Ebookers axes 270 jobs

EBOOKERS, the high-profile online travel agency, is cutting more than 200 jobs in this country and Europe and a further 70 in India, where it was one of the pioneers in outsourcing call centres to the subcontinent.

The group began consultation on the job cuts six weeks ago and expects most to have been implemented by the end of this month. It plans to save £2.5m, as a result, over the rest of this year.

Chairman and chief executive Dinesh Dhamija said the cuts came as a result of the group's success in moving so-called 'offline' travel players with good product content and converting them on to the internet.

That means most of the UK job losses will be felt at its High Street travel agents, including a dozen of those taken on with the £50m acquisition of Travelbag a year ago.

Dhamija said the proportion of Travelbag's bookings taken online was now 54% compared with 16% in January 2003 before it was taken over.

He added: 'Taking advantage of automation and efficiency gains, we are reducing our European headcount by over 200. Jobs currently outsourced to Tecnovate, our Indian business process outsourcing facility, will be reduced by 70.'

Worryingly, Dhamija added: 'As processes are automated and online sales grow, we intend to continue to make further reductions and efficiencies.'

He has targeted operating costs of 8.5% of turnover compared with last year's 12.7%.

Only last August, Ebookers said that it planned to treble the size of its Indian back-office and call-centre business, moving it from a cost centre to a profit centre as it took on more work for third parties. That would have boosted staff there from 640 to more than 2,000.

The Indian operation costs about a quarter of the running costs of the equivalent UK business and is staffed by graduates speaking seven languages between them.

Ebookers saw gross sales grow 4% to £160m in the first quarter, with 23% organic growth. The proportion of sales coming from sources other than cheap flights improved from 29% to 40% over the last 12 months.

In what is traditionally the travel trade's weakest quarter, Ebookers swung from losses of £4.9m to a pre-tax profit of £1.3m. Margins were static at 13.2% of gross sales.

Ebookers' shares plunged 25% to 300p last month on fears about its profit margins and the general outlook for the travel industry. They have since continued to slide back to 285p.

Dhamija said: 'With strong online growth, increasing high-margin non-air sales and the cost reductions detailed today, our business model is performing well and we continue to have a positive outlook for 2004.'

He added that concentration on the mid and long-haul market largely ring-fenced the group from the price war between cut-price airlines in the short-haul market.