DEBT-CRUSHED Eurotunnel is axing 900 jobs in Kent and France in a desperate bid to stave off bankruptcy.

Around 450 will go from the Channel Tunnel operator’s terminal and offices at Cheriton, near Folkestone, with a further 450 going in Coquelles, Calais.

The job losses, widely trailed over the past few months, follow lengthy talks with staff and will hit all sectors of the Anglo-French business.

But Eurotunnel, which is £6 billion in debt and faces stiff price competition from cross-Channel ferries and low-cost airlines, has pledged that there will be no compulsory redundancies. The job losses would not compromise safety or quality of service, it claimed.

Staff are being encouraged to volunteer to go with what it calls an attractive financial package worth around one and half month’s pay for every year of service. Someone who has worked for Eurotunnel for 10 years will receive 15 months’ pay.

The loss of 450 jobs in Kent, which is a blow to the local economy, is part of Project Dare, a cost-cutting and restructuring strategy pursued by the French-led company. A Eurotunnel spokesman said the company faced a bleak future if it did not cut costs.

He said: "This is about making Eurotunnel a leaner and fitter company for the future. What we’re doing here is securing the long-term future of Eurotunnel.

"It had to re-design its business model, it had to reduce costs and it’s got to do something about its debt situation. If we don’t take action now, then I think the future is potentially very bleak."

He added: "We would have been looking at bankruptcy."

Eurotunnel has set aside £36 million for the re-structuring programme but cost savings could begin to flow through in 2006.

"It’s certainly going to help stabilise the company’s financial position, and that will put us in a stronger position in the negotiation concerning the debt," the spokesman said.

Union leaders expressed regret but said the job cuts were not a surprise.

Graham Murfet, regional organiser for the Transport and General Workers Union and spokesman for the Eurotunnel workers, said:

"We have known for some time that jobs will have to go and have been involved in a formal consultation process and negotiations with Eurotunnel to make sure people who do go get the best possible deal. That’s what we believe we have achieved."

Jacques Gounon, Eurotunnel chairman and chief executive, said:"We need a company that is more flexible, more reactive to our markets, and more in tune to the needs of our clients.

"The remaining employees whose commitment, motivation and sense of professionalism I salute, are committed to work together to reach these objectives and by so doing will ensure the long term success of this great company."

Although Eurotunnel has set a June 2006 target for completion of the job-cutting programme, most of the 450 employees affected in Kent will be gone by Christmas.

The Cheriton workforce will fall from around 1,200 to 750. After the round of job cuts, Eurotunnel’s headcount will be 2,300.