MORE than 800 jobs are to go at Dover as a result of the review by P&O of its ferries business.

Although only one ferry is to be taken out of service on the Dover-Calais route, changes in work practices and more flexible manning arrangements will lead to the loss of 798 ship staff and 41 shore-based employees.

P&O today announced 1,200 redundancies, with another 350 jobs at Portsmouth being transferred to Brittany Ferries, as the company struggles to make its ferries profitable again.

Business has been badly hit by the Channel Tunnel, the loss of duty frees, increased tobacco tax in France, a cut-price fares war on the Channel this summer and also by the introduction of cheap flights to Europe by budget airlines.

Faced with a huge loss in the first half of this year, P&O ordered a complete review of its ferries operations.

The review has been the most detailed and wide-ranging ever undertaken of the operation of the business. The outcome, which includes a number of proposals which are subject to employee consultation and other approvals, is expected to benefit the operating result by £55 million a year.

P&O Ferries proposes to reduce the number of ships it operates from 31 to 23 and to close four of its 13 routes.

Freight accounts for half of P&O Ferries' net revenue and the market has been growing at six per cent a year. A new freight product is to be introduced that the company says will be competitively priced, will give customers rapid loading and short waiting times, be based on new management systems, and will continue to give drivers excellent meals, amenities and service on board.

On the tourist side, the company says it will offer clear and consistent pricing with an improved website, provide value for money, offer an enhanced on-board experience, continue to give passengers a range of high quality refreshment options and provide new and attractive on-board purchasing opportunities.

All the Western Channel routes will be closed except Portsmouth to Bilbao, and the number of ships operated will be reduced from six to one.

On the Dover-Calais route, six ships will operate instead of seven, but service frequency and capacity in peak periods will remain unchanged.

The Pride of Provence will be sold, the Pride of Aquitaine - which is currently chartered - will be handed back to its owners at the end of 2005, and the European Seaway, which is currently laid up, will be brought back into service.

This makes a net reduction in the number of ferries of one.

The company plans to save jobs by new, more flexible manning arrangements and changes in work practices. Safety and reliability remain paramount and the proposals have already been agreed with the Maritime and Coastguard Agency.

Significant savings in procurement and other areas have been identified, and possible outsourcing of fleet management is also under active consideration.

It is expected that these proposals will reduce the cash operating costs of the business by more than £100 million or 20 per cent.

After allowing for the anticipated loss of net revenue from the routes being closed, and a reduction in depreciation charges, the benefit to the operating result is estimated to be £55 million a year.

The cost of implementing the proposals is estimated at £60 million. Most of the savings are expected to be achieved by mid-2005 and the remainder by early 2006.

Commenting on the announcement, P&O Chief Executive Robert Woods said: "I am determined to see a major improvement in the profitability of P&O Ferries. What we are announcing today will enable us to have a simplified, customer focused product operated on fewer routes with fewer ships and a substantially lower, more flexible cost base.

"Whilst we greatly regret the possible job losses, we are convinced that what we are proposing is the best way forward for the long term prosperity of the business."

Union bosses say that mass redundancies will be resisted. Bob Crow, general secretary of the maritime union RMT, called on P&O Ferries to consult properly with its workforce over its financial situation rather than announce massive job cuts.

"We only found out that we were being 'consulted' over the possibility of job cuts when we read about it in the media," said Mr Crow.

"It is no use consulting us after a decision is taken - we need meaningful consultation before any drastic announcement is made.

"We are happy to talk about efficiencies, but we remain opposed to redundancies and we draw a line in the sand at compulsory job losses.

"Our P&O members have been subjected to media speculation over the weekend of up to 1,000 jobs being axed.

"They will be less than amused to learn that the Chamber of Shipping is holding a fringe event at the Labour conference today under the title 'ensuring jobs for our growing fleet'.

"P&O is one of the many shipowners to benefit from tonnage-tax handouts that have cost the tax-payer over £100 million to date - it is high time that the government started asking for commitment to retaining UK seafarers' jobs in return.

"Once P&O tells us what it is planning our reps will meet as a matter of urgency to discuss the union's response."

RMT's Dover representative Malcolm Dunning feels the town won't be able to cope with the losses, as he told KM-fm...