c2c sold by National Express to Trenitalia

[pemma]

Translate the following page and it will reveal who has won it.

http://www.lesechos.fr/industrie-se...ace-pour-le-tramway-de-manchester-2044237.php

However it should have been public news in mid December and hasn't been announced yet, so I wonder if anything has happened. Maybe Southern problems have put TfGM off??? Or some other bid problem??

Unless it's been modified since it says Kelios are well placed to win the franchise with RATP and NX the other shortlisted bidders.

 

[swt class 450]

National Express definitely seem to be trying to get rid of all their railway businesses. If you go back about ten years they were one of the largest train operators in the UK and operated a huge amount of franchises including the following.

National Express C2C
National Express Central Trains
National Express East Anglia
National Express East Coast
National Express Gatwick Express
National Express LTS Rail
National Express Midland Mainline
National Express One
National Express Scotrail
National Express Silverlink
National Express Stansted Express
National Express Valley Lines
National Express West Anglia Great Northern
National Express Wales & Borders
National Express Wales & West
National Express Wessex Trains

It does seem very strange that an Italian company that is owned by the Italian government would be interested in running C2C.

So once this sale is complete we will have.

• Chinese Government owned (TFL Rail)
• French Government owned (Gatwick Express / Great Northern / London Midland / Southeastern / Southern / Thameslink)
• German Government owned (Arriva Trains Wales / Chiltern Railways / Cross Country / Grand Central / London Overground / Northern Rail)
• Italian Government owned (C2C)
• Netherlands Government owned (Abellio Greater Anglia / Merseyrail / Scotrail / Stansted Express)

All of these companies (including C2C once the sale is complete) will probably be far more interested in improving their own railways (using the money they make in the UK) than the UKs railways. So im not sure that Trenitalia (Italian government) taking over C2C is really a good idea.

Also does anyone think it is likely that the Trenitalia logos will replace the National Express logos on their 357 and 387 trains? Or will they try to hide the fact that they are Italian owned?

 

[daikilo]

Whilst I guess I can see why NEX may consider C2C is underperforming compared to other parts of the Group, there is an element in the media release of the Trenitalia deal which puzzles me - NEX is "selling the franchise (and possibly the TOC to Trenitalia)" (and pocketing the cash).

Now, when C2C was selected by DFT to run the franchise "after a complex evaluation process", I'm pretty sure there was no print of any size which gave NEX the right to sell down without DfT approval. If there was then it makes a mockery of the process.

Note that I am not discussing the question of TOC ownership as that horse bolted back in the 1990s and is now in the hnads of the DfT who select who can bid..

 

[43074]

National Express definitely seem to be trying to get rid of all their railway businesses. If you go back about ten years they were one of the largest train operators in the UK and operated a huge amount of franchises including the following.
...
It does seem very strange that an Italian company that is owned by the Italian government would be interested in running C2C.

So once this sale is complete we will have.

• Chinese Government owned (TFL Rail)
• French Government owned (Gatwick Express / Great Northern / London Midland / Southeastern / Southern / Thameslink)
• German Government owned (Arriva Trains Wales / Chiltern Railways / Cross Country / Grand Central / London Overground / Northern Rail)
• Italian Government owned (C2C)
• Netherlands Government owned (Abellio Greater Anglia / Merseyrail / Scotrail / Stansted Express)

All of these companies (including C2C once the sale is complete) will probably be far more interested in improving their own railways (using the money they make in the UK) than the UKs railways. So im not sure that Trenitalia (Italian government) taking over C2C is really a good idea.

Also does anyone think it is likely that the Trenitalia logos will replace the National Express logos on their 357 and 387 trains? Or will they try to hide the fact that they are Italian owned?

It shouldn't make any difference whether they are British based or not, the name of the company will probably stay the same as they generally have a good reputation, the management are staying and the contractual commitments established by National Express will have to continue to be honoured by Trenitalia, so in theory there should be little difference as far as the passengers are concerned regardless of where the money ends up.

I don't think NX tried to get rid of their rail franchises, in some cases they were simply unsuccessful when they came up for re-franchising, in other cases they probably didn't bid.

 

[Clip]

I get your point yet again but if there are state owned companies who see it worthwhile to operate trains in the UK to make money for the majority shareholder (Italy in this case) what the hell is going on in the UK?

Are there any UK government owned railway companies operating abroad getting subsidies to operate the services they do and if not why not?

To put it simply to you - the UK does not have a state owned railway company to bid for franchises anywhere else because the government do not want to play at trains.

I hope that has cleared up your repetitive question about why we dont have the same.

 

[daikilo]

To put it simply to you - the UK does not have a state owned railway company to bid for franchises anywhere else because the government do not want to play at trains.

Really? Does DfT know (when, they have finished playing with industrial relations)?

Looking back in time, various BR Directorates did have an international arm and, because they actually knew what they were doing, were quite successful at it.

 

[LNW-GW Joint]

So once this sale is complete we will have.
• Chinese Government owned (TFL Rail)
• French Government owned (Gatwick Express / Great Northern / London Midland / Southeastern / Southern / Thameslink)
• German Government owned (Arriva Trains Wales / Chiltern Railways / Cross Country / Grand Central / London Overground / Northern Rail)
• Italian Government owned (C2C)
• Netherlands Government owned (Abellio Greater Anglia / Merseyrail / Scotrail / Stansted Express)

Not correct.
MTR is a private company based in Hong Kong (they also have the Crossrail concession). They used to be owned by the Hong Kong government (not the Chinese state).
The "French" element in each case (Keolis) has a minority stake in a British-majority-owned TOC (Go Ahead is the majority owner).
The "French" interest is not wholly French either as Keolis has a Canadian minority share.
The "Netherlands" share of Merseyrail is 50-50 with UK's Serco.

None of the "governments" (ie their equivalent of DfT) control any UK franchise, they have to operate under EU and DfT rules.
Their operators are commercial businesses returning profits to shareholders (which may be the state).
All EU "state" railways are open to competition to a higher or lower extent.

 

[Moonshot]

I seriously don't get your point. I am saying that companies entirely owned by foreign governments are making a profit off our government subsidies because of the way we privatised our railways and your response is that ASLEF or the RMT could also bid? How the hell is the UK way ahead in taking government subsidy from other countries to run their trains for the profit of the government and the country? Are any UK government owned companies running railway services in foreign countries?

I don't know how much more simply I can put this, if Stagecoach or National Express make a profit abroad it goes to their shareholders who are whoever. If Trenitalia or Deutsche Bahn make a profit it goes to their shareholders the majority of whom are the German and Italian government.

I dont think you really understand what is going on right now in Europe. EU policy ( ie The Fourth Rail Package ) is heading towards " outsourcing " rail services to the private sector via franchises........which we in the UK already do. In theory, anyone can bid to run a rail franchise ( Aslef did make a somewhat symbolic bid for one some years ago ). In practice , it tends to be competition between already established operators no matter where they are based or how they are financed. As far as I am concerned personally as an employee of Northern, I cant complain that my salary in what is a private sector run rail operator ( Northern ) is far better nowadays than it would have been under a state run BR or whatever the equivalent would have been today. I really couldnt care less who ultimately the profits end up with, because franchises are open to anyone who has the ability to run a rail service - in Northerns case its probably won by the operator who requires the least subsidy.

 

[fowler9]

To put it simply to you - the UK does not have a state owned railway company to bid for franchises anywhere else because the government do not want to play at trains.

I hope that has cleared up your repetitive question about why we dont have the same.

Not really, the reason our government do not want to play at trains is because they feel private enterprise can do it better, so they are paying other countries governments to play on our rail network. Other countries governments obviously think they can do it and are taking money off ours.
--- old post above --- --- new post below ---

What is your problem with the ultimate owner being a government rather than a privately owned company?

Do you have a problem with the UK Government making a profit from, say, Royal Mail? How is that any different?

My problem is not with the ultimate owner being a government, it is with our government thinking the service being privately run is better and then paying other countries governments to do it. What is so fundamentally flawed about our government that means we can't do the same?

 

[WatcherZero]

Now, when C2C was selected by DFT to run the franchise "after a complex evaluation process", I'm pretty sure there was no print of any size which gave NEX the right to sell down without DfT approval. If there was then it makes a mockery of the process.

Note that I am not discussing the question of TOC ownership as that horse bolted back in the 1990s and is now in the hnads of the DfT who select who can bid..

They do need government approval for the transfer of ownership, that is expected to take 4 weeks.

 

[Barn]

Not really, the reason our government do not want to play at trains is because they feel private enterprise can do it better, so they are paying other countries governments to play on our rail network. Other countries governments obviously think they can do it and are taking money off ours.
--- old post above --- --- new post below ---


My problem is not with the ultimate owner being a government, it is with our government thinking the service being privately run is better and then paying other countries governments to do it. What is so fundamentally flawed about our government that means we can't do the same?

Why does anybody outsource? There are lots of reasons. One is risk transfer: those other counties seek to make a (fairly modest) profit but also take the risk of delivering the contracted service.

 

[urpert]

They are mostly privatised.
So the UK equivalent is Stagecoach and National Express (still) with operations and subsidiaries abroad.

There's nothing to stop TfL bidding overseas (like RATP and MTR do here), but I guess the Mayor doesn't see any benefit for London.
Nobody else is big enough really.

Actually that idea was mentioned in Sadiq's manifesto as another way of offsetting the cost of the fares freeze.

 

[LNW-GW Joint]

My problem is not with the ultimate owner being a government, it is with our government thinking the service being privately run is better and then paying other countries governments to do it. What is so fundamentally flawed about our government that means we can't do the same?

The government doesn't want to own a railway operator (TOC), any more than an airline or a ferry company.
A franchise TOC take the risk of running the show, puts up cash to invest in it and to fund bonds in case it goes bust.
All the bidders (public or private) operate under the same rules.
Our companies can bid in Europe, and theirs can bid here, in competition, as commercial entities, not as arms of the state.

Things might change if Mr Corbyn gets to play trains, but historically our public bodies have not been empowered to operate abroad.

 

[fowler9]

Why does anybody outsource? There are lots of reasons. One is risk transfer: those other counties seek to make a (fairly modest) profit but also take the risk of delivering the contracted service.

Yeah I get you, our government chose not to take that risk and fair enough. I have seen and worked in some pretty disastrous outsourcing projects though. I think it is not always to the benefit of the customer though. I have worked on helpdesks where I have been told my job is not to help people, just to get them off the phone, get the next call through and hit SLA's. It's a **** state of affairs.
--- old post above --- --- new post below ---

The government doesn't want to own a railway operator (TOC), any more than an airline or a ferry company.
A franchise TOC take the risk of running the show, puts up cash to invest in it and to fund bonds in case it goes bust.
All the bidders (public or private) operate under the same rules.
Our companies can bid in Europe, and theirs can bid here, in competition, as commercial entities, not as arms of the state.

Things might change if Mr Corbyn gets to play trains, but historically our public bodies have not been empowered to operate abroad.

I get you to. But why do other governments want to do it? They are obviously making at least some money for the state pot as opposed to us paying other states money to do it for us.

 

[LNW-GW Joint]

I get you to. But why do other governments want to do it? They are obviously making at least some money for the state pot as opposed to us paying other states money to do it for us.

If you look at it from the point of view of the German or Italian government, they've been told by the EU to open up their rail networks to competition.
As they have not fully broken up their main state operator, that means DB is under attack from (eg) Trenitalia and SNCF.
But they can do the reverse to Italy or France.
The UK is easier to enter because we are already fully privatised.
They are all building the capability to run rail operations anywhere in the EU.
DB chose to do it by buying our most successful EU operator, Arriva, to give them a head start.
Trenitalia have done it by buying, first, the German operations of Arriva (which had to be divested because of competition laws), and now c2c.
It's like all the electricity operators moving into the previously closed nationalised regional board areas, to generate competition.
The EU aim is for all rail operations to be competitively tendered periodically, like we already do.
Even NS in the Netherlands has only a limited licence to operate services, which will be tendered one day.
They are not permanent "state" fixtures any more.
In contrast, infrastructure looks like staying in state hands everywhere.

 

[fowler9]

If you look at it from the point of view of the German or Italian government, they've been told by the EU to open up their rail networks to competition.
As they have not fully broken up their main state operator, that means DB is under attack from (eg) Trenitalia and SNCF.
But they can do the reverse to Italy or France.
The UK is easier to enter because we are already fully privatised.
They are all building the capability to run rail operations anywhere in the EU.
DB chose to do it by buying our most successful EU operator, Arriva, to give them a head start.
Trenitalia have done it by buying, first, the German operations of Arriva (which had to be divested because of competition laws), and now c2c.
It's like all the electricity operators moving into the previously closed nationalised regional board areas, to generate competition.
The EU aim is for all rail operations to be competitively tendered periodically, like we already do.
Even NS in the Netherlands has only a limited licence to operate services, which will be tendered one day.
They are not permanent "state" fixtures any more.
In contrast, infrastructure looks like staying in state hands everywhere.

Cheers for all the info mate and to everyone else who has answered me. I just want to understand and hope I didn't seem argumentative. I really did think "I must be missing something".

 

[Class 170101]

What Trenitalia is after is not the C2C franchise itself but the National Express management and bidding teams to use for future bids.

But surely they would stay with NX? Only the TOC management is likely to stay with c2c.

 

[pitdiver]

But surely they would stay with NX? Only the TOC management is likely to stay with c2c.

Not if they've got any sense. Despite what Dean Finch might say I don't think NX will get involved in bidding for any more franchises. That is a personal opinion coming from an ex NX employee.

 

[87015]

But it gets complicated - a lot of the bid team (well, what's left of it) is on c2c contracts as a fiddle to get/retain travel facilities and railway pension...

 

[Simon11]

It seems most of what is left of the bid team are moving and most of them aren't on c2c contracts.

I can't see NX bidding for any rail contracts for a long time, they will have lost most of their rail bid people and while they have coach/ bus bidding teams, it really is a different kettle of fish to rail bidding.

 

[JaJaWa]

How come National Express even bid for c2c this time round

 

[richw]

They do need government approval for the transfer of ownership, that is expected to take 4 weeks.

Although they must have it in principal already as NX thank the dft for their cooperation during negotiation in their press release

 

[HH]

Abellio recently admitted that their UK operations required very little investment and generated a good amount of profit which they could invest on their home network.

Better show a link to that, because if it's a repeat of the article I remember it says no such thing.

--- old post above --- --- new post below ---
I was surprised that no-one had picked up this:

The total consideration is expected to be in the region of £70 million, resulting in a small net profit for National Express.

Let me correct that...

The total consideration is expected to be in the region of £70 million, all profit for National Express.

What assets do they imagine that TrenItalia are getting for their money?

 

[387star]

I don't have much positive to say about central trains either.

Unlike Stagecoach National Express didn't seem to have consistency

C2C Midland Mainline and Wessex Trains were very successful in various ways although wessex ran some of the fleet down to the ground namely the dogboxes... However there did seem genuine intent to promote the great scenic railways of devon and cornwall

Central silverlink and wales and borders left a lot to be desired ... Not even sure the 321s were touched! although they should be applauded for their brand new fleets of turbostars both scotrail and central

'One' railway was of course a disaster and the messy reboaunch as mxea is probably why comoanies are doing a scotrail and keeping a name and livery intact

 

[WatcherZero]

Better show a link to that, because if it's a repeat of the article I remember it says no such thing.

--- old post above --- --- new post below ---
I was surprised that no-one had picked up this:



Let me correct that...

The total consideration is expected to be in the region of £70 million, all profit for National Express.

What assets do they imagine that TrenItalia are getting for their money?

The ticket bond, the default bond, the staff and equipment, cash in the franchises bank accounts. The sunk costs of the bid and startup costs.

Put that all together and they are likely making only a seven figure profit, probably just around £3 or £4 million. In fact based on the 2015 accounts NX would have made around £600k profit selling for £70m, though 2016 figures are uncertain.

In 2015 C2C generated revenues of £168.4m for NX but a profit of just £0.6m and it made a loss of £10.1m in 2014, their rail assets were valued at £53.7m of which £19.7m are intangible the franchise had £3.7m in locked cash. They had £50.3m of liabilities. The rail pension pot was £89m with liability of £87m. Rail performance bond was £63.3m and ticket bond £21.9m

They spent £25m in the UK arm bidding for rail franchises in 2014 and £19.8m in 2015

 

[Clip]

Really? Does DfT know (when, they have finished playing with industrial relations)?

Looking back in time, various BR Directorates did have an international arm and, because they actually knew what they were doing, were quite successful at it.

I guess you are thinking about DOR? If so then you really shouldnt be as they are not a TOC and are not really set up in the way a TOC is to bid for services in Britain or Europe.

And yes Im pretty sure the DfT do know.

Not really, the reason our government do not want to play at trains is because they feel private enterprise can do it better, so they are paying other countries governments to play on our rail network. Other countries governments obviously think they can do it and are taking money off ours.
?

Yes, really. They dont want to play at running trains - thats been pretty clear for the last 20 years in case you have missed it.

 

[Mollman]

How come National Express even bid for c2c this time round

Because they were already running the franchise and I don't think shareholders would be too happy if they decided not to bid. This way they get some money and exit the franchise system.

 

[daikilo]

I guess you are thinking about DOR?

No, I was refering to the international arms/consultancies of the various BR directorates like BREL i.e; 30+ years ago.

 

[LNW-GW Joint]

Looking back in time, various BR Directorates did have an international arm and, because they actually knew what they were doing, were quite successful at it.

There are rules written into franchise agreements about "change of control".
They have to be approved by the DfT, and have happened frequently enough, mainly in the first few years of franchising.
There is usually a cost to the incoming owner to pay for the admin of the change, and has in the past led to more stock being ordered or extra services provided.
The incoming owner has to be competent, but as Trenitalia already have a DfT passport to bid for franchises I would think that is taken for granted in this case.

BR had an international arm, but it didn't run trains overseas.
At one time it ran Sealink ferries before they were sold off, and it partnered with SNCF/SNCB/NS on the rail links to the ferry services, also the train ferry links at Dover and Harwich.
In the break up of BR it was sold to SNCF and became Rail Europe.

BR had a similar role in Eurostar as EPS at the beginning when it was a consortium with SNCF/SNCB/BR, but EPS was hived off as a separate government-owned entity, then sold to London & Continental and then recently sold on to SNCF.

I've no doubt some of that ex-BR expertise ended up with the UK arms of EU railways who then bid for UK franchises, notably Keolis.
Some will also now be part of the SNCF's Rail Europe group in London.

 

[Clip]

I guess you are thinking about DOR?

No, I was refering to the international arms/consultancies of the various BR directorates like BREL i.e; 30+ years ago.

But that has no bearing on the present day nor is does it have any relation to what you quoted of mine either .