The UK’s largest ferry operator P&O has sacked all 800 of its crew members and replaced them with agency staff after halting all sailings on Thursday 17 March. The company, which is owned by Dubai-based DP World, said that the move was necessary to “secure the long-term viability of P&O Ferries”.

The decision was announced after all sailing operations were suspended at the start of the day, with passengers advised to switch their bookings to rival firms for their travel arrangements. Staff were then told the new by video call that they were being made redundant with immediate effect. P&O services are not expected to operate for the next few days.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “’The shock announcement of mass redundancies at P&O, as the company struggles with deep losses, is another reminder of the devastation Covid has wreaked on the travel industry. P&O has faced woes before, and financial problems stretch back two decades when once popular routes were scrapped. That was blamed on low-cost airlines and channel tunnel bookings eating into the once steady stream of holidaymakers heading on its vessels to the continent every summer.”

“But the pandemic plunged the operator into a fresh crisis. It had to deal with mass cancellations as lockdowns were enforced and then cope with the fluctuating travel restrictions and quarantine rules, which have continued to dent bookings. It wasn’t alone in experiencing a sharp reversal of fortunes. Brittany Ferries, which now runs some of P&O’s old Portsmouth routes, suffered a 57% drop in turnover in 2020. But it’s managed to stay afloat thanks to a EUR45m financial package from the French Government, in addition to state backed loans totalling EUR117m.”

Although P&O benefited from furlough support and a freight support grant, it failed to secure a £150m bail-out from the UK government. The company has nearly 4,000 employees in total, and warned back in May 2020 that 1,100 may have to be made redundant because of the impact of the pandemic.

Streeter added: “The nature of the redundancy announcement is unlikely to help it win back customers, with staff reportedly refusing to leave ship. This could fast turn into a severe reputational headache for the company, with a big union fight looming ahead.”

Rustom Tata, chairman and head of the employment group at law firm DMH Stallard, said: “One has to question the extent to which the integrity of the P&O brand will be impacted not only by the fact of redundancies, but also by the apparently wholly planned approach being taken to such a large proportion of its workforce, ignoring some of the basic fundamentals of employee relations. It very much seems that there was no prior consultation or discussion with employees of their representatives, and large elements of the employment protection legislation are being wholly ignored.

“Details on specific numbers are not yet clear, but the political reverberations have already started, whether in relation to the dividends paid by P&O to shareholders in recent years, to the amount of furlough money received by P&O during the pandemic, or the question mark over the future of certain routes.”

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