Capita sees shares soar as initiatives are starting to pay off in turnaround plan

SHARES IN Capita rocketed on Tuesday after the outsourcing firm said it was making progress with a turnaround plan.

The group, which sent out profit alerts twice in three months at the end of last year and ousted its chief executive in March, said that as a result of a series of initiatives, trading will “continue to steadily improve”.

“We continue to expect profitability to improve in the second half, reflecting the cumulative benefit from performance improvement initiatives and lower attrition, and our current view that the trading businesses will continue to steadily improve,” Capita said.

The update sent shares soaring by more than 13 per cent to 624p.

Capita also confirmed it has entered an “exclusive engagement” with British Airways to explore forming a potential partnership to support its global customer contact operations, which handles approximately 9.5 million calls per year.

A deal with BA would likely see the airline’s call centres in Manchester and Newcastle, which employ 1,400 people, outsourced to Capita.

BA came under intense fire after an IT meltdown that affected thousands of customers was blamed by some on aggressive cost cutting.

Capita, which also held its AGM yesterday, has come under fire from union bosses over planned changes to its defined benefit pension scheme.

Unite claimed the changes would mean staff lose a large element of their pension benefits, with the union planning to challenge the decision.

A Capita spokeswoman said only a “small percentage” of the group’s workforce will be affected by the changes. She added: “A small percentage (approximately 3 per cent) are members of a defined benefit pension scheme. We are in the minority of companies still offering this type of scheme.

“We are consulting with these employees about a proposed move to our defined contribution pension plan.”