Extreme weather forced AA to rely on mechanics from local rivals, driving down profits by £20m
- Members called the AA 1.91m times during the first half of the year
- The AA sends outside garages if its own patrols cannot get there in time
- Bosses higher costs from third-party garages had driven profits down to £345m
More AA members had their breakdowns dealt with by a non-AA garage as it struggled to meet a spike in calls during this year’s extreme weather.
Members called the AA 1.9million times during the first half of the year as cars skidded on ice or buckled under extra-long summer journeys. That was 8per cent more than last year.
The AA sends outside garages if its own patrols cannot get there in time, and in a trading update bosses said the costs for doing so had risen over the half-year, but declined to say by how much.
More AA members had their breakdowns dealt with by a non-AA garage as it struggled to meet a spike in calls during this year’s extreme weather
In its full-year results in April, they said those higher costs from third-party garages had driven profits down £20million to £345million.
Yesterday, the AA said the call glut was much higher than expected and more than the average over the past ten years.
They are recruiting more roadside patrols and will also be trying to manage their workload better, using mobile phone apps. As well as the financial costs for the AA, members often prefer dealing with its drivers.
Earlier this year, the Mail reported on claims from AA insiders that mechanics were quitting in droves but the AA said there had been no spike in leavers.
Paid members for its roadside insurance business have fallen by 1per cent to 3.25million, it said, with greater competition from rivals such as Direct Line. The retention rate has fallen to 81per cent from 82per cent last year, although that is up from 79per cent in 2015.
In its insurance division, the number of motor policies have risen 7pc to 659,000 while home policies have been flat. Bosses expect that home policies will grow again in 2020.
Overall, the business remains on track to deliver profits of up to £345million for the year.
Chief executive Simon Breakwell, 53, is trying to steady the business after a turbulent 2017.
Executive chairman Bob Mackenzie, 65, was fired for gross misconduct after allegedly punching a colleague during a company weekend away.
He is suing the AA for up to £225million in forfeited stock awards and wrongful dismissal. Mackenzie claims he was overworked and under severe stress at the time of the altercation.
The man he allegedly punched, Mike Lloyd, 39, is due to quit by the end of this year but the AA says his departure has nothing to do with the Mackenzie incident.
Citi analysts said the trading update was strong though Liberum noted the level of complaints had increased. They added: ‘We are not sure if they have increased relative to the level of call-outs. The vast majority have been handled well and this could be a positive driver of future retention.’