Trade unions hit out at AA and Saga deal

Paul Maloney, national secretary for the GMB union, claimed the managing partners in Permira and CVC stood to make £300 million having owned the AA for less than 3 years, while AA chief executive Tim Parker would receive £80 million out of the deal. “This money was made on the back of 3,500 sacked workers, cuts in the pay of the call centre staff, the elongation of the working day for the patrols and a decline in the service to the customers.”

Alistair MacLean, national secretary of the AA Democratic Union, which claims to represent 4,500 AA staff, also expressed fears that jobs could be lost. Private equity firms Permira and CVC bought the AA for £1.7bn in 2004, and were criticised following 3,000 jobs cuts - equivalent to a quarter of the workforce. Staff at the two firms are expected to receive considerable payouts from their investments in the companies, with media speculation suggesting that 2,130 Saga employees are set to share in a windfall of £280m.

The two companies have tried to allay fears of rationalisation by stating that the existing shareholders in both the AA and Saga would be investors in the new business. Meanwhile, Aron Thompson, head of insurance at independent online price comparison and switching service Switch.com calculated the merger would give the group a combined customer base of 17 million, including 2 million car insurance customers. “With more than 20 million people over the age of 50 in the UK, it would be very disappointing if the car insurance products currently offered by SAGA were in any way scaled down or diluted as a result of this merger,” he said.