Transport Officals monitoring financial state of GNER parent

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joeholmes

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Dft are understood to be monitoring the position of sea containers.

Shares in GNERs parent company fell 38% last Friday after the company annouced it was in breach of its banking covenants following a $500 million write dowe in the value of Sea Containers' ferries buisness.

Yesterday the shares fell another 17%

Also GNER suffered another blow last week after the Rail Regulator rejected its application to increase services on the line, jeopardising the enconimics of the franchise...

Interesting little Point which i noticed in the Business Section in "The Intependent"..

Joe
 
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R

RailUK Forums

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Yep GNER and Seaco have been in trouble for a while now and this was very apparent while i was an employee of the company. GNER made its first loss ever last year and Seaco sold alot of its holdings as it had finacial difficulty. I have no exact idea of the situation at the moment as im no longer an employee thankfully, but I have heard that they may be stripped of the franchise if one didnt pull there finger out!

This may also scupper any chance of GNER bidding for XC, or any other franchise :)
 

Dennis

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GNER have every right to feel aggrieved with the GCR decision - to have to pay a substantial premium to run the franchised trains and not have any real opportunity to increase the services and face possible fare abstraction does seem a little off (assuming GNER bid on the assumption that GCR would not be successful in gaining approval to run). Franchise renegotiation coming up?

In a similar vein, the First / DfT issues in the Wessex area also need sorting, each seemingly blaming the other over many of the proposed service reductions. If First don't want to run comercially non-viable services over the franchise requirement, fine. They are a business whose objective is to make a profit. What First should not be doing is blaming DfT for 'imposing' these cuts. Conversely, DfT had the power to include such commercially non-viable services in the franchise agreement.

At the end of the day, both GNER and FGW are expected to pay a (large) premium for running franchised services and it will be the taxpayer who loses out when these payments are not forthcoming. A sensible minimum level of service should be specified in franchises and commercial freedom given to enhance the services so as to maximise profitability (which will come from running services people actually want to use).

DfT meddling and micromanagement is not the way forward - just a continuation of failed SRA policy. Specify minimum service levels (frequency, first and last trains etc) and let the TOC's get on with it.

The ORR should also make it clear what level of regulation there is to be in the future - moving towards full competition via open access (as proposed a decade ago and in line with EU thinking) or tight regulation over what are basically cost plus franchise deals which allow no real commercial freedom.
 
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