Kuoni promises £63.2M in new investment but cuts jobs

Kuoni is to cut the size of its workforce in a drive to cut costs by 5% a year over the next three years.

The group refused to reveal how many jobs are at stake out of a total of 10,000 worldwide, but says the majority will be lost through natural wastage. It admitted some redundancies are likely as a result of groupwide synergies.

The move comes ahead of a predicted drop in bookings this year.

Announcing a three-year investment programme of £63.2 million, the company said: “The cost savings will mean a reduction in workforce numbers. As in the past, this should largely be achieved through natural attrition. For the few exceptions, Kuoni will be devising socially-acceptable solutions for the employees concerned.”

A spokesman insisted: “This is not a personnel cutting programme; it’s an investment programme. After the investment you have lower costs and more synergies - and some less personnel.

“In travel there is a high turnover of staff so we will benefit from that. We cannot say how many people will be affected.”

The investment plan is aimed at increasing differentiation of Kuoni’s products, improving electronic distribution, developing staff skills and reducing costs.

New chief executive Peter Rothwell, former deputy chief executive of the merged TUI Travel group, said the group would report total turnover of £2.86 billion for 2008 - 3.3% up on the previous year. Currency movements reduced turnover by 7% and organic growth amounted to 4.4%, while profits will be broadly in line with expectations.

Its results will be announced on March 19.

Rothwell said: “With these investments and initiatives we are taking the right action at the right time.”

The key planks of its investment programme are to strengthen its electronic distribution; standardise booking systems groupwide; differentiate its products, ensure consistent global branding and launch its first-ever worldwide PR campaign. There will also be investment in specific measures to improve staff skills and improve efficiency.

The group will spend £ 27.4 million this year, £19.6 million in 2010 and £16  million in 2011. Profits should improve by an extra £24 million a year by 2011 as a result of the programme.

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