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TUI plays down ‘brutal’ job cuts – 15 Dec 2006

TUI has announced the loss of 2,600 jobs in the UK and notified head office and back office staff of 900 redundancies on Friday.


But sales director Derek Jones insisted the job losses would be less brutal than early reports suggested.


He said about 900 of the UK job cuts announced yesterday by TUI’s parent company in Germany had already taken place ­- through the closure of the company’s call centre in Glasgow this month cutting 320 jobs, and the loss of more than 600 in retail distribution over the course of this year.


The 900 redundancies announced on Friday will go ahead in the new year following a 90-day consultation with staff.


The remaining 800 job cuts will be made in retail distribution over the next two to three years, according to Jones.


He insisted there are no plans in place for these additional redundancies and hopes they will come through “natural attrition”. TUI’s shops have an annual staff turnover of 25%-30%.


“I’m fairly certain we can cope without [further] compulsory redundancies,” said Jones.


Nonetheless, UK staff will bear the brunt of the 3,600 job losses announced across the group as the UK leads the way in the move to de-package holiday sales.


Profit margins on sales of separate holiday components, which now account for 40% of UK sales, are lower than on traditional packages.


Group chief executive Michael Frenzel said travel agencies would remain the key distribution channel in Germany, where only 400 jobs will go.


The UK job losses form the lion’s share of a Euros250 million cost-cutting programme as the group is restructured.


The group’s carriers in Germany will be rebranded as TUIfly.com, with UK airline Thomsonfly likely to follow suit, and a TUI Cruises brand will be established in a joint venture with Carnival.


TUI will also seek to reduce its debt by Euros1 billion.


Group chief executive Michael Frenzl insisted the cuts were being made “from a position of strength”.


Jones said: “This is not a strategy of shrinkage, it is a remodelling. The number of people travelling is on the increase.”


 


 

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