A RAILWAY facing business failure for the third time since privatisation should be immediately brought back into public ownership, rail union RMT said yesterday.
Virgin Trains East Coast (VTEC) majority owner Stagecoach announced that its pre-tax profit had fallen to £17.9 million in the year to April 29, down from £104.4m.
The plunge came after VTEC booked an £84.1m “exceptional charge” to “provide for anticipated losses.” The parent company also faced a £44.8m “non-cash exceptional impairment,” also related to the East Coast franchise.
The company said it was “in discussions” with the government “regarding our respective contractual rights and obligations” under the its franchise. This prompted speculation that Stagecoach could be about to walk away from the franchise.
In 2006, then East Coast franchisee GNER was asked to pull out after it financial woes.
Then in 2009, its successor National Express East Coast withdrew after failing to renegotiate the premium it paid to the government.
The franchise was then run profitably in the public sector before being farmed out to Stagecoach and Virgin in 2015.
VTEC chief executive Martin Griffiths said: “I am confident that we can return the business to profitability.
“Overall, we believe the long-term prospects for the business and public transport remain positive.”
RMT general secretary Mick Cash said: “RMT warned that reprivatising East Coast, after it had been successfully run in the public sector following the last private failure, was a gamble doomed to failure. We have been proved right.
“This is the third private operator to run the vital East Coast inter-city routes into the ground and, rather than waiting for the inevitable financial collapse, it should be brought back into public ownership immediately.”
Stagecoach blamed “increased terrorism concerns,” Brexit and slowing revenue growth for its black hole. In August, the firm will give up South West Trains, which it has operated since privatisation, after losing the franchise.
But it has been shortlisted for the new East Midlands and South Eastern franchises, as well as the new West Coast Partnership — which will operate the existing main line as well as initial High Speed Two services.
TSSA general secretary Manuel Cortes said: “These robber-baron privateers don’t deserve a bail out, they need to be stripped of this franchise and kicked out of our rail industry and our East Coast main line services must be brought back into public ownership.”