P&O Ferries invested more than £47 million in a major restructuring in 2022, laying off hundreds of British seafarers to reduce losses and bring the company closer to profitability.
The abrupt dismissal of 786 seafarers, mostly British, sparked widespread criticism and calls for a boycott after they were replaced by agency staff, mainly non-European, who reportedly earn as little as £4.87 an hour.
Controversy around P&O reignited recently when Sky News disclosed that DP World, P&O’s Dubai-based parent company, considered halting a £1 billion investment at London Gateway following criticism from Transport Secretary Louise Haigh.
P&O defended the restructuring as necessary to compete on cross-Channel routes and avert a complete collapse, which would have threatened over 2,000 jobs.
Financial statements for P&O Holdings, filed 11 months late, reveal that the restructuring incurred costs of £47.4 million, covering legal fees and consultancy. However, the move saved £21.3 million in annual salaries.
In a note accompanying the accounts submitted to Companies House, P&O’s directors described the restructuring as part of a “transformational journey,” to achieve a pre-tax profit this year.
They expressed optimism that these changes would allow the business to grow sustainably in the years ahead.
The financial distress that P&O faced in 2022 is evident in the accounts. The company reported losses of £375 million the previous year as it struggled with a decline in passenger numbers due to the pandemic and Brexit-related issues, breaching loan agreements with lenders backing its new hybrid cross-Channel ferries.
Although the restructuring contributed to revenue rising by £83.3 million to £918 million, the company still posted a £249 million loss and relied on a £365 million loan from DP World to continue operations.
An additional £70 million loan was extended this year, at a 4.5% interest rate with repayments deferred until 2028.
Financial records further show that P&O had to sell one of its new cross-channel ferries to a French subsidiary to settle a £76.9 million loan, subsequently leasing the vessel back from the new owner.
In a statement, P&O Ferries said: “Our 2022 financial accounts highlight the challenges the business faced at that time, underscoring the need to transform into a competitive operator with a sustainable long-term future.
P&O Ferries has adapted to new market dynamics by aligning capacity with demand and adopting a flexible operating model to better serve customers.”
