29/10/2004

Eurotunnel reveals plan to 'reverse decline'

Eurotunnel has revealed a new strategy which it hopes will reverse a "general decline that has been in evidence for several years".

The three-year plan, dubbed 'Project Dare', is designed to increase revenues and reducing costs in an effort to increase the operating margin by £70 million in 2007. The company confirmed that job losses would be a part of the strategy.

In a statement, Eurotunnel said: "Clearly, and unfortunately, the implementation [of the strategy] will lead to an impact on employment. The validation of the scale of capacity reduction requires substantial further work; it is only when this work is completed that Eurotunnel will enter into the process of consultation with staff and union representatives."

The reorganisation is due, the company said, to declining yields and increased market competition. In the prevailing climate, Eurotunnel said that its commercial strategy had been "unsuited to the present state of the cross-Channel transport market".

The company's half-year figures published on 26 July, and the traffic figures for the third quarter of 2004, found that the number of cars transported had dropped by 5%, the number of trucks by 4% and revenue by around 4%, compared with the same period in 2003.

In the passenger market, Eurotunnel has lost 25% in volume terms since the year 2000, and in the truck market, both revenue and the average yield per vehicle transported have been in decline since the beginning of 2003.

The strategy, which will see a "radical reorientation of our commercial policies", also involves more competitive rates for 50 key haulier customers designed to increase yield by 8-10% in 2005.

Chief executive Jean-Louis Raymond said that the financial structure of the group remained "fragile and the high financial charges continue to impact on operating results".

(gmcg/sp)

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