Dutch hit by East Anglia rail loss

<https://www.thetimes.co.uk/article/704155e2-c081-11eb-975b-15a4f2dfe5d9?shareToken=502086b755373f4b5f4902a0476de8e0>

When the Dutch transport giant Abellio won the Greater Anglia rail
franchise in 2016, an analyst described it as a lucky miss for rival
bidders.

That prediction has come true: Covid-19 and weak demand before the pandemic
sent Abellio East Anglia to a £315.6 million loss for 2020.

It caps a disastrous spell for rail franchising, which was torn up when the
pandemic forced ministers to take control of the railways, replacing
franchises with management contracts, where the state takes the risk.

Abellio East Anglia, which is 60 per cent owned by Nederlandse Spoorwegen
and 40 per cent by Japan’s Mitsui, was struggling with weaker-than-expected
demand before the pandemic hit. It serves areas including Suffolk and
Norfolk.

Abellio has had to pay the government to quit the contract and revealed a
£258.6 million “onerous contract provision” — the compensation payable to
exit the contract. This month it agreed to pay the government a further
£30.5 million.

The provision helped push it to a £315.6 million loss on revenues of £700.5
million in the year to the end of March 2020, according to accounts filed
at Companies House.

When it won the contract, Joe Spooner at investment bank Jefferies warned
that Abellio was on the hook for a weakening economy.

“Missing this opportunity may actually have been the best outcome for the
other bidders: National Express and FirstGroup,” he wrote.

On Sun, 30 May 2021 07:56:54 -0000 (UTC), Recliner
<recliner.usenet@gmail.com> wrote:

>Dutch hit by East Anglia rail loss
>
><https://www.thetimes.co.uk/article/704155e2-c081-11eb-975b-15a4f2dfe5d9?shareToken=502086b755373f4b5f4902a0476de8e0>
>
>When the Dutch transport giant Abellio won the Greater Anglia rail
>franchise in 2016, an analyst described it as a lucky miss for rival
>bidders.
>
>That prediction has come true: Covid-19 and weak demand before the pandemic
>sent Abellio East Anglia to a £315.6 million loss for 2020.
>
>It caps a disastrous spell for rail franchising, which was torn up when the
>pandemic forced ministers to take control of the railways, replacing
>franchises with management contracts, where the state takes the risk.
>
>Abellio East Anglia, which is 60 per cent owned by Nederlandse Spoorwegen
>and 40 per cent by Japan’s Mitsui, was struggling with weaker-than-expected
>demand before the pandemic hit. It serves areas including Suffolk and
>Norfolk.
>
>Abellio has had to pay the government to quit the contract and revealed a
>£258.6 million “onerous contract provision” — the compensation payable to
>exit the contract. This month it agreed to pay the government a further
>£30.5 million.
>
>The provision helped push it to a £315.6 million loss on revenues of £700.5
>million in the year to the end of March 2020, according to accounts filed
>at Companies House.
>
>When it won the contract, Joe Spooner at investment bank Jefferies warned
>that Abellio was on the hook for a weakening economy.
>
>“Missing this opportunity may actually have been the best outcome for the
>other bidders: National Express and FirstGroup,” he wrote.
>
I wonder about the situation with ScotRail. Will there be no exit
penalty there because the Scottish Government conveniently decided not
to extend the contract in 2022?

Scott <newsgroups@gefion.myzen.co.uk> wrote:
> On Sun, 30 May 2021 07:56:54 -0000 (UTC), Recliner
> <recliner.usenet@gmail.com> wrote:
>
>> Dutch hit by East Anglia rail loss
>>
>> <https://www.thetimes.co.uk/article/704155e2-c081-11eb-975b-15a4f2dfe5d9?shareToken=502086b755373f4b5f4902a0476de8e0>
>>
>> When the Dutch transport giant Abellio won the Greater Anglia rail
>> franchise in 2016, an analyst described it as a lucky miss for rival
>> bidders.
>>
>> That prediction has come true: Covid-19 and weak demand before the pandemic
>> sent Abellio East Anglia to a £315.6 million loss for 2020.
>>
>> It caps a disastrous spell for rail franchising, which was torn up when the
>> pandemic forced ministers to take control of the railways, replacing
>> franchises with management contracts, where the state takes the risk.
>>
>> Abellio East Anglia, which is 60 per cent owned by Nederlandse Spoorwegen
>> and 40 per cent by Japan’s Mitsui, was struggling with weaker-than-expected
>> demand before the pandemic hit. It serves areas including Suffolk and
>> Norfolk.
>>
>> Abellio has had to pay the government to quit the contract and revealed a
>> £258.6 million “onerous contract provision” — the compensation payable to
>> exit the contract. This month it agreed to pay the government a further
>> £30.5 million.
>>
>> The provision helped push it to a £315.6 million loss on revenues of £700.5
>> million in the year to the end of March 2020, according to accounts filed
>> at Companies House.
>>
>> When it won the contract, Joe Spooner at investment bank Jefferies warned
>> that Abellio was on the hook for a weakening economy.
>>
>> “Missing this opportunity may actually have been the best outcome for the
>> other bidders: National Express and FirstGroup,” he wrote.
>>
> I wonder about the situation with ScotRail. Will there be no exit
> penalty there because the Scottish Government conveniently decided not
> to extend the contract in 2022?
>

The penalty would apply if the franchise was having to be subsidised by
Abellio and already in danger of failing before Covid struck in March 2020.
In other words, the UK government was prepared to cover the subsequent
Covid losses, but not pre-existing losses. Without that UK government
support, ScotRail would have shut down in April 2020. Perhaps a few core
lines would then have reopened with a skeleton service.

In message <s8vgg6$lsa$1@dont-email.me>, at 07:56:54 on Sun, 30 May
2021, Recliner <recliner.usenet@gmail.com> remarked:

>Abellio has had to pay the government to quit the contract and revealed a
>£258.6 million “onerous contract provision” — the compensation payable to
>exit the contract. This month it agreed to pay the government a further
>£30.5 million.

Will anyone tell the unions, who are now suffering a bad case of "wrong
trousers", ie ones which aren't after all stuffed full of profits to
foreign shareholders at the expense of the UK commuters/taxpayers.
--
Roland Perry

On Sun, 30 May 2021 12:55:48 +0100, Roland Perry <roland@perry.co.uk> wrote:

>In message <s8vgg6$lsa$1@dont-email.me>, at 07:56:54 on Sun, 30 May
>2021, Recliner <recliner.usenet@gmail.com> remarked:
>
>>Abellio has had to pay the government to quit the contract and revealed a
>>£258.6 million “onerous contract provision” — the compensation payable to
>>exit the contract. This month it agreed to pay the government a further
>>£30.5 million.
>
>Will anyone tell the unions, who are now suffering a bad case of "wrong
>trousers", ie ones which aren't after all stuffed full of profits to
>foreign shareholders at the expense of the UK commuters/taxpayers.

Yes, it's funny how the unions always seem to miss seeing news like this. I assume they're simply against private
enterprise in principle, though their members have done rather well out of the semi-privatised railway. They may do less
well from now on.

On 30/05/2021 14:22, Recliner wrote:
> On Sun, 30 May 2021 12:55:48 +0100, Roland Perry <roland@perry.co.uk> wrote:
>
>> In message <s8vgg6$lsa$1@dont-email.me>, at 07:56:54 on Sun, 30 May
>> 2021, Recliner <recliner.usenet@gmail.com> remarked:
>>
>>> Abellio has had to pay the government to quit the contract and revealed a
>>> £258.6 million “onerous contract provision” — the compensation payable to
>>> exit the contract. This month it agreed to pay the government a further
>>> £30.5 million.
>>
>> Will anyone tell the unions, who are now suffering a bad case of "wrong
>> trousers", ie ones which aren't after all stuffed full of profits to
>> foreign shareholders at the expense of the UK commuters/taxpayers.
>
> Yes, it's funny how the unions always seem to miss seeing news like this. I assume they're simply against private
> enterprise in principle, though their members have done rather well out of the semi-privatised railway. They may do less
> well from now on.

The foreigners made a decent-looking short-odds bet on the UK not
suffering a once-in-a-generation disaster, and lost.

Certes <none@nowhere.net> wrote:
> On 30/05/2021 14:22, Recliner wrote:
>> On Sun, 30 May 2021 12:55:48 +0100, Roland Perry <roland@perry.co.uk> wrote:
>>
>>> In message <s8vgg6$lsa$1@dont-email.me>, at 07:56:54 on Sun, 30 May
>>> 2021, Recliner <recliner.usenet@gmail.com> remarked:
>>>
>>>> Abellio has had to pay the government to quit the contract and revealed a
>>>> £258.6 million “onerous contract provision” — the compensation payable to
>>>> exit the contract. This month it agreed to pay the government a further
>>>> £30.5 million.
>>>
>>> Will anyone tell the unions, who are now suffering a bad case of "wrong
>>> trousers", ie ones which aren't after all stuffed full of profits to
>>> foreign shareholders at the expense of the UK commuters/taxpayers.
>>
>> Yes, it's funny how the unions always seem to miss seeing news like
>> this. I assume they're simply against private
>> enterprise in principle, though their members have done rather well out
>> of the semi-privatised railway. They may do less
>> well from now on.
>
> The foreigners made a decent-looking short-odds bet on the UK not
> suffering a once-in-a-generation disaster, and lost.
>

Abellio was losing money on both GA and ScotRail long before Covid arrived.
Basically, it overbid. The same is true of SWR and TPE, and VTEC and
Northern before that. It looks like the DfT, egged on by the Treasury, had
been demanding too much from bidders. The winners were the bidders who
either walked away (eg, Stagecoach) or were outbid. NatEx also got out,
even selling its successful c2c franchise to Trenitalia.

Conversely, Covid didn't hurt the franchise holders and, arguably, the
forced termination of their franchises is a blesssing.

On Sun, 30 May 2021 09:05:19 -0000 (UTC)
Recliner <recliner.usenet@gmail.com> wrote:
>Scott <newsgroups@gefion.myzen.co.uk> wrote:
>> I wonder about the situation with ScotRail. Will there be no exit
>> penalty there because the Scottish Government conveniently decided not
>> to extend the contract in 2022?
>>
>
>The penalty would apply if the franchise was having to be subsidised by
>Abellio and already in danger of failing before Covid struck in March 2020.
> In other words, the UK government was prepared to cover the subsequent
>Covid losses, but not pre-existing losses. Without that UK government
>support, ScotRail would have shut down in April 2020. Perhaps a few core
>lines would then have reopened with a skeleton service.

I bet Wee Jimmy never mentioned that at the SNP conference. What a shame
the scottish government can't be a franchise, they could hardly do any
worse.

On 30/05/2021 20:58, MrSpook_q1_67@jkjs8bjn8zr_pl.biz wrote:
> I bet Wee Jimmy never mentioned that at the SNP conference. What a shame
> the scottish government can't be a franchise, they could hardly do any
> worse.

But who would invest in the franchise!

On 31/05/2021 08:23, MB wrote:
> On 30/05/2021 20:58, MrSpook_q1_67@jkjs8bjn8zr_pl.biz wrote:
>> I bet Wee Jimmy never mentioned that at the SNP conference. What a shame
>> the scottish government can't be a franchise, they could hardly do any
>> worse.
>
> But who would invest in the franchise!

The descendants of the Darien investors?

--
Basil Jet recently enjoyed listening to
2001 - Here Come The Miracles - Steve Wynn

And now EMR:
<https://www.telegraph.co.uk/business/2021/06/08/dutch-hand-taxpayers-91m-end-rail-funding-row/>

The Dutch government is paying more than £90m to UK taxpayers to prevent
its train company from being booted off Britain's railways.

West Midlands Trains, which is majority-owned by Dutch state-backed
operator Abellio, has struck a compensation deal with Whitehall officials
after ministers axed rail franchising and agreed to shoulder the burden of
huge industry losses during Covid.

A “termination payment” of £91m was agreed following months of negotiations
with the Department for Transport. The Government is thought to have
initially demanded penalties of about £200m, according to accounts filed
with Companies House.

Japanese firms JR East and Mitsui & Co, which own a 30pc stake in West
Midlands Trains, will pay a share of the operator’s penalties.

Abellio and Mitsui struck a deal with the Government at the end of May to
pay £30.5m in similar penalties for another troubled franchise, Greater
Anglian.

… continues

———

Do I hear chortles from Perth?