GNER services to be 're-nationalised'?

[Trev]

GNER threat to dump franchise
Tom McGhie, Mail on Sunday
3 September 2006

TRAIN operator GNER, which runs services between London's King's Cross station and Edinburgh, will ditch its franchise if there is no progress on talks this month over a new contract.

GNER won the East Coast rail franchise last year with an offer to pay the Government £1.3bn over ten years. But with losses set to mount and its parent company facing a debt crisis, the rail group is ready to walk away unless the Government agrees to cut its bill.


Abandoning the franchise would force the Government to take it back into the hands of the state. In a classic stand-off, the Department for Transport told Financial Mail that it was not prepared to agree to a cut in the bill.


GNER is owned by the ailing Bermuda-based Sea Containers group, which faces its own credit crunch on October 14 when it has to repay £60 million out of its £340m debt. Company sources indicated that it is unlikely the payment will be made.

GNER made a profit of about £20m last year when it managed to pay its franchise bill. But this year, GNER will plunge into the red because business has not been as good as it predicted when it won the franchise.

Energy costs have soared, passenger numbers have been hit by terrorist attacks in London, and the decision to allow competition on the East Coast line have all played havoc with GNER's financial predictions. For example, passenger numbers have increased by only 3% compared with a predicted 9%.

With the parent company in financial trouble, industry sources said GNER would not tolerate losses in its railway business, hence the urgency of the talks at the Department for Transport. Bob MacKenzie, chief executive of Sea Containers, will lead the talks.


The Government has said that while it will discuss a range of issues relating to the franchise, it is not prepared to renegotiate the price.


Meanwhile, analysts have said that if the Government is forced to renationalise the franchise and then re-auction, it would be unlikely to raise anywhere near the present price.


Sea Containers argues that the Department for Transport would do better to renegotiate its contract and accept a small reduction in payments rather than risk another auction.


GNER, which is one of the largest rail operators in the UK carrying 17m passengers, is also taking measures to solve the crisis.


In an attempt to cut costs, it is likely to make redundancies among its 3,100 staff. It is also trying to boost passenger numbers by offering a permanent ten per cent discount on fares for travellers booking on the internet.

http://www.mailonsunday.co.uk/pages/...page_id=3&ct=5

If I had my way, the entire system would be taken back into public ownership.

[GWR9600]

I agree Trev.

[swisstrains]

"Big Business" and the government are playing games with what is essentially a public transport system. I am not totally against some private involvement but the system we have at the moment isn't fair to the millions of people who rely on the railways.
John.

[GWR9600]

Originally Posted by swisstrains

"Big Business" and the government are playing games with what is essentially a public transport system. I am not totally against some private involvement but the system we have at the moment isn't fair to the millions of people who rely on the railways.
John.

If the Tories wanted to privatise BR they should have kept it as one and sold off 65% to the stock market, 5.1% to the workers and the goverment keeping the remaining 29.9% to have effective control. The only bit of BR I would have totally privatised would have been the freight into two companies, one run by EWS and the other by Freightliner. There would also be a open access so companies like West Coast Railways could operate charter trains and GBRf run frieght trains.

[Bev]

Originally Posted by Trev

If I had my way, the entire system would be taken back into public ownership.

I agree, although it would mean less livery variety for modern image enthusiasts.

[pavorossi]

I'm with Trev on this, the railways should belong to the public of the nation, and be held in the custody of the nations government.

Adam

[JohnM]

Although I agree with the above sentiments, I feel it's a bit of a shame as GNER is pretty much the only TOC I've ever used that has impressed.

[Trev]

Originally Posted by pavorossi

I'm with Trev on this, the railways should belong to the public of the nation, and be held in the custody of the nations government.

I agree.

I'm a bit of an old socialist where this is concerned Adam. I don't want to turn this thread all political, but it seems to me that there are certain things which have a national importance and which should not be left in the hands of private, profit chasing companies.

In both World Wars, the railway system was requisitioned (well, sort of), it being recognised that there was a greater need, over and above that of delivering profits for private shareholders. Seems to me that the same should apply in peacetime.

Let's not forget the instant millionaires that were created when the Rosco's were sold on. In any other walk of life, that would be called 'theft'.

[martin adamson]

Originally Posted by JohnM

Although I agree with the above sentiments, I feel it's a bit of a shame as GNER is pretty much the only TOC I've ever used that has impressed.

I too think that GNER run a good service, the problem with taking this out of the hands of private companies is that there would be no competition and no choice. And would services be improved? GNER refurbished the Mk4's, would that have happened if it was nationalised? But the private companies have to pass everything with the government anyway so they don't really have that much control.

[swisstrains]

GNER are generally regarded as one of the better TOC's. Helped, no doubt (at the time of privatisation), by inheriting the most recently modernised and electrified mainline and the newest locos and rolling-stock. Refurbishing the Mk4's was the least they could do.
John.