After layoffs of the crew, P&O initiates the next phase of restructuring

P&O Ferries has embarked on a new phase of a sweeping restructuring plan that began with the controversial redundancy of hundreds of UK-based crews last year.

The British shipping company has restricted some services on its Irish Sea ferry routes and is seeking further changes by sharing some operations with Danish rival DFDS, according to two people informed on the matter.

There are also plans to shift seafarers and resources to services to busier and more lucrative European destinations as the industry is impacted by lower freight volumes due to Brexit and a global drop in freight rates.

“We have made changes to the business so that we can adapt our service to market demand. The cuts in services have now been made and from here we are focused on growth,” said a person briefed on the matter.

The proposed deal with DFDS would allow both companies to share operations on less profitable routes to keep them going.

But that would be subject to regulatory approval amid concerns about weaker competition, one of the people said.

Owned by Dubai’s DP World, P&O’s main routes run between the UK and France, the Netherlands, Northern Ireland and the Republic of Ireland.

DFDS is one of the largest ferry operators in Northern Europe, operating services between the UK and mainland Europe, as well as routes through Scandinavia and the Baltics.

P&O and DFDS declined to comment.

The companies already have an agreement that will allow freight drivers at the ports of Dover and Calais to show up and travel on the next available ferry, regardless of which operator operates them.

P&O is investigating the changes as part of its restructuring plan, which resulted in the layoff of about 800 seafarers last March and sparked public outcry.

The restructuring, which has seen the seafarers replaced by cheaper agency crew, has given the shipping group new operational flexibility, enabling it to make changes.

At the time, P&O argued that its business was losing an unsustainable amount of money and would go bust without significantly reducing its labor costs.

Accounts filed in the UK showed P&O Ferries lost a combined £200m in 2020 and 2021.

Nonetheless, the decision to dismiss the old crew without notice, some via video message, sparked a political firestorm in the UK.

P&O chief executive Peter Hebblethwaite admitted the company broke labor laws over the layoffs and instead paid employees with extended severance packages.

The company is also unveiling two new turbo-hybrid vessels that will cut carbon emissions by up to 70 percent as part of parent company DP World’s decarbonization strategy to achieve carbon neutrality by 2040.