McAleese prepares for financial pain as Cootes’ woes deliver hit to parent company’s bottom line
McAleese is preparing for a significant financial hit to its bottom line this financial year due to the woes afflicting its Cootes Transport brand.
On the same day the New South Wales Roads and Maritime Services (RMS) issued more than 300 charges against Cootes, McAleese announced to investors the fuel transporter’s setbacks and restructure would cost it $47.3 million.
Cootes lost lucrative contracts with BP and Shell in the wake of a fatal crash at Mona Vale, prompting McAleese to announce changes to the running of the fuel carrier.
The contract losses alone make up the majority of the $47.3 million figure ($33.3 million), followed by the $13 million McAleese has set aside for redundancies as part of the restructure.
The restructure will involve a significant downsize of Cootes, with McAleese planning to offload 190 prime movers and 286 tankers estimated at $11.3 million in value.
Cootes is also terminating contracts with 7-Eleven stores in Queensland and New South Wales.
The changes are expected to lead to job losses within Cootes’, but McAleese has rejected media reports that 540 positions are on the chopping block.
A spokeswoman for the company says it is too early to determine how many drivers will be made redundant. She says McAleese has started discussions with the Transport Workers Union (TWU) and employees.
Cootes is still tendering for some BP work and the outcome of that will determine the fate of many employees.
“The company is still involved in the remainder for the tender process – 540 roles includes if we were to lose the entire national BP contract but that has not been decided yet,” the spokeswoman says.
“Redundancies, relocation of staff and transitions of staff to other operators is still some time away.
“The company is working hard to support its staff during this period of time and we’re hopeful that we’ll transition the majority of the people across to new contracts and find them other areas of work which is within our own organisation and support them along that journey.”
Investors were also told yesterday McAleese had underestimated the financial fallout from the Mona Vale accident. It originally forecast revenue losses of $2.1 million but now expects losses to peak at $7.7 million this financial year.
Meanwhile, McAleese expects the cost of fleet maintenance and inspections following the accident to rise from the originally forecast figure of $2.3 million to $5.2 million.
It has been a torrid year to date for Cootes, which was recently ordered to undergo another fleet inspection in New South Wales due to concerns about the safety of its fleet.
It last week took the decision to pull its trucks off the road in Victoria after the State’s transport department, VicRoads, detected major defects in Cootes’ fuel tankers.