ScotRail racks up £10m loss amid contract woes

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The company that runs Scotland’s rail services has reported losses of £10m over a 15-month period.

Abellio ScotRail lost £7.9m before tax on turnover of nearly £990m between 1 January 2018 and 31 March 2019.

Earlier this month, it was stripped of the contract to run rail services by the Scottish government amid criticism of performance levels.

The rail operator said its results had been “impacted by operational performance issues”.

ScotRail operates about 2,400 train services a day, and covers all services in Scotland except those run by other operators which cross the border.

The Scottish government contract to provide rail services, worth more than £7bn over 10 years, was due to last until 2025.

However, the government said a so-called “break clause” would be used to end the franchise three years early, in 2022.

The company also revealed that it had not paid out any dividends to shareholders over the period, in accounts lodged at Companies House.

Dominic Booth, managing director of Abellio UK, described the decision to end the contract early as “the wrong choice for Scotland’s railway and its customers”.

He said the company had invested more than £475m in new and upgraded trains and created more than 500 extra jobs in Scotland.

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In its latest accounts, Abellio said it had set “ambitious objectives” at the start of its franchise in April 2015, with the “biggest investment in new trains, track and stations since the Victorian era”.

It went on to state: “During this period of unprecedented investment and change, results for the period have been impacted by operational performance issues following major infrastructure upgrades of track and stations and the late delivery of new trains to support significant timetable improvements.”

It added that since it took over the franchise, it had increased the number of seats available each weekday by 23% and increased overall rail services by 9% as a result of timetable improvements and bringing in more carriages in new and refurbished trains.

Running ScotRail doesn’t seem very easy or very profitable, if these accounts are anything to go by.

Abellio ScotRail has – yet again – been unable to make a profit or pay back the multi-million pound loan it got from its parent company. Even shareholders go empty-handed.

That could present a problem for the future.

If Abellio – an arm of the Dutch state railway – can’t run ScotRail to the standards expected by the Scottish government, who can? Since Abellio took charge, they’ve made a huge investment in electric trains, and increased the number of seats for passengers by 23%.

But that wasn’t enough.

They lost the contract – officially, at least – because the Scottish government didn’t accept their plans for the future. The fresh subsidy sought by Abellio was deemed too much.

Scottish ministers now have two years to find a company to run the railway better than Abellio managed – and more cheaply than Abellio promised.

Anyone bidding will wonder how they can do that, and still make a profit.

By 2022, the UK government may have changed the rail franchise system. Perhaps a new “concession” system will be in place, which means the operator wouldn’t own ScotRail trains or sell ScotRail tickets.

That may open the door for a public sector bid – “Calmac ScotRail”, anyone?

But the clock is ticking. A new operator has to be in place by April 2022.

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