VTEC Financial Performance

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dquebec

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Whilst reading the RMT website information on the Southern DOO row - I came across a link which basically implies VTEC is awash with serious financial difficulties.

Anyone got any information on this?

http://www.rmt.org.uk/home/
“RMT is deeply concerned at the financial position of the Virgin East Coast franchise and the service is awash with rumours of serious losses mounting up. That position appears to be confirmed in the company’s financial returns.

It is important to remember that the private sector have already failed twice on this line and that a highly successful and profitable public operation was kicked out to open the door for Virgin/Stagecoach to take over.

“RMT will fight to defend our members jobs and conditions in light of this latest threat and the union is demanding urgent meetings to obtain details on the real financial position.

“The East Coast should never have been re-privatised. It was an ideologically driven gamble by this right wing government which RMT always said would come back to haunt them. RMT will continue to fight for public ownership of the railways and an end to the speculation and racketeering of privatisation.
 
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JamesTT

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I wonder how many passengers have been lost because the rewards scheme was scrapped for a few measly nectar points
 

the101

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Maybe the RMT should consider employing someone who is able to write something that could at least loosely pass for a press release.
 

Simon11

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I work for another company in the industry and we are also hearing this on the grape vine. Stagecoach aren't doing well financially on East Coast and are struggling.

Will be an interesting time as DfT won't want them to fail but other bidders for the East Coast may throw up a few things if DfT does a deal with Stagecoach....

I can also foresee this happening on Northern & TPE, just give it a year....
 

LNW-GW Joint

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The recent Stagecoach trading update mentions all their franchises, in revenue terms.
VTEC shows revenue up 4.9%, VTWC 4.6%, while SWT and EMT grew 2.5%.
While they are obviously applying cost-control measures, it doesn't sound like financial disaster, and VTEC seems to be the best performer in their portfolio.
http://otp.investis.com/generic/regulatory-story.aspx?cid=273&newsid=710170
UK Rail and Virgin Rail Group

The outlook for the UK rail industry is more challenging than it was at this time last year. Although growth trends continue to vary across the different parts of the rail industry, the overall industry rate of revenue growth has slowed in recent months. Reflecting those softer trends, like-for-like rail revenue growth in our own UK Rail Division (principally South West Trains and East Midlands Trains) was 2.5% in the forty eight weeks, revenue growth at Virgin Trains East Coast was 4.9% and revenue growth at Virgin Rail Group's West Coast franchise was 4.6%. We believe the reduced rate of growth reflects the effects of weakening consumer confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings.

We have taken and will take further steps to mitigate the effects of lower revenue growth, focussing on cost control and additional initiatives to grow revenue. We continue to work constructively with the Department for Transport and other industry partners to meet our obligations, manage contract changes and ensure the continued stability and growth of our rail businesses.

The annual results to 30 April, where we can expect to see more details and profit margins, are due on 29 June.
The Lamington blockade won't have helped VTWC performance.

Note: I'd say Stagecoach is more worried about SWT and EMT than the Virgin operations.
EMT has always been a tough franchise to make money from, and SWT seems to be in difficulty (hence Stagecoach refusing the extension).
SWT is being rebid now (the ITT was due this month), and the finances should be reset by the end of the year.
EMT comes up for rebid later this year (as does VTWC).
 
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The Ham

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A TOC is making losses in the early years of a franchise when they are having to invest. Hardly news worthy of that is all it is.

If however they are making significantly less money than they were expecting and that is the reason for these rumours then that is another matter.
 

yorkie

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I wonder how many passengers have been lost because the rewards scheme was scrapped for a few measly nectar points
In my case, they didn't lose a passenger, but they did lose a lot of my ticket booking custom.

(Incidentally, the vast majority of tickets I buy are not for me)
 

CdBrux

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In my case, they didn't lose a passenger, but they did lose a lot of my ticket booking custom.

(Incidentally, the vast majority of tickets I buy are not for me)

out of interest how do you get people from A to B now and in a way that negatively impacts VTEC revenue?
 

yorkie

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out of interest how do you get people from A to B now and in a way that negatively impacts VTEC revenue?
I'm not too sure what you're asking, but I'll clarify my response to JamesTT to say that the scrapping of the Rewards scheme didn't result in me travelling less, but it did result in me switching many of my bookings elsewhere, to other booking sites, and I know of several others who did likewise.

(However, I don't think that a reduction of sales through the VTEC website would have very much impact in the grand scheme of things)
 

CdBrux

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I'm not too sure what you're asking, but I'll clarify my response to JamesTT to say that the scrapping of the Rewards scheme didn't result in me travelling less, but it did result in me switching many of my bookings elsewhere, to other booking sites, and I know of several others who did likewise.

(However, I don't think that a reduction of sales through the VTEC website would have very much impact in the grand scheme of things)

I think you have answered and sorry for not being clear enough. So you still book the same journeys but not directly through VTEC website? I assume, and happy to be told I am wrong, that this probably has zero effect on the income VTEC get from you, they just get it a different way?
 

hwl

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I'm not too sure what you're asking, but I'll clarify my response to JamesTT to say that the scrapping of the Rewards scheme didn't result in me travelling less, but it did result in me switching many of my bookings elsewhere, to other booking sites, and I know of several others who did likewise.

(However, I don't think that a reduction of sales through the VTEC website would have very much impact in the grand scheme of things)

Ditto I used to do 2-4 journeys a week on EC and used them to book other journeys too, I now rarely travel on the ECML but I still used EC to do the booking until virgin came along.

From what I heard VTEC were planning to increase the revenue by significantly more than that and the weekly shortfall is eyewatering.

The payments to DfT early in franchise will also be lower.
--- old post above --- --- new post below ---
I assume, and happy to be told I am wrong, that this probably has zero effect on the income VTEC get from you, they just get it a different way?
TOCs get fee for doing bookings for other TOCs so VTEC no longer get the fee
 

tbtc

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The Fair And Balanced RMT describe someone else's actions as being "ideologically driven" :lol::lol::lol:

A TOC is making losses in the early years of a franchise when they are having to invest. Hardly news worthy of that is all it is

Agreed.

I feel that the RMT were going to complain either way.

"VTEC make lower profits than expected" = "OMG - the Government will need to re-nationalise a route that private companies keep failing on"

"VTEC make higher profits than expected" = "OMG - greedy private companies exploiting passengers with their price gouging increases, licence to print money - we need to re-nationalise now"

If they are playing the long game, over the eight year duration of the franchise, and accept that the big money is to be made once the increased capacity comes along in 2018/2019 then fair enough - they've got deep enough pockets to pay bigger premiums at the start of the 2020s (by which time the RMT will be complaining about them making too much money, rather than complaining that they aren't making enough... should't the RMT be glad that VTEC aren't coining it in?).

I wonder how many passengers have been lost because the rewards scheme was scrapped for a few measly nectar points

How much quieter are the trains nowadays, given the large number of people on such Forums who were saying that they used significant numbers of "free" tickets a year, and would be boycotting VTEC since the move to Nectar?
 

Mordac

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Stagecoach replies!

http://www.chroniclelive.co.uk/news/north-east-news/stagecoach-says-virgin-east-coast-11265380

Stagecoach says Virgin East Coast is 'growing' in response to union claims

19:20, 29 Apr 2016
Updated 19:22, 29 Apr 2016
By Simon Meechan

RMT released a statement saying it is 'deeply concerned' about rumours of rail operator's financial position




Virgin East Coast says business is growing and it is continuing to deliver the promises it made when taking over the East Coast Mainline after a union announced it is “concerned” about rumours the franchise is making losses.

Rail union RMT released a statement on Friday from its general secretary, Mike Cash.

In it he claims members are “deeply concerned” at the railway operator’s financial position. He says there are rumours of “serious losses mounting up”.

Mr Cash believes the East Coast mainline should never have been privatised after its “highly successful and profitable” period in public ownership between National Express and Virgin’s stints in charge of the line.

The railway was put under state control in 2009 before Virgin and Stagecoach paid £3.3bn to take over the franchise last year. They promised to £140m in the route over eight years,

An RMT spokesman said there are concerns Virgin overpaid for the right to run the line, so its margins are too small. The union wants “urgent meetings” with Virgin to obtain details on its “real financial position.”

The spokesman added that the union is looking for assurances from Virgin that its members’ jobs are not under-threat.

A spokesman for Stagecoach Group, which runs the franchise with Virgin, said: “Virgin Trains is continuing to deliver on the contract signed with the Department for Transport, growing the business and improving the experience for passengers. We are meeting both our promises around significant investment and our commitments on premium payments to the taxpayer.”
 

yorkie

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How much quieter are the trains nowadays, given the large number of people on such Forums who were saying that they used significant numbers of "free" tickets a year, and would be boycotting VTEC since the move to Nectar?
Loadings are variable based on day of week, time of day, season, events, and many other factors, but I have not noticed any decrease in loadings.

The DfT wants East Coast users to subsidise cheaper fares on lines like on the West Coast, and bidders always go along with this and promise implausible premium payments, which will always end badly.
 

cjmillsnun

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I wonder how many passengers have been lost because the rewards scheme was scrapped for a few measly nectar points

Probably not a lot in the grand scheme of things.
--- old post above --- --- new post below ---
The recent Stagecoach trading update mentions all their franchises, in revenue terms.
VTEC shows revenue up 4.9%, VTWC 4.6%, while SWT and EMT grew 2.5%.
While they are obviously applying cost-control measures, it doesn't sound like financial disaster, and VTEC seems to be the best performer in their portfolio.
http://otp.investis.com/generic/regulatory-story.aspx?cid=273&newsid=710170

The annual results to 30 April, where we can expect to see more details and profit margins, are due on 29 June.
The Lamington blockade won't have helped VTWC performance.

Note: I'd say Stagecoach is more worried about SWT and EMT than the Virgin operations.
EMT has always been a tough franchise to make money from, and SWT seems to be in difficulty (hence Stagecoach refusing the extension).
SWT is being rebid now (the ITT was due this month), and the finances should be reset by the end of the year.
EMT comes up for rebid later this year (as does VTWC).

Revenue ≠ profit. SWT is obviously not in difficulty, as they wouldn't have bothered to bid. The extension would've been a management contract on terms that Stagecoach didn't like. Souter is many things, but he isn't stupid. He knew he'd get better terms by going for the retender.
 

Simon11

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"Originally Posted by The Ham View Post
A TOC is making losses in the early years of a franchise when they are having to invest. Hardly news worthy of that is all it is"

tbtc response "Agreed."


I would have to completely disagree with this statement. If you look at the profile of the money that VTEC has to pay the Dft, it substantially increases each year. If they fail to hit their targets in Y1, they will have to meet the targets for Y2, as well as recouping the growth they should have got in Y1.

If they fail to obtain the growth rate in Y1 and are unable to get this back, that revenue will serious dent their margins for the rest of the franchise and will make the difference between making money/ losing money on the whole franchise length. Its a quick downhill spiral.
 
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CyrusWuff

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Accounts for the year ending 31st March 2016 are not yet available, but for 2014-15 they made a £40.8 million loss (compared to a £7 million profit in 2013-14), which appears to mostly be attributable to a £66 million increase in operating costs that year compared to 2013-14, with an increase in turnover of just shy of £15.5 million.
 

HSTEd

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It truly is the era of classics.
Infighting in the Conservative party over Europe.
An ECML operator in financial difficulty....

Truly everything old is new again.
 

The Ham

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"Originally Posted by The Ham View Post
A TOC is making losses in the early years of a franchise when they are having to invest. Hardly news worthy of that is all it is"

tbtc response "Agreed."


I would have to completely disagree with this statement. If you look at the profile of the money that VTEC has to pay the Dft, it substantially increases each year. If they fail to hit their targets in Y1, they will have to meet the targets for Y2, as well as recouping the growth they should have got in Y1.

If they fail to obtain the growth rate in Y1 and are unable to get this back, that revenue will serious dent their margins for the rest of the franchise and will make the difference between making money/ losing money on the whole franchise length. Its a quick downhill spiral.

It is worth reading my original post in full:


A TOC is making losses in the early years of a franchise when they are having to invest. Hardly news worthy of that is all it is.

If however they are making significantly less money than they were expecting and that is the reason for these rumours then that is another matter.

I was not referring to VTEC not making as much money as they thought (that comes in the second part), rather if all that is happening is that the profit and loss looks bad because of the investment being made.

If there is evidence that they aren't seeing the levels of income that they were expecting then clearly that could be a problem going forward. However it is just that they are spending money that they said that they would which means that accounts look bad but are meeting or exceeding their income expectations then there is no story.

As others have pointed out Stagecoach provided figures showing 5% growth on VTEC, which is unlikely to too far adrift from their plan.
 

CdBrux

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TOCs get fee for doing bookings for other TOCs so VTEC no longer get the fee

Thankyou, this was the info I was missing.


Accounts for the year ending 31st March 2016 are not yet available, but for 2014-15 they made a £40.8 million loss (compared to a £7 million profit in 2013-14), which appears to mostly be attributable to a £66 million increase in operating costs that year compared to 2013-14, with an increase in turnover of just shy of £15.5 million.

No doubt the RMT will be complaining that the organization running the trains for 14-15 are bad and should no be allowed to run a franchise again?...
 

ScotGG

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I know I've never used them since Virgin/Stagecoach took over as decent advances have all but gone. When I did use those advances the trains weren't packed so I doubt they will make up the losses with more paying higher prices at those off-peak times.

I now fly. £10-£15 London to Edinburgh. No difference in time even with airport travel. I would rather take the train but at 2-3 times the price it's not happening.
 

Marton

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In my case, they didn't lose a passenger, but they did lose a lot of my ticket booking custom.

(Incidentally, the vast majority of tickets I buy are not for me)



I nearly went elsewhere but the seat selector kept me for EC journeys (95% of £1,000 per month) but I go elsewhere for non EC ones.

When are seat selectors likely to be industry wide (or have I missed that?).
 

Starmill

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I used Virgin Trains East Coast less than I used to because I find their public relations tacky and dislikeable, promising great journeys and their trains are uncomfortable and in a very poor state of repair, their timetable leaves too much to be desired and they have screwed me over by paying me less in compensation than I am statutorily entitled to. I also find their Advance tickets much more expensive now than in the past and really really dislike the horrible East Midlands Trains sets they use.
 

Class 170101

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I feel there has been too much focus on end to end journeys and insufficient focus on intermediate ones.

So whilst London to Edinburgh may be fast and similarly London to Leeds intermediate journey times between some ECML stations and from the regions to the major centres have suffered.

On Sundays in my limited experience sees everyone pile off at York and waits for the train making intermediate stops throigh to Peterborough.
 

yorkie

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On Sundays in my limited experience sees everyone pile off at York and waits for the train making intermediate stops throigh to Peterborough.
That's odd, as there are no York starters on Sundays, and the trains making intermediate stops mostly originate at Edinburgh!
 

Marton

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I used Virgin Trains East Coast less than I used to because I find their public relations tacky and dislikeable, promising great journeys and their trains are uncomfortable and in a very poor state of repair, their timetable leaves too much to be desired and they have screwed me over by paying me less in compensation than I am statutorily entitled to. I also find their Advance tickets much more expensive now than in the past and really really dislike the horrible East Midlands Trains sets they use.



Absolutely.

The parade of publicity about The Bearded One's "new trains" disgusted me.
 

Class 170101

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That's odd, as there are no York starters on Sundays, and the trains making intermediate stops mostly originate at Edinburgh!

Used to be some Newcastle starters but I think most now start at Edinburgh. Either way I feel the loadings between the slow and fast Edinburghs could be balanced better with the Sundays fasts calling at Doncaster and Peterborough.
 

yorkie

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Used to be some Newcastle starters but I think most now start at Edinburgh. Either way I feel the loadings between the slow and fast Edinburghs could be balanced better with the Sundays fasts calling at Doncaster and Peterborough.
I disagree; the fasts are packed with people travelling longer distances. The likes of Doncaster & Peterborough enjoy a better Sunday service than many comparable towns have on a Saturday.
 

HMS Ark Royal

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*picks up sword*

I must defend VTEC here - I love their announcements, their social media team are top notch, I find their trains in a good state of repair and services very speedy indeed
 
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