City Link slips into administration threatening 2,727 jobs at Christmas

 
Joe Hall
Follow Joe
City Link expect to make "substantial redundancies" after slipping into administration. (Source: Wikipedia Commons)

Parcel delivery company City Link has gone into administration, putting 2,727 jobs at risk.

Administrators Ernst & Young, called in by the Coventry-based company on Christmas Eve, said “substantial redundancies” would be made in the coming days.

City Link’s owner, private equity firm Better Capital, had marked the company for sale after incurring “substantial losses” on the £40m it had poured into the company.

Yet after failing to find a buyer, administrators were called in on Christmas Eve.

The timing of the move has drawn fierce criticism, with RMT union general secretary Mick Cash describing it as “an absolute disgrace” in an interview with the BBC.

City Link says it could no longer continue to accept new parcels. All of its depots will be closed until Monday when customers and recipients are urged to collect undelivered parcels as soon as possible.

A small number of staff will be retained in order to help return parcels and assist with the winding down process.

Better Capital bought the then loss-making City Link from Rentokil for just £1 in April 2013. Hunter Kelly, a partner at administrators Ernst & Young, said it had since failed to put the delivery company on the right path:

City Link limited has incurred substantial losses over several years.

These losses reflect a combination of intense competition in the sector, changing customer and parcel recipient preferences, and difficulties for the company in reducing its cost base.

The strain of these losses became too great and all but used up Better Capital’s £40m investment, which was made in 2013 and intended to help turn around the company.

Despite the low costs it offered to offer to customers, City Link failed to beat off the competition in the UK’s £7bn parcel delivery market.

Related articles