UK government takes tough line on bailout requests for Eurostar
ft.com/content/7d255c12-c8de-4925-a97f-57fd76...
ft.comPosted Apr 6, 2021, 8:42 AM UTC
2330
ft.comgood, eurostar is not owned by UK least bit and as thus UK has no obligation to help French,USA and private owned company, France also holds majority of shares
20
I believe that France should not help Eurostar either. It clearly has more interest economically speaking for England and especially London. Paris is already widely connected to other European big cities (Brussels and Amsterdam with Thalys, Barcelona and soon Turin with high speed train to the south, Geneva and Frankfurt and Cologne too). It should focus on developing more lines across Europe than with the UK that is isolating itself in the years to come.
-6†
Given that SNCF holds 55% of Eurostar, I suspect letting it go to the wall might not be in that company's best interests. The British government on the other hand holds no financial stake in Eurostar now.
That being said, the infrastructure isn't affected by Eurostar, so it will always be there for a new operator even if Eurostar collapses.
Neither of us have crystal balls, but there will probably always be a market for passenger services between the capital cities of Europe's 2nd and 3rd largest economies, especially when both cities are major international hubs, rail travel consistently beats aviation on that corridor, and the infrastructure is already there.
24
I agree that a market is always going to exist for train services, especially with the points you underlined and moreover climate change awareness since train is way less impacting climate than planes. And for such short distance high speed train definitely is the best transport available currently.
The thing is the UK seems to not take it as a priority (not only Eurostar, train poor infrastructure in Great Britain is a shame especially for the birthplace of trains). That doesn't surprise me actually that Westminster couldn't care less about Eurostar.
-3†
It's ironic you raise the 'birthplace of trains' point, I work in the industry and one of the things that makes stuff here really expensive is trying to work around old infrastructure with tight structural gauging. Electrification, for example, often involves basically rebuilding all the bridges and tunnels to make space for the wiring. You'll never see double-decker trains here largely because of our role as the first adopter of rail and the fact the industry made it through the Second World War largely undamaged, meaning there was no chance to start afresh.
Infrastructure has been a poor relation of government spending for a long time, much of the British Rail-era was a 'managed decline' without many upgrades. The wind on this seems to be changing and rail has very much become the dominant transport sector in terms of investment and public interest. It will take a while to improve, but these are unfair grounds to condemn our industry on.
16
Aren't Eurostar and the tunnel a bit of a flop though? I thought ferries were still more popular?
1
Ministers insist struggling train operator should look to shareholders to ease its plight
The government of Prime Minister Boris Johnson is resisting requests for a UK bailout of struggling train operator Eurostar, with ministers insisting that the company should look to its shareholders to ease its plight.
Eurostar is at risk of bankruptcy following a collapse in revenue after passenger numbers plunged during the pandemic.
UK ministers are said to be taking a tough line. One UK official briefed on the situation said: “The tunnel and the rolling stock are there. Someone would take them on, even if the company went to the wall. There’s no appetite for bailing them out at all.”
Chancellor Rishi Sunak announced in May 2020 a scheme called Project Birch to help strategically important companies but only where “viable companies have exhausted all options”.
Eurostar has £400m loans that are due by June, although they can be extended, say people familiar with the matter. The company called for rescue funds from the UK government in January, when it said there had been a 95 per cent decline in passenger numbers since March 2020.
But the UK government has maintained that the French state and private shareholders should be primarily responsible for any rescue, with both France and the UK reluctant to move first and lose negotiating power.
The UK sold its stake in Eurostar in 2015, leaving the French government with a majority 55 per cent stake via the state-owned railway SNCF, and Belgium 5 per cent.
A senior official in Paris said the French government expected shareholders and creditors to make an additional effort before any state aid could be put on the table.
The official added that a solution for Eurostar would have to be found by this summer, and that as it stands France still expects the UK to participate if needed but there had been no high-level political contacts with the British so far.
Shareholders, including the Canadian pension fund Caisse de dépôt et placement du Québec and Hermes Infrastructure have already put in more than €200m during the crisis.
SNCF told the Financial Times in March that Eurostar will need new money in “weeks not months” to fend off a looming cash crunch and that both the French and UK governments were in advanced discussions about how to help the company.
Eurostar and the UK government have held talks over a possible state-backed commercial loan worth £60m to help it through the crisis, but they are yet to yield any results. One person close to the talks said the discussions had not concluded, and there has not yet been a definitive refusal from the government.
Eurostar owns and runs the trains that travel on high-speed lines between the UK and France, Belgium and the Netherlands but does not own any of the infrastructure it uses, including the Channel Tunnel itself.
Its chief executive Jacques Damas told the FT last month he was “fed up” with the French and UK governments’ refusal to take responsibility for helping the company.
Eurostar and shareholders SNCF, Hermes and CDPQ declined to comment.
9
Its chief executive Jacques Damas told the FT last month he was “fed up” with the French and UK governments’ refusal to take responsibility for helping the company.
"I am fed up with the public not covering the losses my company incurred" said Jacques, looking injured. "If the public does not agree to eat the losses, investors and lenders will be stuck with them."
9
But it's a public owned company that manages an asset of strategic interest. At least before Brexit
1
But it's a public owned company
You mean state-owned? Yeah, partly. Not the British government, though. If France feels that France comes out ahead by eating the losses for the non-French owners, then France could toss French funds in.
that manages an asset of strategic interest
Whether this company does it or they go bankrupt, the investors and creditors lose out, and another company picks up the assets and operates them, the tunnel isn't going anywhere, and there's not much you can do with it than operate a cross-Channel train service. So I expect that as long as it's profitable to operate train service there, it'll be operated by someone.
8
Well yes and no, the asset is government owned. Good luck having anyone operating the tunnel without government approval.
Truth is either it will be a collective choice over which the governments will cooperate even if with a possible loss or the tunnel will close for good.
France doesn't need the tunnel. UK does it's the faster way to get the food supply.
-1
Common sense tbh, they want all the rewards without the risk.
There should be something in exchange if they want a bailout
9
I understand the argument that someone else will take over the operation - Eurostar doesn't own the infrastructure either in the UK, in France, or the tunnel itself. That will still all be there, and Eurostar doesn't operate the motorail shuttle service.
But it would be a terrible shame to lose the service at a time when if I'm honest finding a new operator in the next few years might pose challenges, and it would also set a bad precedent in comparison to the tidy sums given to the aviation industry, which is something we really ought to be moving away from for short-haul travel. Rail beats air on London-Paris and London-Brussels, this is unequivocally a good thing.
That being said, the government isn't a charity. Its bailouts of domestic rail operators have come with so many strings attached as to amount to renationalisation of passenger operations in practise, and a bailout of Eurostar cannot be a simple hand-out.
6
But it would be a terrible shame to lose the service
Many bankruptcies don't involve operation being stopped. Investors lose money, lenders lose money, ownership changes, things otherwise keep moving.
5
The UK government didn’t bailout Thomas Cook, Monarch or Flybe either tbf
1
Obviously, why would the UK government even consider bailing them out? No benefit to them and this doesn't look like an opportunity to line their mates pockets.
1
Good. State aid should only be given in return for equity
[deleted]
The 'overton window' on state operation of rail has shifted quite considerably leftward in recent years, both in public opinion and government. Northern Ireland has long had state-operated passenger rail, Scotland will do in the near future, and Wales, Northern England's local/regional services, and the East Coast Mainline have recently become state-operated. It remains unclear what will happen to the remaining franchises, but I'd be amazed if 'traditional' regional franchises didn't go into public ownership of some description.
But it would be funny to watch the government essentially buy back what was sold off so recently.
The new government are much more willing to splash the cash.
Aye, it's ironic they're probably more economically left wing than 2015 Labour