GMB call for talks with AA over £2.7 billion debt burden
GMB, the union for staff at the AA, commented on the sale by AA of its Home Emergency services business announced on 29th November 2017.see notes to editors for copy of the press release from the AA.
Paul Grafton, GMB Regional Organiser, said “GMB members working for the AA are seriously worried about the scale of debts and the cost of financing them and how this is impacting on their day to day lives.
The latest figures show that AA is saddled with debts of £2.7 billion and the costs of financing the debts are £185m per annum in the last published accounts. Financing the debts piled onto the balance sheet by the former private equity owners ate up 66% of the Operating Profit of £284m for the year ending 31st January 2017.
The Guardian commented “Most mature consumer-based companies might regard borrowings of two times trading profits as a tolerable upper limit. This is a company worth £1bn towing a £2.7bn caravan of debt. At AA the ratio is nearly seven times.
GMB consider that this sale and possible future sales of businesses by AA is linked to this squeeze imposed by the debt burden.
GMB members also think that it is linked to the AA providing them with equipment to do their jobs which is not up to scratch and which has given rise to injuries at work that are now subject to litigation.
GMB want serious talks with the new management about how to protect members and the business from this squeeze.”
Contact: Paul Grafton 07714 239 092 and GMB Press Office 07970 114762
Notes to editors:
Copy of AA press release:
PRESS RELEASE AA sells its Home Emergency Services business 29 November 2017
The AA announces that it has agreed to sell the AA’s Home Emergency Services policy book to HomeServe. This transaction, which is expected to complete early in 2018, aligns with the AA’s strategic focus on the Roadside Assistance and Insurance businesses.
Under the terms of the agreement, HomeServe will acquire approximately 70,000 consumer policies who will migrate from May 2018. HomeServe will operate the business under the AA brand for the next three years.
The AA will continue to provide Home Emergency Services cover for its business customers via its banking relationships and as add-ons to other home insurance policies. Claims fulfilment services for these will be outsourced to HomeServe.
On completion, approximately 70 plumbing and gas engineers will transfer to HomeServe.
Simon Breakwell, Chief Executive Officer, said: “This is a progressive step for us in light of our sharpened strategic focus. We thank the team for all they have done to build this business and wish them and the business well under new ownership.
Home Emergency Services remains an important product for our corporate business partners and we are proud to continue to deliver home services under the AA brand.”