Price cuts could lead to drastic action, warns P&O Ferries

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The chief executive officer of P&O Ferries, Helen Dreeble, has warned of serious consequences of recent dire trading conditions on the short-sea channel routes.

In a letter to employees, Dreeble said the company was under a pressure from competitors in the short sea sector and accused Eurotunnel of sparking a price war to win back market share it lost after a tunnel fire in September 2008.

Losing freight volumes to Eurotunnel had forced P&O Ferries to lower prices which had driven revenue down, she said.

However, a Eurotunnel spokesperson denied involvement a price war.  Customers were returning because Eurotunnel offered a faster transit for time sensitive deliveries.

Price cuts advertised on the Eurotunnel web site were  focussed on off peak travel, and accounted for only one per cent of its business, the spokesperson said.

P&O estimates that over-capacity on the channel amounts to about 50 per cent.

Dreeble said: “It is therefore important I highlight to you at the earliest opportunity that our current performance is of serious concern and that it is going to require urgent attention. We have also started to communicate these messages to the European Works Council and to the trades unions representing members of our workforce.”

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