LNER - Losses and subsidy increase despite increase in passenger numbers

[Jim James]

LNER, the state-run train operator that services London King's Cross, has seen its losses and taxpayer subsidies doubled despite an increase in passengers.

New figures from the Office of Rail and Road show LNER recorded an £88million operating deficit in 2024-2025, and received £93million in net taxpayer subsidies.

That compares with a £35million loss in the prior year and £40million of taxpayer support, The Times reports.

The deficits come despite growing demand on the east coast main line, where passenger numbers are now 12% higher than before the CV19 pandemic.

 

[moleman212]

Oh who would have thought that splashing thousands upon thousands on an irritating ad campaign would boost profits...as well as their suicidal pricing policy

 

[AlterEgo]

Oh who would have thought that splashing thousands upon thousands on an irritating ad campaign would boost profits...as well as their suicidal pricing policy

The article, and the post you're replying to, explain that there are now quite a few more passengers. So I don't think you're making the point you think you're making.

At the heart is this:

At issue for LNER appears to be the encumbrance of the rolling stock leasing and maintenance costs it pays to Agility Trains, one of the highly profitable coterie of train leasing companies, the one part of the industry that has avoided renationalisation under the government’s plans.

As well as the investment they're making towards the new timetable (which in my view is quite an ambitious timetable):

A spokesperson for LNER said: “Government support has allowed LNER to recruit hundreds of additional colleagues and invest across the business as we prepare for the introduction of our transformational December 2025 timetable.”

 

[ainsworth74]

The article, and the post you're replying to, explain that there are now quite a few more passengers. So I don't think you're making the point you think you're making.

At the heart is this:



As well as the investment they're making towards the new timetable (which in my view is quite an ambitious timetable):

Yes the real proof in the pudding will be if once the new timetable is in place and running smoothly revenue goes up. At the moment we've got all the costs of the new timetable without the actual revenue it should, theoretically, unlock.

Not an ideal start though for LNER to go from making money to losing it mind you! Those payments for the Azuma's always did seem somewhat heroic personally speaking. I'm sure we had a thread on here a few years ago which was discussing how affordable they'd actually be in the long term.

 

[AngusH]

I can't read the article due to paywall but I think the original figures are these:

Table 7226 – Franchised Passenger Train Operator Finances since 2015-16 by Franchise | ORR Data Portal

This image is an extract of the file covering the LNER section:





LNER starts at row 140.

The figure for Total rolling stock expenditure appears to have grown from 73 million in 2015 to 423 million in 2024-25
although about 125 million seems average for earlier years, so 2015-16 be a outlier year for some reason.

(I thought initially that the values were not inflation adjusted, but the notes clearly state that they are)

I'm not clear what else that involves though and most of the breakdown is redacted.

There seems to be a big jump about the time of the Azuma introduction, at least it seems that way?



For comparison the Great Western Figures (row 248 in the spreadsheet)




Total rolling stock expenditure

75 million in 2015-16 to 627 million in 2024-25


Can this be correct?

 

[crablab]

75 million in 2015-16 to 627 million in 2024-25

The figure for Total rolling stock expenditure appears to have grown from 73 million in 2015 to 423 million in 2024-25
although about 125 million seems average for earlier years, so 2015-16 be a outlier year for some reason

This does not seem sustainable over the lifetime of the IEP contract.

 

[AngusH]

This does not seem sustainable over the lifetime of the IEP contract.

The numbers are remarkable, I kept thinking that I'd mis-interpreted something somewhere

I'm really sort of hoping that someone will appear and explain why the simple interpretation isn't right

 

[crablab]

I'm really sort of hoping that someone will appear and explain why the simple interpretation isn't right

Edit:

I've been signposted to this thread, where this issue has been discussed previously with explanation of the figures: https://www.railforums.co.uk/threads/impact-of-the-class-800s-and-801s-on-lners-finances.176819/

 

[gabrielhj07]

This is a high-level dataset so it would be unwise to draw too broad a conclusion. Things to consider would be:
- adjustments for train/km
- adjustments for the type of stock (eg. InterCity high-speed trains cost more to manufacture)
- the type of lease arrangement and whether any depreciation is being carried onto the balance sheet (would seem unlikely, but we don't have the contracts)

At a first glance it's troublesome that GTR, who also had a fleet replacement during this period, and who have ~80% more passenger/km have roughly the same fleet cost, without the same scale of increase during their fleet replacement.

Likewise Northern, who also replaced a fleet in that period, don't have a noticeable increase in fleet costs and, whilst they have ~50% fewer passenger/km have about 1/4 to 1/5 of the fleet cost.

Both compared to GW/EC.

Roger Ford discussed this in Modern Railways February 2025. His basic summary was that IEP procured fleets were significantly more expensive than those procured conventionally.

Page 30

 

[ainsworth74]

Edit:

I've been signposted to this thread, where this issue has been discussed previously with explanation of the figures: https://www.railforums.co.uk/threads/impact-of-the-class-800s-and-801s-on-lners-finances.176819/

Oh, that's why this topic is familiar. I started a thread on it

 

[Hadders]

LNER fare income increased by 8.7% between 2023/24 and 2024/25.

GWR fare income increased by 8.9% across the same time frame.

 

[Bletchleyite]

LNER fare income increased by 8.7% between 2023/24 and 2024/25.

GWR fare income increased by 8.9% across the same time frame.

How's that fare "trial" going again? Looks like GWR is doing better with a predominantly walk up fares set...

 

[JonathanH]

How's that fare "trial" going again? Looks like GWR is doing better with a predominantly walk up fares set...

GWR has priced many of its advances up to the walk up level, and those walk up fares are no creating a cap on what it can charge. GWR have increased fares in the Thames Valley multiple times in the last year. IEP is hurting.

 

[Iskra]

How's that fare "trial" going again? Looks like GWR is doing better with a predominantly walk up fares set...

I heard it’s all the fault of Open Access

 

[LNW-GW Joint]

The IEP (class 800/801) "leasing" costs for GWR/LNER will include maintenance and depot costs, which are charged per train diagram delivered.
LNER then has the IC225 costs, but that will be a small proportion of the whole.
GWR also has an 802 fleet cost which is contracted differently to the IEPs, plus the more usual leasing and maintenance costs for its extensive regional DMU/EMU fleets.
GWR will also have higher unit costs for its all-bi-mode IEP fleet.

 

[quantinghome]

So LNER are paying the best part of £1m for each carriage PER ANNUM!!!

 

[MontyP]

So LNER are paying the best part of £1m for each carriage PER ANNUM!!!

That can't be right

 

[800Travel]

New figures from the Office of Rail and Road show LNER recorded an £88million operating deficit in 2024-2025, and received £93million in net taxpayer subsidies.

That compares with a £35million loss in the prior year and £40million of taxpayer support

Out of curiosity, why in both years are they given £5million of additional taxpayer subsidies relative to their operating deficit?

 

[TUC]

To have increased passenger numbers, but greater losses, indicates that either the pricing of tickets is too low (hard to believe) or that costs are out of control.

 

[Watershed]

To have increased passenger numbers, but greater losses, indicates that either the pricing of tickets is too low (hard to believe) or that costs are out of control.

Or, more probably, that a substantial proportion of their high-paying business traffic has been lost due to the overall post-Covid reduction in business travel.

 

[TUC]

Or, more probably, that a substantial proportion of their high-paying business traffic has been lost due to the overall post-Covid reduction in business travel.

That doesn’t mean explain the increased losses/subsidy now rather than in the previous years.

 

[Sealink]

LNER, the state-run train operator that services London King's Cross, has seen its losses and taxpayer subsidies doubled despite an increase in passengers.

New figures from the Office of Rail and Road show LNER recorded an £88million operating deficit in 2024-2025, and received £93million in net taxpayer subsidies.

That compares with a £35million loss in the prior year and £40million of taxpayer support, The Times reports.

The deficits come despite growing demand on the east coast main line, where passenger numbers are now 12% higher than before the CV19 pandemic.

Hang on. I thought LNER were paying back millions ?

 

[800001]

Be interesting to know how much extra staff cost and staff numbers have increased ready for the new timetable.

10 x new Control jobs were advertised at circa £50k, add in drivers, train managers, catering staff etc who would all of needed to of been employed and trained over the last several months, that's another big increase in costs.

 

[Watershed]

That doesn’t mean explain the increased losses/subsidy now rather than in the previous years.

If you look at the extract posted by @AngusH you can see that total revenue has not reached pre-Covid levels. That is exactly what you'd expect when business travellers (with inelastic demand and little aversion to high prices) are replaced by more price sensitive leisure travellers.

 

[GuyGibsonVC]

Yes the real proof in the pudding will be if once the new timetable is in place and running smoothly revenue goes up. At the moment we've got all the costs of the new timetable without the actual revenue it should, theoretically, unlock.

Not an ideal start though for LNER to go from making money to losing it mind you! Those payments for the Azuma's always did seem somewhat heroic personally speaking. I'm sure we had a thread on here a few years ago which was discussing how affordable they'd actually be in the long term.

I did see a slideshow that said that the December 2025 timetable would bring in an extra £60 million per annum.

LNER will be on the hook for it as a lot of Network Rail's capital funding has been spent on East Coast in the last five years or so preparing for this change. Projects such as Kings Cross remodelling, Werrington Dive Under, Power Supply Upgrade, Stevenage Turnback, Doncaster Platform 0 and Darlington Station have all had a few quid spent on them.

Network Rail will also get an additional £6 million a year in through additional access charges.

 

[Royston Vasey]

Oh who would have thought that splashing thousands upon thousands on an irritating ad campaign would boost profits...as well as their suicidal pricing policy

I'm not exactly sure how they've filmed that. The coach itself is an Azuma (could be CGI) but the seats are real, but aren't real Sophias, they look like a bit like Networker seats, I can't put my finger on what they are. They've put normal LNER cloth on but it fits poorly and is visibly baggy on the headrests in places. Anyway... deeply annoying

 

[quantinghome]

That can't be right

The latest annual leasing costs are £397million and there are 500 Azuma carriages (plus 73 legacy Mk4s). It's madness.

 

[Clarence Yard]

That can't be right

It is, IEP availability costs per year are around £1m a vehicle. From that, you can work out roughly what the daily availability charge for a set is. It isn’t cheap!

The IEP programme is expensive but was designed to bring in enough revenue (through increases in services) to cover the extra cost.

The costs went up as the units were introduced but the extra revenue hasn’t really happened. So both LNER and GWR have seen a huge worsenment in their P&L.

The whole thing is a scandal which the DfT has, so far, managed to keep quiet.

 

[Horizon22]

Be interesting to know how much extra staff cost and staff numbers have increased ready for the new timetable.

10 x new Control jobs were advertised at circa £50k, add in drivers, train managers, catering staff etc who would all of needed to of been employed and trained over the last several months, that's another big increase in costs.

Staffing costs went from £175m (23-24) to £193m (24-25) in the chart above, about a 10% increase.

 

[Charlie978]

The latest annual leasing costs are £397million and there are 500 Azuma carriages (plus 73 legacy Mk4s). It's madness.

Doesn’t that cost in the table include everything though, so things like maintenance as well as raw leasing costs.