Eurostar debts

[Citybreak1]

A rather worrying article in The Times about debts and running below pre covid levels. I find that hard to believe seemingly in profit but lots of debt? What does this mean for the future?

 

[jfollows]

Forum rules:

If referring to an external text-based source, you should put a suitable section of the text in QUOTE tags and provide, as appropriate, details of the source and a relevant comment to promote discussion

Without this, how can we discuss further?

 

[Tazi Hupefi]

Forum rules:

Without this, how can we discuss further?

You need an article to discuss further?

If it is behind a paywall it isn't always possible.

Anyway, some snippets.

Eurostar returned to profit last year after traveller numbers plummeted during the pandemic, but its latest accounts revealed that auditors had found a “material uncertainty” over its ability to continue as a going concern.

The company warned that if revenues fell because of strikes or passengers cutting back on their spending, it may breach covenants on some of its borrowings, according to accounts filed at Companies House.

In the year to December, turnover rebounded to £928 million from £179 million, and it recorded a pre-tax profit of £61 million from a loss of £305 million the year before. A £350 million commercial loan it took out during Covid matures in June 2024. Net borrowings fell slightly to £650 million.

While the company plans to expand services to the Netherlands, it has axed its direct service to Disneyland Paris.

Eurostar said: “The 2022 financial results for Eurostar International show a robust recovery post pandemic… The trend in terms of traffic is also high in 2023. Current performance is in line with management expectations and the Eurostar Group has maintained cash reserves sufficient to repay the £350m term loan if required.”

== Doublepost prevention - post automatically merged: 24 Jul 2023 ==

So basically not really any issues, although like any other business, it's simply warning that if people stop using it, in this case because of strikes or economic conditions, life is going to be difficult for Eurostar, but not catastrophic, as they have enough reserves to meet their major commitments. However, I suspect if they exhaust their cash reserves in June 2024, AND things still haven't improved passenger wise, that's when things get messy, but you'd be into 2025 by then, so it's crystal ball gazing. They've already cut some of their services etc and found cost reductions, so I wouldn't be especially concerned. It's basically repaying the cost of COVID.

 

[Citybreak1]

You need an article to discuss further?

If it is behind a paywall it isn't always possible.

Anyway, some snippets.

Thanks my apologies it was a pay to read article

 

[zwk500]

A rather worrying article in The Times about debts and running below pre covid levels. I find that hard to believe seemingly in profit but lots of debt?

Traffic is below, partly because travel simply hasn't recovered with everything else that's going on but also because border processing capacity has fallen slightly because of Brexit. Eurostar, like nearly every company, will always have debts of some kind but in particular after COVID it's servicing a very high level of debt it took out to keep going. Because of these two factors it has chosen to concentrate on it's core business of connecting European capital cities by withdrawing various 'extras' like Kent, Southern France, and Disneyland while expanding to Amsterdam for a very large potential market.

What does this mean for the future?

Pretty much what we've seen for the last two years - the big question is whether or not they get kicked out of Amsterdam for a year or more as some other threads have covered. Don't expect Eurostar to take on any serious costs like reopening stations without big potential markets (so no Kent or Calais, no Disney etc.), and to concentrate on the core London-Paris route for a long time. Extensions to Germany, Bordeaux, etc will likely wait. However keep an eye out on increasing services to Amsterdam (if and when the Centraal/Zuid situation is resolved), as that's where Eurostar see the long-term potential for the Brussels route.

 

[tomuk]

So basically not really any issues, although like any other business,

Auditors qualifying your accounts with a material uncertainty is slightly more concerning than business as usual.

 

[Citybreak1]

Maybe the new passport gates will help? Seemingly only leave security and French border controls but only for Business class?

 

[zwk500]

Maybe the new passport gates will help? Seemingly only leave security and French border controls but only for Business class?

The new gates will help a tiny bit as a few more passengers can be processed per hour, but it's not going to fundamentally shift any needles.

 

[Citybreak1]

Traffic is below, partly because travel simply hasn't recovered with everything else that's going on but also because border processing capacity has fallen slightly because of Brexit. Eurostar, like nearly every company, will always have debts of some kind but in particular after COVID it's servicing a very high level of debt it took out to keep going. Because of these two factors it has chosen to concentrate on it's core business of connecting European capital cities by withdrawing various 'extras' like Kent, Southern France, and Disneyland while expanding to Amsterdam for a very large potential market.

Pretty much what we've seen for the last two years - the big question is whether or not they get kicked out of Amsterdam for a year or more as some other threads have covered. Don't expect Eurostar to take on any serious costs like reopening stations without big potential markets (so no Kent or Calais, no Disney etc.), and to concentrate on the core London-Paris route for a long time. Extensions to Germany, Bordeaux, etc will likely wait. However keep an eye out on increasing services to Amsterdam (if and when the Centraal/Zuid situation is resolved), as that's where Eurostar see the long-term potential for the Brussels route.

I assume Amsterdam would have a larger market than Cologne as don’t these trains including Amsterdam all reverse out of Brussels south? They don’t see Rotterdam as a big market during the works so I assume that’s why no Germany? Frankfurt maybe?

 

[rvdborgt]

I assume Amsterdam would have a larger market than Cologne as don’t these trains including Amsterdam all reverse out of Brussels south?

No they don't, they use track 3.

 

[StephenHunter]

No they don't, they use track 3.

Definitely in both directions - there's a barrier on the connection to Platform 4 that's closed when the platform is being used for a London-bound service.

 

[zwk500]

I assume Amsterdam would have a larger market than Cologne as don’t these trains including Amsterdam all reverse out of Brussels south?

Both Amsterdam and Cologne would have Northbound departures from Brussels South. The market is larger for Amsterdam though as it's got more tourism and business together - the Air market for London-Amsterdam is massive and the air market from London to Cologne is not anywhere near as big. Although Frankfurt would be the long-term goal for Germany.

They don’t see Rotterdam as a big market during the works so I assume that’s why no Germany? Frankfurt maybe?

Rotterdam isn't a big market because Amsterdam is where the destinations are. Rotterdam isn't set up to turn Eurostar trains, so it's easier to turn at Brussels if you have to make a change anyway. There's no German services for 2 primary reasons: the most important one being border controls, which are awkward to introduce into the very busy stations Eurostar would want to serve, and the other (somewhat related) is the platform capacity, as German main stations are busy and taking platforms out for an hour or more per service would be extremely disruptive (although not impossible to resolve if there is enough will, see Amsterdam Centraal).

 

[DanielB]

taking platforms out for an hour or more per service would be extremely disruptive (although not impossible to resolve if there is enough will, see Amsterdam Centraal).

The security clearing time appears to be only half an hour became apparent by recent track works (with domestic trains using platform 2 in Rotterdam, which had to be empty when passing within 30 minutes prior to a Eurostar departure).
But the actual reason why taking a platform out wasn't a too big problem in Amsterdam is that platform 15 was already almost exclusively used for international trains, as its only conveniently used coming from the yard. 15b, which has the Eurostar terminal and is the secured side, actually is only used a few times a day to accomodate a long Thalys besides Eurostar.
In Rotterdam something similar applied as platform 1 was originally used for the Hoek van Holland bound trains which had however converted to metro just prior to the introduction of Eurostar. And also there it lacked convienient infrastructure to use it otherwise. It actually was widened to become platform 2 as only platform 1b could be reached from the high speed line and a Eurostar wouldn't fit there.

Very likely that those two strokes of luck won't apply to any German station.

 

[Fragezeichnen]

Funnily it is actually the opposite...
The only place you could possibly do any security clearing in Cologne Hbf would be Platform 1, since all the others are narrow island platforms. This is best suited for trains coming from Bonn and heading towards Wuppertal or Düsseldorf via Leverkusen. For a Northbound service coming off the HSL and heading to Aaachen it's pretty much the worst platform you could choose, so hypothetical Frankfurt - London service would have to cross the entire station throat to reach the platform, and then cross it again on departure

 

[Blindtraveler]

If Eurostar want some more revenue and maybe some more passenger Goodwill, how about restarting services through Kent which was always a big selling point and well used especially at Ashford

 

[Fragezeichnen]

So your business idea for a company with worrying levels of debt, is that they should borrow even more money to spend reopening the mothballed station, and then take the risk of trying to rebuild their Kent customer base from nothing?

Their current business strategy seems to be to maintain existing services, make no major new investments or risky decisions, and use their current revenue to pay off the debt. I think that is sensible.

 

[zwk500]

If Eurostar want some more revenue and maybe some more passenger Goodwill, how about restarting services through Kent which was always a big selling point and well used especially at Ashford

Not worth it if the revenue available is lower than the cost of reopening the stations.

 

[duesselmartin]

Funnily it is actually the opposite...
The only place you could possibly do any security clearing in Cologne Hbf would be Platform 1, since all the others are narrow island platforms. This is best suited for trains coming from Bonn and heading towards Wuppertal or Düsseldorf via Leverkusen. For a Northbound service coming off the HSL and heading to Aaachen it's pretty much the worst platform you could choose, so hypothetical Frankfurt - London service would have to cross the entire station throat to reach the platform, and then cross it again on departure

unless you use Köln Messe/Deutz. The lower platforms seem under-utilised. One could also go from Aachen to Düsseldorf to connect into the German market.

 

[zwk500]

unless you use Köln Messe/Deutz. The lower platforms seem under-utilised. One could also go from Aachen to Düsseldorf to connect into the German market.

Eurostar would want to remain concentrated in a limited number of stations (Koeln and Frankfurt Hbf) ideally to minimise expenditure on border facilities and maximise the usage of those it has. I believe kicking other DB services out to Messe/Deutz is necessary for E* to get into Hbf in any event.

Funnily it is actually the opposite...
The only place you could possibly do any security clearing in Cologne Hbf would be Platform 1, since all the others are narrow island platforms. This is best suited for trains coming from Bonn and heading towards Wuppertal or Düsseldorf via Leverkusen. For a Northbound service coming off the HSL and heading to Aaachen it's pretty much the worst platform you could choose, so hypothetical Frankfurt - London service would have to cross the entire station throat to reach the platform, and then cross it again on departure

From looking at http://www.sporenplan.nl/ There appears to be 2 realistic options - the first is to build a departure lounge under the island platforms, and have a security sweep/barrier for departure (similar to Brussels P3). I'm making a rough guess that an elevated lounge would be rejected given the historic nature of the trainshed. However I have no idea how much room there might be underneath Koeln Hbf for that.
The other option appears to be using the link at Ehrenfeld to cross fewer lines at the throat - this may require doubling or modifying as the SporenPlan pdf gives no clue on the relative lengths. There is then enough pointwork at Messe/Deutz to get onto the faster pair of lines and then eventually onto the Frankfurt HSL.
However none of this is going to be cheap to implement or operate and therefore I would not expect Eurostar to look at it unless there is a marked upswing in passenger numbers between the UK and Germany or they have consolidated the Amsterdam route and serviced a safe portion of their debt.

 

[paul1609]

Not worth it if the revenue available is lower than the cost of reopening the stations.

Its all political Revenue at Ashford was far higher than it is at Rotterdam.

 

[zwk500]

Its all political Revenue at Ashford was far higher than it is at Rotterdam.

It is political, but the potential revenue is undeniably far higher at Rotterdam, given that it's position in the global logistics market. Also it's operational - there's no option but to go through Rotterdam Central slowly so you might as well stop if you can but at Ashford you can easily avoid the station at 300kph.

 

[StephenHunter]

unless you use Köln Messe/Deutz. The lower platforms seem under-utilised. One could also go from Aachen to Düsseldorf to connect into the German market.

Brussels Midi has a wall between Platforms 3 and 4 with a gap that can be closed for when southbound Eurostar trains are calling at the former.

 

[30907]

Brussels Midi has a wall between Platforms 3 and 4 with a gap that can be closed for when southbound Eurostar trains are calling at the former.

Köln is significantly tighter for space at platform level, though.

unless you use Köln Messe/Deutz. The lower platforms seem under-utilised. One could also go from Aachen to Düsseldorf to connect into the German market.

Messe Tief (low level) is awkward to access from Aachen, and Düsseldorf wayoff-route for Frankfurt and beyond. I did wonder about Messe (high level), but sending passengers there to crawl back through Hbf would feel odd and be difficult to spin positively. Maybe Hbf platform 1, with the complications of routing departures towards Aachen (is it even possible?) is the least worst option?

 

[philg999]

Its all political Revenue at Ashford was far higher than it is at Rotterdam.

I very much doubt that. There are around 3.5m people living in the southern half of the Randstad - the catchment area of the Eurostar Rotterdam stop. Kent and East Sussex have only a population of 1.5m people combined. And there’s the huge size of rotterdam itself as a commerce hub.

 

[paul1609]

I very much doubt that. There are around 3.5m people living in the southern half of the Randstad - the catchment area of the Eurostar Rotterdam stop. Kent and East Sussex have only a population of 1.5m people combined. And there’s the huge size of rotterdam itself as a commerce hub.

Kent (including Medway) had a population of 1.9 million in 2019 so Im not sure where you get your English stats from but whilst the population may be lower the direct destinations from Ashford on Eurostar were Lille, Brussels and Paris and seasonally the south of france and alps. I believe that the Ashford to Paris trains alone revenue was bigger than Eurostars revenue from Rotterdam to London (its only destination).

 

[railfan99]

I very much doubt that. There are around 3.5m people living in the southern half of the Randstad - the catchment area of the Eurostar Rotterdam stop. Kent and East Sussex have only a population of 1.5m people combined. And there’s the huge size of rotterdam itself as a commerce hub.

Wouldn't Kent be one of the most affluent areas in the UK? Rich pickings for Eurostar, one would think.

 

[RT4038]

Wouldn't Kent be one of the most affluent areas in the UK? Rich pickings for Eurostar, one would think.

If it was, E* would have discovered this already, having had over 25 years of stopping trains in Kent. So I think it can be presumed that this is not in fact the case.

 

[zwk500]

Wouldn't Kent be one of the most affluent areas in the UK? Rich pickings for Eurostar, one would think.

Kent has quite wide variations in it's level of Affluence. Leafy stockbroker areas on the London/Sussex borders are very affluent but many of the former seaside or military towns are very deprived. And it's one thing to have a lot of wealth, quite another to want to go to the places Eurostar serve from Ashford. The reality is Eurostar loses little business of worth by closing Ashford, as enough customers will travel in to St Pancras for the trains they want.

 

[Peterthegreat]

If it was, E* would have discovered this already, having had over 25 years of stopping trains in Kent. So I think it can be presumed that this is not in fact the case.

Absolutely. Before HS1 opened Ashford was responsible for about 7% of Eurostar passengers by volume (c 5% by revenue). When HS1 opened similar figures were obtained by the two Kent stations with Ebbsfleet slightly in the lead.
Unfortunately 99.9% of overseas visitors and 99% of Europeans just want London. Even in the UK only about 5% of passengers want to use Ashford/Ebbsfleet.

 

[Trainbike46]

I don't think comparing pre-covid ashford passenger numbers with post-covid Rotterdam numbers makes sense, because:
-Rotterdam is new and Eurostar is still growing the market, whereas Ashford had been served for 25 years
-Rotterdam passenger numbers are affected by capping (both to and from London), which didn't apply to Ashford numbers in the same way
-Stopping at Rotterdam has a very limited time penalty, as the infrastructure requires all trains to slow down to 40 km/h at rotterdam, whether they stop or not. Ashford is a much more significant time penalty
-Seats from Rotterdam couldn't have been sold from Amsterdam anyway, due to capacity constraints at Amsterdam