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Last Updated: Friday, 8 October, 2004, 14:59 GMT 15:59 UK
AA cuts 1,300 jobs in shake-up
AA mechanic
The AA has more than 15 million members
The AA is to cut 1,300 jobs across the UK, representing 10% of its workforce.

The motoring organisation is shutting its loss-making tyre fitting unit and most of its vehicle servicing centres.

The redundancies follow the AA's acquisition by venture capital firms CVC Partners and Permira from Centrica for 1.75bn ($3.13bn) in July.

The AA expressed regret at the job losses but said the reorganisation of its business was in the best interest of its members and customers.

Regrettable impact

As part of the shake-up, four hundred AA staff will transfer to Nationwide Autocentres, which is to take over the running of 50 of the AA's servicing centre sites.

The AA said it hoped to redeploy as many of the 900 staff set to lose their jobs as possible in other areas of its business.

The AA centres have not been profitable
Tim Parker, chief executive

"The AA centres have not been profitable and we believe that the arrangement we are proposing is the best long-term solution for our members and customers," said AA chief executive Tim Parker.

"We regret the impact that these intended closures will have on our people."

The news will inevitably fuel speculation about further job losses across the organisation, particularly at its headquarters in Farnborough and Basingstoke.

New owners

CVC Partners and Permira surprised the City when they paid 1.75bn for the AA in July.

History of the AA
1905 AA started with 100 members to help motorists avoid speed traps
1908 Appoints agents and repairers throughout UK
1912 Starts inspecting hotels
1920 Starts car inspection service
1967 Starts insurance broking service
1999 Bought by Centrica for 1.1bn
2004 Sold by Centrica for 1.75bn
Analysts had put a 1.5bn price tag on the organisation, which Centrica bought for 1.1bn in 1999.

The AA said it was closing about 70 vehicle servicing centres, which provide MOTs and car repairs, because it had been unable to build a national network since buying the business from Halfords in 2001.

Nationwide will now become its approved service provider for members and customers.

Subject to consultation with unions, the AA also intends to close its Tyre Fit mobile maintenance service, bought in 2002, and its Vehicle Inspections unit for used cars.

The AA's membership flourished under Centrica's ownership, rising from 9.5 million in 1999 to more than 15 million last year.

However, Centrica was keen to focus on its core utilities business and was thought to believe that the AA had limited potential for expansion, particularly outside the UK.




SEE ALSO:
Centrica gets bumper price for AA
01 Jul 04  |  Business
Centrica starts talks to sell AA
21 Jun 04  |  Business
AA plans office closure
03 Mar 04  |  Scotland


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