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Monday, 29 January, 2001, 18:08 GMT
UK shipyard in choppy waters
The middle section of a ship built by Cammell Laird
An Italian liner's failure to arrive hit Cammell Laird
UK shipbuilder Cammell Laird is set to lose 34m this year, with hundreds of jobs under threat after an order to rebuild an Italian cruise ship was cancelled.

The firm's founder and chief executive, John Stafford, has resigned following the dispute between the Italian shipowners and the yard.

The luxury ship Costa Classica was expected to arrive in November for lengthening work, which involved it being cut in half and having a newly built centre section inserted into it.

But the Italian firm pulled out of the agreement allegedly at short notice, leaving the shipyard with a huge bill and unwanted centre section.

Plunging profits

The order was worth 51m and a huge section of the ship was already built at the yard in readiness for the ship's arrival.

Cammell Laird is seeking legal advice on the Italian cancellation and has held numerous talks in an attempt to settle the dispute.

The cash-strapped yard has now asked the Royal Bank of Scotland to waive a condition of payment relating to debts due at the end of April.

Cammell Laird sign
Cammell Laird has a long tradition in the UK's shipping industry
"At present, there is significant doubt as to whether we can meet this particular banking condition," said Finance Director Jon Schofield who is to replace Mr. Stafford in the short-term.

Cammell Laird has secured some replacement work for the ship but is still left with a substantial shortfall as well as the cost of the preparation work done.

The firm announced losses of 3.5m between April and October last year, compared to profits of 8.2m the previous year.

But despite predicting further losses and falling into heavy debts, Cammell Laird's chairman is positive about the yard's future.

"We fully expect to reverse the recent sequence of events with good profitable work in the near future," said chairman Juan Kelly.

End of an era?

Cammell Laird's reborn operation on the banks of the Mersey builds on a long history at the original shipyard which closed in the early 1990s.

Vessels built there include the aircraft carrier Ark Royal and, more recently, the navy's Upholder class submarines.

The new Cammell Laird began life under a different name and from small beginnings grew rapidly over the past decade, specialising in repairing ships, expanding rapidly and becoming one of the stock market stars of the late 1990s.

At the close of business on Monday, Cammell Laird's shares were at 13.5p, down more than 90% from the high of 147p at the start of the Costa Classica dispute.

The Costa Classica, built in 1991, carries 1,300 cruise passengers.

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