Ebookers to cut staff despite record Q1
Ebookers is cutting staff by over 270 despite posting positive results for the first quarter.
The online agent reported a 47% rise in gross sales for the first quarter of this year to £160 million and says it is confident for the year ahead. Pre-tax profits were £1.3 million in the first quarter up from a loss of £4.9 million in the same quarter last year.
Ebookers says that further “automation and efficiency gains” are allowing it to reduce its European headcount by over 200 and also cut staff in its outsourced India facility by 70. The job cuts will save ebookers an estimated £2.5 million in 2004. The company has not ruled out further redundancies in the future.
Ebookers has hoped the India BPO facility would be a money spinner by generating third party business as well as generating cost savings for the company. Chief financial officer, Nigel Addison Smith, told TravelMole that the India facility had been let down by third party companies that expressed an interest, but later backed out. He said that he hoped to be able to announce other deals soon.
Chairman and chief executive, Dinesh Dhamija said: “Our successful strategy of taking offline companies and converting them to the internet, is enabling us to significantly improve productivity and take out costs.”
The website is now selling more non-air products – non-air sales amounted to 40% of products sold in the first quarter, up from 29% in the same quarter last year. Commenting on this Mr Addison Smith told TravelMole: “It has been superb, and way beyond our expectations, which were around 30%.” He says ebookers hopes to achieve a 50/50 balance between non-air and air sales eventually.
Non-air products like hotels, insurance and cars offer better margins than flights, which may have helped to boost sales. According to Mr Addison Smith hotel sales have a margin of about 30%, insurance 50% and car hire 25-30%. According to ebookers margins have fallen to as low as 1% on shorthaul flights in some markets. However, ebookers sells 80% of its flights on mid and longhaul routes which has helped it to maintain an average margin of 9.2%.
In a bid to boost hotel sales, ebookers has poached Expedia’s director of lodging demand, Ranjan Singh, to take up a role as head of hotels. Mr Addison Smith describes him as “the best in the industry” and says he was responsible for turning around Expedia’s hotel sales.
Report by Ginny McGrath
Ginny McGrath
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