AA restructure, job losses and franchised breakdown choices

AA restructure, job losses and franchised breakdown choices

The factual information in this blog comes from the February Car and Accessory Trader (CAT) magazine.

I’ve written about the AA charging loyal customers more than they do new ones. An example of this is the Club member who told us she contacted the AA about a difference of more than £50 here. After 20 years of loyal membership she was horrified to be told they wouldn’t budge, at all, for her.

Sadly Muriel had run out of time to go elsewhere for this cover so she paid the extra to stay with the AA, as she no doubt had done for many years, without realising this. I suspect that many motorists do the same, because if they had left, the AA would surely take this matter more seriously?

Could this strategy to ‘make loyal motorists pay the most’ be influenced by the AA’s current financial situation I wonder?

AA Finances

Here are the facts for you to decide for yourself.

Once upon a time the AA was a mutual society which meant that it was owned by its members. That was presumably when patrolmen used to salute car drivers who had an AA badge in the car’s grille?

In 1999 the AA became a PLC, soon after which it was bought by Centrica, who were later expected to concentrate on their core British Gas customers and sell the AA on. It was then bought by private equity partners CVC and Permira who regrouped with others to form Acromas, to include Saga. Rumour has it they over-stretched themselves at this stage and in 2014 it was sold on again to a combination of management and investors who thought they could do a better (cost cutting?) job.

Saddled with a £2.7bn debt at that stage, last year their CEO was involved in a Director brawl about finances and then sacked for gross misconduct. He was facing a £185m annual financing bill to support this debt, accounting for 66% of the AA’s operating profit of £284m for the year ending 31 Jan 2017.

Put further into perspective, we also learn that the AA’s pension deficit is £622m which is close to twice that of the £345m deficit that brought down BHS.

In addition to the scheduled loss of 100 management, admin and support roles, their National Training Centre at Melton Mowbray is to close. Paul Grafton of the GMB Union thinks this will impact on the quality of service delivered by their patrol force and sees this as an attempt to squeeze the last drop out of the business before having to franchise it.

Is there an AA franchising future?

Were the AA to franchise (parts of) its patrol operation, all is not lost of course although many patrol staff jobs probably will be. Were this to happen, the AA would start to reduce the number of patrol staff they employ, replacing them with local recovery services the AA doesn’t own, who’d be contracted to act on the AA’s behalf.

This is how many of the less well known breakdown operators work, of course, including Direct Line owned Green Flag. Undoubtedly a franchised breakdown services model can work but it likely needs more, not less, training for non AA patrol teams to ensure that AA standards and trust levels can be maintained.

It certainly seems that we will see fewer AA branded vehicles and patrol men/women on our roads in future.

By all means sympathise with front line patrol staff who continue to do a good job in these uncertain times. But don’t feel sorry for the AA Board or shareholders who seem to have little regard for loyal customers like Muriel.

Instead, I suggest you check out the [50% discount Green Flag offer] to compete with AA and RAC at renewal times, for cars younger than 10 years old. I don’t know how long this offer’ll continue, or if they’ll reward customer loyalty in future years either but we’ll keep looking until we find a better and more transparent breakdown service and offer for women drivers in future.

FOXY Steph

Here’s [the Green Flag offer].

Here’s where to [join FOXY Lady Drivers Club] to be sure of motoring advice and support when you’re not sure what best to do.

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