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300 More AA Jobs To Go

Tuesday, February 10, 2015

Further 300 Jobs To Go As AA Struggles To Cope With Interest Payments On Massive Debts

This is yet more bad news from the AA. This comes on top of seventy front line staff who were taken out of the business in 2014 says GMB.

GMB, the union for AA workers, reacted to the announcement of 300 back office job losses at the AA offices in Basingstoke. See note to editors for copy of the AA statement and recent GMB PR on retirement of Damon Buffini.

Paul Maloney, GMB Regional Secretary said, “This is yet more bad news from the AA. This comes on top of seventy front line staff who were taken out of the business in 2014.

Waiting times for customers is now around two hours up from half an hour before the sale to private equity in 2005. If you have to wait for recovery you could be at the side of the road now for up to four hours.

The purchase of the AA by private equity back in 2005 has turned out to be a smash and grab robbery of a great British company. Having taken over the company the private equity owners proceeded to sink it in to debt and stuck the blood out of it.

The sale to SAGA continued the pattern of leaving the AA high and dry with billions of pounds of debt while the private equity owners retired with the cash and left the UK motorist and AA staff to pick up the pieces.”


Ends

Contact: Paul Grafton, GMB Organiser on 07714 239092 or 0208 397 8881 or GMB press office 07921 289880 or 07974 251 823.

Notes to Editors:

1 Statement from AA plc Changes

The AA plc notes speculation concerning possible staff reductions and consequent changes to the deployment of its resources. While no detailed plans have been finalised, the AA executive management have been undertaking a review of the business since the successful listing of the company’s shares at the end of June. This review and the development of a refined business strategy continue on track and its conclusions will be communicated during this quarter.

The AA can confirm that it plans major investment in the business, in order to enhance the service it provides to members and customers, and to make reductions in staff numbers and related overheads in due course. Depending on the outcomes of management forum, staff and union consultations there is likely to be a reduction of approximately 300 posts (including some vacancies) with 50 new posts also created. Currently the AA employs 8022 people. The reduction would be drawn principally from administrative back office functions, but the AA also intends to hire more front line Roadside personnel. The objective of these plans is to ensure that the AA focuses its resources on its customers and members while operating as efficiently as possible.

Bob Mackenzie, Executive Chairman if the AA commented: “The AA’s level of service is highly-regarded which is reflected in its status as the UK’s most trusted commercial brand. It is our intention to continue to serve the needs of the motorist as comprehensively as possible. Our plan is to strengthen the relationships we have with our 13 million customers and members by offering an enhanced experience. In achieving this objective, there will be a benefit to all our stakeholders.”

2 GMB Press Release on retirement of Buffini
January 20, 2015 5:26 pm Damon Buffini steps down from Permira

Damon Buffini, seen as the political face of private equity during the buyout boom, is stepping down from Permira, the European group he helped to build into a €20bn international firm over three decades. Mr Buffini will continue as a senior adviser after stepping down from the partnership by the end of the year. He handed over the day to day running of the firm to co-managing partners Kurt Björklund and Tom Lister in 2007. Mr Buffini will also remain a board member of Hugo Boss, the fashion house in which Permira retains a 32 per cent stake.

During 12 years at the helm as managing partner and then chairman of Permira, Mr Buffini expanded the firm’s assets from €500m in 1997 to four buyout funds totalling €20bn in 2010. Under Mr Björklund and Mr Lister, Permira closed its fifth fund last year at over €5bn.

“With a strong management team, a €5.3bn global fund to invest and the continued good performance of our portfolio companies, Permira is in great shape today and the time is right for me to do something new,” he said.

The Leicester council estate-born Mr Buffini also serves as the founder of the Social Business Trust, a social enterprise fund, and as a governor of the Wellcome Trust. It was also announced on Tuesday that he will become a non-executive director of golf’s PGA European Tour.

A string of pre-crisis buyouts in the UK including the AA and Bird’s Eye brought Permira and Mr Buffini into conflict with the GMB, Britain’s third-biggest trade union, over job cuts and what the union called private equity’s “blatant asset-stripping”.

After one GMB stunt in which the union paraded an Arabian camel past Mr Buffini’s place of worship in 2006 — in a reference to the biblical passage by Jesus saying it would be easier for a camel to pass through the eye of a needle than for the wealthy to get to heaven — he met face to face with union representatives.

There is little love lost a decade on. “While Damon Buffini steps down from Permira as a very wealthy man, it is workers and customers at AA who are required to service the debt mountain he saddled it with,” said Paul Maloney, GMB regional secretary.

Mr Buffini also entered industry legend in 2009 for making Permira partners eat burgers at a restaurant after overhearing complaints about the Michelin-starred food.

Hired by Jon Moulton in 1988 to join Schroders Venture UK — the firm that became Permira a decade later — Mr Buffini entered private equity the same year the $25bn buyout of RJR Nabisco in the US brought the industry into the public eye for the first time.

Fundraising levels were then counted in the millions rather than billions of dollars. As of the end of last year, Permira had already invested €1.6bn of the €5.3bn in its new fund.

Ends
Contact: Paul Grafton, GMB Organiser on 07714 239092 or 0208 397 8881 or GMB press office 07921 289880 or 07974 251 823.

Notes to editors:
Story on Press Association AA set for stock market flotation 06 Jun 2014 - 14:07
By Graeme Evans, Press Association City Editor

The AA is poised for a £1.4 billion stock market flotation that will see control of the UK's biggest roadside recovery firm pass to a group of City investors.

The business, which was founded in 1905 and has four million members, is currently owned by Acromas Holdings, the private equity-backed firm behind the recent sale of shares in over-50s holidays and insurance company Saga.

Unlike the flotation of Saga, which involved retail investors, Acromas has secured the backing of City institutions such as Aviva, Blackrock and Invesco to buy shares worth at least £930 million as part of a management buy-in fronted by former Green Flag boss Bob Mackenzie as executive chairman.

Trading in AA shares is expected to commence later this month and value the company, which has an estimated 40% market share, at £1.38 billion.

Mr Mackenzie said: "The AA is a very successful organisation with a strong record of serving its members and the needs of the UK motorist.

"We believe there are significant opportunities to grow the business, a sentiment shared by the high-quality leading cornerstone investing institutions who have already committed over £930 million to the transaction."

Saga and the AA were combined in a £6.2 billion deal at the height of the credit boom in 2007 to form Acromas, owned by private equity firms CVC, Permira, and Charterhouse. The business was funded by £4.8 billion of bank debt.

Saga recently began trading on the London stock market with a value of around £2 billion but shares are 10p lower than their opening price of 185p, having earlier been priced at the bottom end of expectations.

The float saw 50% of the stock on offer allocated to retail investors, a "substantial majority" of them to customers.

Mr Mackenzie pledged to "steadily reduce" the AA's debt mountain, which currently stands at around £3 billion.

As part of the offer, the company will issue £210 million of new shares, with the proceeds going towards the drive to cut borrowings. Acromas will retain an approximate 31% shareholding in the AA but has agreed to make its remaining stake available to new investors at the same valuation.

The AA has around 16 million customers with an estimated 50% of UK households subscribing to at least one AA product.

 

 

 

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