Platform 6 for the East Coast Mainline service to London Kings Cross

[Bayum]

East Coast Mainline Company are apparently the public body talking over the East Coast Rail franchise...

http://news.bbc.co.uk/1/hi/scotland/8164189.stm

 

[djw1981]

Arggh they are not talking over until, and if NX default on a premium payment. If passenger numbers increase, then NX can make these payments and there is no default and they retain the franchise. Adonis disappointed me with his highly political and non factually correct press releases.

 

[Bayum]

So, really it's upto the public to increase their wanting to go on NXEC trains thats going to save them?

 

[djw1981]

Or the NX marketing department. Same as every franchise though - more people = more money.

 

[paul1609]

Arggh they are not talking over until, and if NX default on a premium payment. If passenger numbers increase, then NX can make these payments and there is no default and they retain the franchise. Adonis disappointed me with his highly political and non factually correct press releases.

Its all political gesturing. I still reckon a deal will be done to renegotiate the franchise. The taxpayer will end up with a £1.4 billion tab if the franchise fails.

 

[Failed Unit]

So, really it's upto the public to increase their wanting to go on NXEC trains thats going to save them?

Sounds like a good reason use Hull Trains, Virgin, XC, TPE or anyone else whereever possible then!

 

[djw1981]

Its all political gesturing. I still reckon a deal will be done to renegotiate the franchise. The taxpayer will end up with a £1.4 billion tab if the franchise fails.

No cos the new franchisee will pay a prem,ioum also - maybe smaller says £600m; thus taxpayer loses income of £800m over 8years, much less thanw e are losinbg from some otehr goivernment policies

 

[scandal]

It does make me very curious this whole talk of premimum payments. According to the statistics in rail trends Greater East Anglia Franchise and the ECML make a profit. It therefore makes me beg the question that why are we painting having it back in public hands such a big loss to the taxpayer, when as said it actually makes a profit and there is no need for the DfTs premimums to first be shared to the shareholders of NX. As Adonis put it, NX can not be allowed to reap the benefits when times are good, and quite frankly I feel disappointed the ideas of taking back NXEA and C2C have all gone quiet when it would of allowed the government to make back the losses it is facing due to revenue support and being messed about by NX.

Incidentally with road and air traffic down 20%, rail traffic is still growing, something that seems to be forgotton by the media.

 

[WillPS]

Its all political gesturing. I still reckon a deal will be done to renegotiate the franchise. The taxpayer will end up with a £1.4 billion tab if the franchise fails.

It's not acceptable for a business to bid a large amount for a government franchise only to then realise it's completely unsustainable and ask the government to settle for less, even more so when the franchisee wants to pay less than the next highest bidder (as I suspect may have been the case with NXEC). If you don't believe this happens, then take a look at GMTV - who outbid TVAM in 1991 by a ridiculous amount only to then have their franchise payment lowered to below what TVAM had offered.

Effectively, this leaves the door open for prospective franchisees to bid outrageous amounts to obtain a franchise safe in the knowledge that if they cant pay it they will be allowed to drop down. It makes a mockery of the whole franchising process.

I also think the cost of temporarily rebranding the service should be handed on to National Express. Business is about risk, and this time the odds have not favoured NX and it's not acceptable that the taxpayer should pay for their foul.

Additionally, those who say the taxpayer will be £140m out of pocket aren't quite right. One must remember that the East Coast Main Line is profitable - so the public purse will still receive money from a nationalised franchise.

If NXEC is making a loss then NX should cut the ties, especially seeing as the plans are now public. The only thing that'd drive them to keep on paying is if their whole rail division is turning a profit (all of NXEC, NXEA and c2c), because once they hand in the keys for NXEC they risk being asked for NXEA and c2c's back aswell.

So ultimately, the profits of their entire rail division will decide when and if National Express throw the towel in. I'd guesstimate in saying that NXEC's losses are just about to outdo NXEA and c2c's profits, so any time now - as reports indicate.

 

[WillPS]

A couple of ideas I've had:

 

[paul1609]

No cos the new franchisee will pay a prem,ioum also - maybe smaller says £600m; thus taxpayer loses income of £800m over 8years, much less thanw e are losinbg from some otehr goivernment policies

According to their company announcements NXEC lost £20 million in the first 6months of the year. Thats £40 million a year. The premium to the government this year is £87 million. As a back of the fag packet calculation that means NXEC is currently making a nett profit of £47 million a year. If growth remains the same as this year the franchise over 8 years is worth a maximum of £ 326 million deduct the costs of bidding and setting up a new franchise and the risk of taking on a franchise in the current recession and East Coast is probably worth a bid of around £200 to £250 million.

Worse still who is going to bid for the franchise? 2 of Firsts current franchises (FCC and FGW) are according to Roger Ford currently receiving maximum cap and collar support from the government due to revenue shortfalls. Stagecoach are at arbitration trying to get the SWT premium reduced by around £200 million after a collosal overbid. Virgin need to retain the west coast franchise in a little over 2 years. Govia are reportedly happy with their market share after retaining Southern.

I dont think the Government can afford to lose NEG as a bidder.

 

[djw1981]

DB REgio?

 

[Failed Unit]

I dont think the Government can afford to lose NEG as a bidder.

They can and they must, as others have said the franchise still makes a profit that will go directly to the government. The mess has already shown that the private sector is only in it for the good times, and when the going gets tough they get going. If concessions are made to national express for their over optimistic bid then every other franchise should be allowed to renegiotitate, that will cost the UK taxpayer a lot more than remove East Coast from national express.

The other thing is the majority of people who use the route daily don't want national express running down the route. I have suffered two bad franchises of thiers (Central trains been the other one). So I agree let national express run buses, which is what they are good at!

 

[Waverley125]

47m profit? They're losing £40m a year, and then have to pay £87m to the government. I make that a £127m a year loss, which would be why NEG's share price is plummeting.

 

[EWS 58038]

DB REgio?

Hopefully not. If there is one company which is not able to run a InterCity business... then it is DB Regiobahnen. They can only handle maller franchises. DB is crap as their InterCity department has an average punctuality of just over 70% in Germany.

And how would you think about the Germans running the prime route to London? They are already running the royal train... who would have thought that 60 years ago.....

 

[Daimler]

A couple of ideas I've had:

Either would suit me!

 

[paul1609]

47m profit? They're losing £40m a year, and then have to pay £87m to the government. I make that a £127m a year loss, which would be why NEG's share price is plummeting.

I believe the £20 million loss is after the premium payments have been made.
The reason the share price is plummeting is that the premium payments are over £100 million next year.