VTEC Financial Performance

[cjmillsnun]

I used Virgin Trains East Coast less than I used to because I find their public relations tacky and dislikeable, promising great journeys and their trains are uncomfortable and in a very poor state of repair, their timetable leaves too much to be desired and they have screwed me over by paying me less in compensation than I am statutorily entitled to. I also find their Advance tickets much more expensive now than in the past and really really dislike the horrible East Midlands Trains sets they use.

Absolutely.

The parade of publicity about The Bearded One's "new trains" disgusted me.

I'm also going to defend VTEC here.

Every TOC will parade its new trains and make out that they got them. Most of the general public don't know and don't care about RosCos. Virgin are very good at this promotion, and have supported Stagecoach in this.

Also yes, their trains are in a bit of a state and are uncomfortable. The last refurb was Mallard and was initiated by GNER back in 2003. VTEC to their credit are putting their whole fleet through a refresh. To facilitate that they have hired in a set from East Midlands Trains (it's fairly obvious why they'd use EMT stock. 1. It is convenient in terms of location - EMT's HSTs are maintained at Neville Hill, and 2. EMT have the stock available (plus the fact it's another Stagecoach operation)

The first refreshed sets are in service and aren't bad.

As far as I know the compensation only extends to 50% if you are 1/2 hour or more late or 100% if you are an hour or more late for your journey (delay repay). If you're not getting that then you need to go back to them and ensure that you do (I won't defend them on this or on ticket prices)

 

[Starmill]

Also yes, their trains are in a bit of a state and are uncomfortable. The last refurb was Mallard and was initiated by GNER back in 2003. VTEC to their credit are putting their whole fleet through a refresh.

Which was due to commence in August. When did it commence? Late October. And progress has been glacial. But that's alright because they got their colours on the trains first.

To facilitate that they have hired in a set from East Midlands Trains (it's fairly obvious why they'd use EMT stock. 1. It is convenient in terms of location - EMT's HSTs are maintained at Neville Hill, and 2. EMT have the stock available (plus the fact it's another Stagecoach operation)

I think you mean to facilitate the spreading of their brand. They have now had 13 months and only made interior alterations to 12 of their sets. But they are all nice and red...

As far as I know the compensation only extends to 50% if you are 1/2 hour or more late or 100% if you are an hour or more late for your journey (delay repay). If you're not getting that then you need to go back to them and ensure that you do (I won't defend them on this or on ticket prices)

I have currently got 2 cases open with Transport Focus because they refuse to pay the correct level of compensation. I was delayed by more than 2 hours in both cases.

 

[johnnychips]

This was the headline in the Sunday Times Business section today.

Unfortunately I can't find a link as it seems to be hidden behind a paywall, but if anybody can do better...

In summary, it states that revenues on the EC have risen by 4.9% rather than the 8-12% on which the bid was based. As I think on the same basis that maybe Simon11 has said earlier, the paper said:

Should expansion slow one year, the business would have to run twice as fast the next. "The problem with revenue compounding up is once you fall behind it's very hard to catch up".

The train company blamed weakening consumer confidence, terrorism concerns, lower fuel prices [presumably making car use more attractive], car and air competition, slow UK GDP growth and slow growth in real earnings.

 

[causton]

I think you mean to facilitate the spreading of their brand. They have now had 13 months and only made interior alterations to 15 or so of their sets. But they are all nice and red...

Virgin is a strong brand so I am not surprised they are doing that.

And leaving the trains in a state internally?

Well they can just state in a few years "Remember how bad our old trains were? They are so much better now" even though they weren't that bad but people may remember these as "Virgin" trains and go "Yes they were horrible this new one is so much better". Cynical? Me?

 

[najaB]

...their trains are uncomfortable and in a very poor state of repair, their timetable leaves too much to be desired...

You mean the trains and timetable that are virtually unchanged from East Coast days other than having additional services added and a £21M interior refresh and overhaul...

This train certainly has a luxury feel to it. I don't think the ambience is quite as good as on GWR because the Virgin branding is more garish and less nuanced and professional. However, despite the use of leather these seats are more comfortable. They are nice and soft, not too baggy and the little pillow is very comfortable. Even the armrests are more comfortable.

 

[Starmill]

You mean the trains and timetable that are virtually unchanged from East Coast days other than having additional services added and a £21M interior refresh and overhaul...

I do, yes. Please see my above post which very clearly outlines why I think the process has been mismanaged and could easily have been done better if the firm were more practical and less image-conscious.

The timetable does leave much to be desired, for example Leeds <> London is only 1tph on Saturday and only 2tph weekdays. Is this changing? Well only one additional train now runs...

Timetable improvements will come but they have not arrived yet in earnest and as such I do not see why VTEC should yet have expected a big increase in revenue.

 

[The Ham]

The timetable does leave much to be desired, for example Leeds <> London is only 1tph on Saturday and only 2tph weekdays. Is this changing? Well only one additional train now runs...

Timetable improvements will come but they have not arrived yet in earnest and as such I do not see why VTEC should yet have expected a big increase in revenue.

How do you expect Virgin to increase service provision without any extra trains? If the could then the old EC wouldn't have been doing is job.

When is that extra daily service due, I would guess after the refurbishment but before the new trains? If I'm right then why didn't the wonderful old EC run it?

Virgin are in a place where they are limited in what they can do and are going to be in for a lot of bashing given that they are replacing the old EC and all the emotions that will invoke from those who wanted it to stay in public hand.

As such, if it stayed in public hands would things be any different? Would the trains be being refurbished or would they have just left them because they are being replaced soon? Would you be getting extra services any faster? Would they be retaining some (shortened sets of) locos and mark 4's? In short before bashing Virgin ask yourself would it be better in the public sector and if the answer is likely to be no then what is your point (other than its not in the public sector, which another issue)?

 

[Class 170101]

I disagree; the fasts are packed with people travelling longer distances. The likes of Doncaster & Peterborough enjoy a better Sunday service than many comparable towns have on a Saturday.

Still only hourly from Edinburgh. As per my previous comments in my limited experience these services aren't full south of York yet the slower trains are.

 

[HH]

I think you mean to facilitate the spreading of their brand. They have now had 13 months and only made interior alterations to 12 of their sets. But they are all nice and red...

Changing the colour can be done very quickly; a refresh means that a set has to be taken out of use for some time. Normally this is done one set at a time because otherwise you don't have enough trains.

It would be better if you understood the process a bit better before shooting from the hip.

 

[HowardGWR]

Changing the colour can be done very quickly; a refresh means that a set has to be taken out of use for some time. Normally this is done one set at a time because otherwise you don't have enough trains.

It would be better if you understood the process a bit better before shooting from the hip.

Rail mag had a visit in March (on its archive) to Craigentinny and the manager said they had now got the refurbish down to 11 days per set (the first took three times as long and had some teething issues). The target was to complete the job by August IIRC. Impressive.

 

[HH]

Sunday Times Business section today:

In summary, it states that revenues on the EC have risen by 4.9% rather than the 8-12% on which the bid was based.

Should expansion slow one year, the business would have to run twice as fast the next. "The problem with revenue compounding up is once you fall behind it's very hard to catch up".

The train company blamed weakening consumer confidence, terrorism concerns, lower fuel prices [presumably making car use more attractive], car and air competition, slow UK GDP growth and slow growth in real earnings.

I don't know why they posited such a big growth in Year 1; it's certain that the ICWC bids didn't show such a large rise. 8% in Year 1 is a very big ask.

It should be noted that there could be two reasons why this isn't a disaster:
1. It's simply a delay in an initiative, which means that the revenue will get back on target when implemented; or
2. It was something from DfT's end, when they will be compensated through the change mechanism.

It should also be noted that if GDP growth is lower than expected they have some protection through the GDP mechanism.

 

[Starmill]

Changing the colour can be done very quickly; a refresh means that a set has to be taken out of use for some time. Normally this is done one set at a time because otherwise you don't have enough trains.

It would be better if you understood the process a bit better before shooting from the hip.

Changing the colour scheme can't be done while the train is on it's same period out of service for refurbishment? That's how TransPennine are doing theirs. And if you know so well how it works, why is it so behind schedule? And why, for that matter, has GR revenue grown less than predicted? Because of "increased terrorism concerns"? Yeah, right.
--- old post above --- --- new post below ---

How do you expect Virgin to increase service provision without any extra trains? If the could then the old EC wouldn't have been doing is job.

Excuse me, they could have submitted their bid on the basis of more trains from the start of the franchise. I'm sure they could have found some, but decided not to as their prerogative. That was up to them, but they also still bid up their revenue without any extra trains...

 

[najaB]

Changing the colour scheme can't be done while the train is on it's same period out of service for refurbishment?

That depends on where the work is being done - is it all happening at Craigentinny?

Excuse me, they could have submitted their bid on the basis of more trains from the start of the franchise. I'm sure they could have found some...

Where is this 125mph stock that's currently sitting idle?

 

[dquebec]

The reason I originally started this thread is that I actually own a sizeable number of Stagecoach shares as part of my investment portfolio.

This time last year, the price was above 410p/share, but ultimately has now reduced substantially down to about 250p/share, a near 40% loss in value.

The latest rumour I have heard, is that a company called Virgin Rail Group is being lined up to take 100% of the VTEC franchise - with Stagecoach exiting the partnership. Although it seems the VRG is heavily Stagecoach related too?

 

[Starmill]

There's a little slack in various fleets, I'm sure. There's a lot of slack in XC HST and GW 180 fleets. If they wanted the extra trains and stumped up the cash, are you really saying they couldn't have got anything?

 

[cjmillsnun]

The reason I originally started this thread is that I actually own a sizeable number of Stagecoach shares as part of my investment portfolio.

This time last year, the price was above 410p/share, but ultimately has now reduced substantially down to about 250p/share, a near 40% loss in value.

The latest rumour I have heard, is that a company called Virgin Rail Group is being lined up to take 100% of the VTEC franchise - with Stagecoach exiting the partnership. Although it seems the VRG is heavily Stagecoach related too?

VRG is 49% owned by Stagecoach.

 

[cjmillsnun]

There's a little slack in various fleets, I'm sure. There's a lot of slack in XC HST and GW 180 fleets. If they wanted the extra trains and stumped up the cash, are you really saying they couldn't have got anything?

XC HST maybe. But do VTEC drivers sign 180s?

 

[dquebec]

VRG is 49% owned by Stagecoach.

Possibly could have meant that Virgin were buying Stagecoach out of the partnership then...

 

[HMS Ark Royal]

XC HST maybe. But do VTEC drivers sign 180s?

Can not imagine they would unless a driver transfers to them that is passed for 180s

 

[cjmillsnun]

Can not imagine they would unless a driver transfers to them that is passed for 180s

Which was my point

 

[coppercapped]

This was the headline in the Sunday Times Business section today.

Unfortunately I can't find a link as it seems to be hidden behind a paywall, but if anybody can do better...

In summary, it states that revenues on the EC have risen by 4.9% rather than the 8-12% on which the bid was based. As I think on the same basis that maybe Simon11 has said earlier, the paper said:

Should expansion slow one year, the business would have to run twice as fast the next. "The problem with revenue compounding up is once you fall behind it's very hard to catch up".

The train company blamed weakening consumer confidence, terrorism concerns, lower fuel prices [presumably making car use more attractive], car and air competition, slow UK GDP growth and slow growth in real earnings.

It seems to me that the story has got somewhat twisted. I find it very difficult to believe that Stagecoach/Virgin would have expected an 8-12% revenue growth in the first year when historically, since 1995, over the railways as a whole, the figure has been around 3% CAGR.

The 8% to 12% is so far out of kilter that the number has to be misunderstanding somewhere.

 

[HH]

Changing the colour scheme can't be done while the train is on it's same period out of service for refurbishment? That's how TransPennine are doing theirs. And if you know so well how it works, why is it so behind schedule? And why, for that matter, has GR revenue grown less than predicted? Because of "increased terrorism concerns"? Yeah, right.

1. Because they wanted to change the colour more quickly, and could.
2. Why is what behind which schedule? Show me the evidence.
3. Again this is a story. It's hearsay and I'm not convinced.

 

[LNW-GW Joint]

If anyone is interested, VTEC was due to pay DfT a premium of £204.8m for the year 2015/16.
This is very similar to the payment made by DOR East Coast in its last 3 years.
Next year (ie now) the VTEC premium jumps to £271.9.
(Roger Ford, Modern Railways, Feb 2015).

 

[Chrism20]

It seems to me that the story has got somewhat twisted. I find it very difficult to believe that Stagecoach/Virgin would have expected an 8-12% revenue growth in the first year when historically, since 1995, over the railways as a whole, the figure has been around 3% CAGR.

The 8% to 12% is so far out of kilter that the number has to be misunderstanding somewhere.

It does seem a very big growth figure that's for sure. Even bigger when you also consider that the old EC (DOR) had pretty healthy growth.

As a customer not a lot appears to have changed with the exception of rewards closing and the meddling with advances. The timetable throughout the financial period in question was fundamentally still the same with a few extensions to Stirling and Sunderland so it's difficult to see how they could expect to see 8%+ growth in the first year.

The 4% posted I would say was pretty good tbh.

 

[The Ham]

It depends on what the growth is measuring, passenger numbers then 5% is very good, income then 5% isn't so good.

The reason being is that if you see 5% increase in passengers then with inflation added to ticket prices then you could be looking at about 7%.
--- old post above --- --- new post below ---

There's a little slack in various fleets, I'm sure. There's a lot of slack in XC HST and GW 180 fleets. If they wanted the extra trains and stumped up the cash, are you really saying they couldn't have got anything?

Even if EC took all of the XC HST's (which wouldn't go down well with a lot of people!) Then you're not going to get a lot of extra services, even if there were the path available.

The 180 fleet would have given you a little more if that was available as well.

However, how likely is it that a ROSCO would want a short term lease with EC or a longer lease with a company who may not be using them quite as much?

 

[Smidster]

While we need to take anything the RMT says with a pinch of salt it is interesting to see some of these figures and how they match with expectations - personally 4% seems pretty good.

I am one of those who is travelling significantly less (beyond the normal commute) than I used to.

1) I know I am in the minority, and it won't have an impact on the bottom line, but I won't book on the Virgin Website following the rewards change - simply ain't worth it.

2) I work in Leeds and it is noticeable that staff are travelling to London a lot less than we used to - In the longer term I wonder how the inter city market will develop as technology makes physical travel less important.

3) Last year I became too old for a railcard - Given the cost differential I am prepared to use alternative modes (coach / plane) as while they may take longer the savings are too big to ignore.It is one thing if business if paying for it but if I am travelling to London you are talking big numbers.

 

[Kite159]

Similarly to other posters, the only time I use the VTEC booking engine to book tickets are for VTEC advances, and that is only for the small discount available (in some cases), everything else was switched to GWR when they ditched the Rewards program in exchange for Nectar.

So they must have lost out on some commission from my random purchasing.

 

[Starmill]

Even if EC took all of the XC HST's (which wouldn't go down well with a lot of people!) Then you're not going to get a lot of extra services, even if there were the path available.

The 180 fleet would have given you a little more if that was available as well.

However, how likely is it that a ROSCO would want a short term lease with EC or a longer lease with a company who may not be using them quite as much?

I think this is really very moot. This was their problem, and still is. They have chosen not do anything about it. My point was simple and I haven't seen a convincing argument against it: there has been no transformational change, just minor tinkering, over their first year. Therefore, it was naïve to expect the sort of revenue increases that could accompany new trains and more services.

 

[najaB]

Therefore, it was naïve to expect the sort of revenue increases that could accompany new trains and more services.

Though, as several posters have commented, there are reasons to doubt that the growth figures quoted in the linked article are actually what VTEC has been working towards.

 

[Chrism20]

1) I know I am in the minority, and it won't have an impact on the bottom line, but I won't book on the Virgin Website following the rewards change - simply ain't worth it.

Similarly to other posters, the only time I use the VTEC booking engine to book tickets are for VTEC advances, and that is only for the small discount available (in some cases), everything else was switched to GWR when they ditched the Rewards program in exchange for Nectar.

So they must have lost out on some commission from my random purchasing.

This is mentioned quite a lot on here and I have also changed my behaviour and purchase tickets elsewhere for journeys that I would have previously booked through EC. I have also spoken to a fair number of people that have done the same.

Does the discount on VTEC advance tickets when booked on VTEC still exist? I thought that had stopped or was in the midst of being stopped.

From looking at a random date at the end of this month VTEC appear to be the same price as XC for a ticket from Edinburgh to Kings Cross.

If that is the case the savvy purchaser will no doubt take their money to another TOC who will offer cashback and Nectar in return for 10% of the ticket value this costing VTEC more.