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DFDS cuts 650 jobs to ‘adapt to new market conditions’

Danish ferry operator DFDS will cut 650 jobs in response to ‘the severe drop in demand caused by lockdowns from mid-March’

Danish car and passenger ferry operator is to make 8% of its workforce redundant as part of cost-saving measures

FERRY operator DFDS’ decision to cut 650 jobs is due to the severe fall in demand as a result of the coronavirus backdrop and to prepare for “the new reality”, according to chief executive Torben Carlsen.

The Danish company said it plans to combine some sales operations, focus its ferry division on freight transport, optimise port terminal and haulage operations, and other structural changes amid “a downsizing of various functions”.

“The adaptation to the new market conditions will regretfully lead to around 650 employees leaving DFDS in the coming months, 200 of whom are employed in Denmark,” it said in a statement.

Mr Carlsen told Lloyd’s List the job cuts were split roughly 60/40 between sea- and land-based positions, and many related to passenger services.

He said the UK’s ferry aid package “ended up not not supporting our Channel service” because of the way it was set up. He said he would have liked to see the scheme tailored for ro-pax carriers and hoped “there will be some sharing of the losses”.

Mr Carlsen said he was in talks with the Department for Transport, which was keen for the company to continue lifeline ferry services, adding that the UK and Danish furlough schemes had “been excellent” through the crisis.

While the Danish scheme was extended to the end of August, the company chose to exit it to carry out the more thorough restructuring of its business. This included a “major reorganisation in our IT setup” and gearing the business towards couriers and freight forwarders.

Mr Carlsen said the company would focus on safe transport for customers rather than entertainment and market ferries as a safe alternative to flying.

“We’ve simply adjusted our concepts and our approach to this new reality,” Mr Carlsen said.

The restructuring is expected to save the company up to Dkr250m ($37m), with “a positive financial impact” of DKr50m-DKr75m for the year, as well as one-off DKr100m redundancy cost, it said.

“Our initial response to coronavirus has been successful,” Mr Carlsen said. “We now take further steps to restore long-term growth and efficiency At the same time, we continue to monitor new opportunities that may arise.”

Coronavirus lockdowns have severely impacted Europe’s ferry trade, with some operators calling for government aid as freight carriage failed to offset lost passenger revenue.

DFDS, which runs about 70 mostly ro-ro and ro-pax ships in the English Channel and the Baltic, Mediterranean and North seas, in March cancelled two routes and suspended its financial guidance.

In May, it reduced its outlook for earnings before special items to DKr2bn and warned this could “change significantly” in the second half of the year.

DFDS reopened the Oslo – Frederikshavn – Copenhagen route on June 25 after the border between Denmark and Norway reopened. Reopening of the Amsterdam – Newcastle route and English Channel services would depend on the easing of UK and European Union travel restrictions.

It said it would exit the Danish furlough scheme on June 29 and would release its second-quarter results on August 12.

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