Peninsular and Oriental Steam Navigation, the UK ferry operator, is to buy...
Peninsular and Oriental Steam Navigation, the UK ferry operator, is to buy the outstanding forty per cent of P&O Stena Line for GBP150m ($216m) as part of a raft of measures to stem losses on some of its short-sea ferry operations.
The group said its decision to increase its holding in the jointly-operated ferry business with Stena Line would strengthen its position in the UK and Continental ferry market.
The cash purchase will be funded from P&Os existing credit facilities and subject to competition clearance from the EU. The group said that it saw no problem with competition issues and would rebrand the Ferry service on completion of the deal.
P&O, which last month announced it would shed 1,000 jobs from its P&O Nedllyod venture, also said it was in consultation with staff about the possible closure of the P&O Stena Line Dover-Zeebrugge route.
The closure of the route would allow the group to replace two of its older ferries on the Dover-Calais route with the three ferries from the Dover-Zeebrugge route, thereby reducing the P&O Stena Line fleet from ten to eight ships.
Separately, P&O North Sea Ferries announced that the inability of certain routes to achieve profitability had led the company to enter into discussions about the closure of the Felixstowe-Zeebrugge and Felixstowe-Rotterdam routes.
Of the five ships that operate on the route, P&O North Sea Ferries said it was in advanced negotiations to sell its three ships to Stena Line.
In its full-year results in March, the group reported a one million pound operating loss compared with operating profits of GBP 20.1m in the previous year because the foot-and-mouth outbreak hit tourist demand for the services that they offer.
P&O said that most of the job losses from the restructuring measures, estimated to be around a hundred, could conceivably be achieved by natural wastage. ?Hopefully some of the staff on the Felixstowe-Zeebrugge route will be offered jobs by Stena,? the group said.
The group added that there were no further plans for rationalisation this year.
The expected cost savings of the restructuring, including synergy benefits of the Stena Line acquisition, are anticipated to reach between ten and fifteen million pounds by the end of next year. ?We expect to save by eliminating duplication in areas such as integration of our back office functions, customer services and our call centres,? the company said.
Lord Sterling, chairman of P&O, said the developments presented a major opportunity for the future of the whole of the ferry business.