80,000 driv­ers desert AA as prof­its plunge

Daily Mail - - City & Finance -

PROF­ITS plunged at the AA last year as the break­down ser­vice ploughed more money into road pa­trols and a dig­i­tal turn­around plan.

It is bank­ing on driv­ers will­ing to pay higher fees than its ri­vals for a more ex­ten­sive ser­vice that will in­clude plug-in tech­nol­ogy to di­ag­nose prob­lems, pre­dict break­downs and tell pa­trols where the cus­tomer’s car is if it runs into trou­ble.

The Smart Break­down ser­vice has al­ready been launched to new mem­bers and will be ex­tended to ex­ist­ing cus­tomers next year.

The over­haul is the brain­child of the AA’s tech-savvy chief ex­ec­u­tive Si­mon Break­well, who co-founded Mi­crosoft spin-off Ex­pe­dia. Higher spend­ing on its smart sys­tems shake-up, and more pa­trols and staff, cost it £26m last year, and were part of the rea­son why prof­its dived 62pc to £53m.

Rev­enues rose from £960m to £979m, but the num­ber of driv­ers with AA ac­counts fell by 80,000 to 3.21m. The av­er­age time it took to ar­rive at a call-out fell from 50 min­utes to 43 min­utes.

The AA is also ex­pand­ing its in­surance arm, with the num­ber of mo­tor poli­cies sold ris­ing 16pc to 731,000. It ex­pects the splurge on tech­nol­ogy to keep cus­tomer num­bers sta­ble this year with a rise in 2020. Break­well said: ‘We have spent the past year sta­bil­is­ing the op­er­a­tions – this year is about launch­ing new ser­vices.’

It man­aged to re­new sev­eral of its largest con­tracts last year, with com­pa­nies in­clud­ing Lloyds Bank­ing Group, Volk­swa­gen and Jaguar Land Rover. Separately, it also an­nounced it had signed a three-year con­tract with in­surer Ad­mi­ral of­fer­ing road­side as­sis­tance to its 4.3m UK mo­tor in­surance cus­tomers.

The AA’s share price yes­ter­day rose 0.8pc, or 0.7p, to 91p but that will be of lit­tle com­fort to in­vestors who have been ham­mered since AA floated at 250p a share in 2014. Shares peaked at 432p in early 2015.

The to­tal dividend for share­hold­ers was 2p in 2018, down from 5p the year be­fore. by Francesca Washtell

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