Big loss at scotrail

[14sutton]

Todays Times newspaper reports Scotrail has lost £17.9 million!! Last year it made a loss of £2.7 million. A big thank you to the dutch taxpayer, for keeping it going!

https://www.thetimes.co.uk/edition/...osses-mount-as-passengers-stay-away-9hw65t9bk

Weaker passenger growth and higher charges from Network Rail were among the factors that affected Abellio Scotrail. Accounts lodged at Companies House show that it made a pre-tax loss of £17.9 million last year.

Abellio Group, a Dutch transport operator, has been running Scotrail since April 2015 after winning the ten-year tender contract and replacing Firstgroup. The Abellio Scotrail subsidiary set up to run the franchise made a profit of more than £12 million in the 2015 calendar year, followed by a loss of £2.7 million the next year.

Revenue for 2017 increased by about 10 per cent to £668.9 million but the company said …

 

[Darandio]

Last year it made a loss of £2.7 million. A big thank you to the dutch taxpayer, for keeping it going!

Don't forget the near quarter billion subsidy from closer to home....

 

[najaB]

Don't forget the near quarter billion subsidy from closer to home....

And yet people see publicly-run railways as a panacea.

 

[snookertam]

And yet people see publicly-run railways as a panacea.

The aim of public ownership isn't to make a profit.

 

[GrimShady]

Nederlandse Spoorwegen is publicly owned.

Imagine a private company having to invest in a business they choose to run.... whatever next.

 

[najaB]

The aim of public ownership isn't to make a profit.

I never said it was.

 

[Carlisle]

The aim of public ownership isn't to make a profit.

Why else would Abellio, (a publicly owned company) have taken on the Scotrail Franchise?.

 

[GrimShady]

Abellio, IMO aren't entirely to blame for the recent issues in the last few years. E&G electrification, 385/HST issues etc, they have been badly let down...but that's the nature of the private world.

Do I have any sympathy for them? No I don't, they should have known what they were getting into when bidding for the franchise.

I do hope they succeeded though, at least they are trying which First never did with their eternal Sprinter/Turbostar usage for everything!

 

[LLivery]

And yet people see publicly-run railways as a panacea.

Whilst it isn't a remedy to all fixes, if the likes of Porterbrook never existed, ScotRail would've saved £86 million in 2010-11. I wonder how much leasing is costing them this year?

 

[Helvellyn]

Whilst it isn't a remedy to all fixes, if the likes of Porterbrook never existed, ScotRail would've saved £86 million in 2010-11. I wonder how much leasing is costing them this year?

But to play devil's advocate leasing goes down as OpEx. Without it you need to find not insignificant amounts of CapEx to purchase new fleets such as the 385s.

 

[Class83]

Whilst it isn't a remedy to all fixes, if the likes of Porterbrook never existed, ScotRail would've saved £86 million in 2010-11. I wonder how much leasing is costing them this year?

While the BR units may have been transferred to the RoSCos at too low a value, there will have been some revenue to the treasury when that happened. The RoSCos have since then bought the 170s, 334s, 380s etc which are now leased to Scotland. Now it's may have been cheaper for Transport Scotland to directly buy and maintain the units than the leasing costs over the years, but we are where we are. Without paying the £86million Scotrail wouldn't have had any trains.

Presumably at some point Scotrail will be due some pretty hefty compensation payments from Wabtec and Hitachi, or the RoSCo intermediary who they have a contract with? So the actual loss incurred this year may be less.

 

[route:oxford]

Whilst it isn't a remedy to all fixes, if the likes of Porterbrook never existed, ScotRail would've saved £86 million in 2010-11. I wonder how much leasing is costing them this year?

I've often wondered if ScotRail & Strathclyde Transport would have ordered 156s & 158s as all 3 car units if they had leased them from day one.

 

[alangla]

I've often wondered if ScotRail & Strathclyde Transport would have ordered 156s & 158s as all 3 car units if they had leased them from day one.

Erm... The 156/5s were ordered by SPT... Before the 170s arrived, all modern DMUs in Scotland were 2 car. IIRC there were a couple of longer 117 sets in the 1990s, not sure if the 1980s 101/107 sets were longer. By the early 1990s the SPT 101s were 2 car anyway

 

[LLivery]

But to play devil's advocate leasing goes down as OpEx. Without it you need to find not insignificant amounts of CapEx to purchase new fleets such as the 385s.

Oh, of course, money doesn't grow on trees. But you have to then ask how does everywhere else cope when they need new stock?

While the BR units may have been transferred to the RoSCos at too low a value, there will have been some revenue to the treasury when that happened. The RoSCos have since then bought the 170s, 334s, 380s etc which are now leased to Scotland. Now it's may have been cheaper for Transport Scotland to directly buy and maintain the units than the leasing costs over the years, but we are where we are. Without paying the £86million Scotrail wouldn't have had any trains.

Presumably at some point Scotrail will be due some pretty hefty compensation payments from Wabtec and Hitachi, or the RoSCo intermediary who they have a contract with? So the actual loss incurred this year may be less.

That's really it. Making a quick buck and undervaluing it in the process is a scenario that has repeated itself. That compo will be interesting, maybe they'll get an added train like I believe c2c did (or was it LTS then).

I've often wondered if ScotRail & Strathclyde Transport would have ordered 156s & 158s as all 3 car units if they had leased them from day one.

Would it have been needed in the 80s?

 

[yorksrob]

Oh, of course, money doesn't grow on trees. But you have to then ask how does everywhere else cope when they need new stock?



That's really it. Making a quick buck and undervaluing it in the process is a scenario that has repeated itself. That compo will be interesting, maybe they'll get an added train like I believe c2c did (or was it LTS then).



Would it have been needed in the 80s?

They build it !

Incidentally, are there any reasons given for this decline in profitability - low season ticket sales, shorter journeys being made etc ? If a relatively uneventful franchise like Scotrail is having difficulties, what hope is there for everywhere else !

 

[alangla]

The constant evening and weekend engineering works & longer blockades associated with the E&G, SDA and Shotts electrifications plus the PARR project have probably chased away a lot of discretionary travel plus, around Glasgow, there's a feeling that general performance has gone down the pan, mainly due to niggly infrastructure failures. Certainly anecdotally, I know a few people who were season ticket holders who now drive. I'm ashamed to say I'm also one of them & I've no intention of swapping back if I can still park near work.
It would be interesting to see ticket sales broken down by line & time of day vs the latter years of First that might shed some light on things. It would also be interesting to see if the training on the HST, 365/385 fleet has pushed up crewing costs

 

[Norther Monkey]

The Dyce to Aberdeen blockade pushed a lot of people into their cars. Unscientific observation since suggests that loadings haven't returned to pre works levels.

It's a bit of a shame as the replacement bus service was excellent.

 

[yorksrob]

In that case, TOC's in the North of England are in for a big surprise.

 

[clc]

I note from the Accounts that the revenue grant from Transport Scotland increased from £257 million in 2016 to £296 million In 2017. What did Abellio do to warrant the extra funding?

 

[uww11x]

Am I the only one who see's the positives here?

Before I start I don't work for Scotrail incase people think I do.

They are investing huge sums of money into the network with the new trains and improved timetabling. They have one of the best MD's in the industry who is proactive.

Short Term Pain for Long Term Gain!

I think in time they will see profits returned.

 

[LNW-GW Joint]

I note from the Accounts that the revenue grant from Transport Scotland increased from £257 million in 2016 to £296 million In 2017. What did Abellio do to warrant the extra funding?

The TOC is insulated from cost increases in things like access charges, if they are higher than in their bid.
The extra TS funding might be because of higher NR charges.
All franchise agreements are like that, DfT will fund other TOCs in the same way.
Going the other way, TOCs hand over the proceeds of the SG/DfT/WG mandated fare increases to the franchising authority.
The net subsidy or premium payment is adjusted accordingly each year.

 

[LNW-GW Joint]

The aim of public ownership isn't to make a profit.

Yes it is (if it is a commercial operation, as TOCs are).
Do you think the publicly-owned Manchester Airports Group does not run its airports to make a profit for its shareholders (the GM local authorities)?

 

[InOban]

Who's investing huge sums of money? Scogov/NR, surely, rather than Abellio.

 

[ScotTrains]

Scotrail should bring back their first class lounges and their advance loyalty scheme. I used to travel almost every weekend using my advance card. I also regularly used their advance club offers for rail travel, hotels, sleeper train service etc. I rarely travel with scotrail anymore, but often travel with other operators who have cheaper 1st class tickets with lounge accesss. For example, when going from Glasgow to Aberdeen I'll go XC to Edinburgh then LNER to Aberdeen. It's longer but far better and always cheaper (excluding their super rare £10 1st advance). First class is often completely empty on Scotrail and they are also the only operator in the UK that doesn't allow 1st advance tickets into their [last remaining] first class lounge. If they want better passenger growth they should be trying to get back their share of this lucrative leisure market.

 

[Esker-pades]

Let's hope the upcoming improvements do something to this.

Having said that, I don't mind railways not making money. It is a public service for the public good, so I'm happy for the government to spend my money on it. ScotRail have some very long, rural lines that don't make a profit but are essential to many communities (WHL, FNL, Kyle etc.). They'll always eat into the profits that something like the Edinburgh to Glasgow services make (I assume).

 

[HH]

Who's investing huge sums of money? Scogov/NR, surely, rather than Abellio.

Actually all 3, but the NR bit is paid for by the British taxpayer, and the Abellio bit by the Dutch. Pretty good deal for the Scots, all in all.

 

[Iskra]

Am I the only one who see's the positives here?

Before I start I don't work for Scotrail incase people think I do.

They are investing huge sums of money into the network with the new trains and improved timetabling. They have one of the best MD's in the industry who is proactive.

Short Term Pain for Long Term Gain!

I think in time they will see profits returned.

This. I think it's fairly normal for franchises to lose money at the start, but recover it plus more at the end.

The projections for VTEC started with heavy losses, before turning to surplus.

 

[Helvellyn]

Oh, of course, money doesn't grow on trees. But you have to then ask how does everywhere else cope when they need new stock?

Well in BR days it was a case of going to the Treasury and getting CapEx plans approved. BR was good at weaving cloth with meagre threads but there are numerous examples of where its plans were curtailed, such as HST acquisitions, Networkers and the last BR purchase where the Treasury gave a fixed sum and BR had to decide between 16 additional 91s + Mark 4 sets for Euston-Manchester/Liverpool or 41 Networkers for Kent Coast/Great Northen services. The latter won out.

And this is the issue I have. If it is back to those days can you really imagine in a tight budget round a new train fleet being high up the priority list against Health, Social Care, Welfare or Education? Look how Defence is struggling for funding. Would rail be much better?

 

[Carlisle]

They have one of the best MD's in the industry who is proactive.
.

Where’s the compelling evidence of that?
He conveniently left northern shortly after the strikes begun.

 

[clc]

Actually all 3, but the NR bit is paid for by the British taxpayer, and the Abellio bit by the Dutch. Pretty good deal for the Scots, all in all.

Actually the Scottish Government funds most of Network Rail’s operations in Scotland.