The prosecution was undertaken by the Premier League and supported by several other organisations, including FACT (Federation Against Copyright Theft) and Merseyside Police.
Kevin Plumb, Premier League general counsel, said: “The significant sentence handed down to the individual involved once again serves to highlight the severity of his actions.
“We will continue to pursue legal action against those supplying unauthorised access to Premier League football, regardless of the scale or mode of operation. Ignoring warnings to stop only served to make the consequences worse for the individual.”
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Detective Sergeant Steve Frame from Merseyside Police said: “Merseyside Police is committed to working in collaboration to investigate intellectual property theft and we welcome today’s sentence handed to Edge.
“Many people see no harm in illegally streaming TV services but they are wrong, and this outcome should serve as a further warning how seriously such copyright theft continues to be taken.”
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