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July 31, 2009

Occupation holds back Vestas factory closure date as company extends consultation period

RMT: July 31 2009

The occupation of the Vestas wind turbine factory on the Isle of Wight today passed another significant milestone with the workers holding back the scheduled closure date of the facility and with the company writing to staff this morning confirming that the consultation has been extended indefinitely – a move described by Vestas union RMT as a “massive victory.”

Vestas had planned to close the factory today – Friday 31 July – but as a result of the occupation, and the global campaign in support of the workforce, they have been pushed back and the extension of the consultation with the workforce means that there is a serious opportunity to draw up a rescue package similar to the one supported by the Scottish Parliament earlier this year which saved the Vestas factory in Kintyre.

This weekend will see a further show of the strength of the growing support for the Vestas workforce with crowds from the cancelled Big Green Gathering diverting to the Isle of Wight in what will be another important boost for the Save Vestas campaign.

Tomorrow, Saturday 1st August, there will be a major demonstration in support of the campaign starting at 1pm from St Thomas’s Square in Newport town centre.

RMT have also congratulated Gerry Byrne who took the Vestas protest to the fourth plinth in Trafalgar Square for an hour this morning between 5am and 6am.

Bob Crow, general secretary of Vestas workers’ union RMT, said:

“The fact that the Vestas campaign has held back the scheduled closure date today is another significant milestone in the fight to save the factory and 625 skilled manufacturing jobs in green energy. The extension of the consultation with the workforce this morning gives us a real chance to work up a rescue plan.

“This weekend will see a major demonstration of the growing support for the Vestas campaign which has fired the imagination of the labour and environmental movements all around the world.

“RMT remains deeply concerned as to the well being of those in occupation and we will be taking further legal and health advice today. This brave group of workers continue to be denied access to their basic human rights to nutritional food and liquids and we are making every effort to get supplies through.”

Ends

Supporters of Vestas workers break into factory to deliver food

Guardian: 30 July 2009
Paul Lewis

Supporters of workers occupying the Vestas wind turbine factory on the Isle of Wight today broke into the premises to deliver food, accusing the company of trying to starve the men into submission.

The Danish-owned company said it would officially close the Newport factory, the only major producer of wind turbine blades in the UK, tomorrow. However, about 10 workers at the plant remain in a first-floor office space which they have occupied for 11 days in protest at the closure of the factory, which they say will result in about 625 job losses.

Vestas failed in a legal attempt to obtain a possession order from a local court to evict the workers on Wednesday, when a judge ruled it had failed to properly serve papers on the men. He adjourned the hearing until Tuesday.

The National Union of Rail, Maritime and Transport Workers (RMT) has raised concerns over the welfare of the men, who have no access to showers or hot water.

The union is seeking legal advice on the obligations the company has to feed the workers, who are receiving a modest breakfast at 9am and a small meal – such as slice of pizza – at night. Occasionally, they have been given drinks.

"It cannot be right that the company are allowed to try and starve the workers at Vestas into submission," said the RMT general secretary, Bob Crow. "This looks to us like a gross infringement of their human rights."

One of the workers left the occupation yesterday, and was told by ambulance staff that his blood sugar levels were dangerously low. Luke Paxton, 20, said a police officer guided him to a waiting ambulance after he emerged from the plant looking "pale and shaky". He said he was advised to go to hospital after a blood test showed his sugar levels were lower than normal.

Vestas activists from the island, who are campaigning alongside environmental protesters at a campsite outside the factory gates, stormed through a security cordon yesterday to deliver food. Steve Milligan, from the Climate Camp protest group, said those outside had become "really frustrated and angry" at the lack of food and decided to enter by force.

A number were restrained by security, he said, but others managed to throw supplies in, including a kettle, rice, tins of tuna and pasta.

Until now, workers inside the factory have relied on additional supplies stuffed into tennis balls and thrown to them from a distance, meaning supplies have been limited to rolled up bags of instant soup, sweets and pound coins for use in a vending machine.

The tennis ball technique – also used to smuggle drugs into prisons – was used by the Guardian to get a USB memory stick into the factory. The workers uploaded video footage they shot of their occupation, giving an insight into their living conditions, and threw the ball back.

The footage, shot on Wednesday, shows the men lounging around on office desks and listening to music on the radio. They react jubilantly when they hear the news from court that enabled an extension of their occupation until next week.

One worker can be overheard saying: "Six days isn't it – something like that? We need to speak to Ian Woodland and they need to start getting us food in properly. They've said they can do it, so we need to get it done now. And maybe the RMT can start getting the food in and putting on the pressure."


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Government all at sea on wind power

Financial Times: July 29 2009
By Ed Crooks

As ministers have sounded the fanfare for hundreds of thousands of “green jobs”, the demise of the Vestas wind turbine plant on the Isle of Wight has provided a mocking counterpoint.

The closure of one factory with the loss of 600 jobs does not in itself say much about the success or failure of the government’s strategy. However, the decision by Vestas is an uncomfortable reminder that the vision of a vibrant industry growing up to meet the challenge of cutting carbon dioxide emissions for Britain and the world is little more than an aspiration.

The sales pitch for the “low-carbon industrial strategy” is plausible. The transition to an economy with much lower carbon dioxide emissions – the official commitment is a 34 per cent reduction by 2020 and an 80 per cent cut by 2050 – will demand structural change. Many old jobs will disappear, and new ones will be created.

Relative to many other countries, however, Britain is starting at a competitive disadvantage.

The standard source for claims about green job creation is a report from Innovas, a consultancy, which found that about 880,000 people worked in the broadly defined low carbon and environmental industries.

Over the next eight years, it went on, 400,000 jobs in those industries could be created. Focusing on the green jobs is misleading, however. While they are being created, plenty of other non-green jobs will be being destroyed, in part because of the rise in electricity and gas prices that will be necessary to pay for the investment needed in low-carbon energy.

The net effect will depend on whether the jobs being created have a higher value than the ones being lost. The government’s definition of “green jobs” is drawn very wide to catch as many occupations as possible, from dustmen to clean-tech venture capitalists.

Manufacturing jobs such as the ones at Vestas are among the ones that are likely to strengthen the economy.

An ill wind

In attracting those jobs, however, Britain is hampered by the size of its market, its high costs compared with China and other emerging economies, and its lack of skills, which has given other countries a head start.

Britain’s emphasis on offshore wind power – forced on the nation by the difficulty of securing planning permission for wind farms on land – may also be a handicap.

Other countries investing heavily in wind power, with more space and less effective local opposition, still see the greatest potential in onshore developments.

Explaining BP’s decision not to join in the UK wind industry, but to focus on the US, Tony Hayward, the company’s chief executive, talked wistfully this week about spaces the size of English counties available for wind farms in the US.

The right jobs can be brought to Britain, but the same considerations apply to green employment as to any other kind. There must be a skilled and capable workforce and confidence that there will be a market for the product. Also, costs have to be low enough to make the business viable.

So, it is no coincidence that Nissan has chosen to base its European centre for making batteries for electric cars in Sunderland, where it has had out­standing success in manufacturing vehicles powered by good old petrol and ­diesel engines.

Train strike enters second day

BBC News: 31 July 2009

Thousands of commuters are facing more disruption as a strike by workers on National Express East Anglia train services enters its second day.
norwich_picket_line.jpg
Many commuters stayed at home on the first day of the strike

The Rail Maritime and Transport (RMT) and Aslef unions are striking over pay and conditions and only one in 18 trains is operating.

It affects Cambridgeshire, Norfolk, Suffolk and Essex and services into London and Stansted Airport.

The limited peak-time service is being staffed by National Express managers.

The strike action is set to end at midnight.

'Greedy bosses'

On Thursday, RMT and Aslef said their members "solidly supported" the walkout and the 48-hour dispute had "crippled" services.

A further three 48-hour strikes are planned for next month.

RMT general secretary Bob Crow said: "This strike has been caused by greedy National Express bosses who have soaked up £2.5bn in taxpayer subsidies in the past 10 years and who have milked every penny out of this franchise, while treating their staff like dirt."

Andrew Chivers, managing director of National Express East Anglia, said: "The unions' demands are totally unrealistic, especially in this current economic climate.

"We have offered salary increases above the rate of inflation and remain available at any time for discussions."

National Express managers say the unions want a 2.5% pay rise, a four-day working week and a 4% increase in the number of train drivers.


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Strikes shut down trains

Daily Mirror: 31/07/2009

Thousands of passengers endured chaos yesterday as a strike crippled rail routes.

Most services on National Express East Anglia were closed by a 48-hour strike over pay and conditions. It ran a service of 100 trains instead of 1,800. RMT and Aslef members have planned three more 48-hour stoppages in August.

RMT's Bob Crow said: "This has been caused by bosses who have soaked up £2.5billion in taxpayer subsidies in 10 years."

Tories ask funding questions about Adonis’s £1.1bn electrification plan

Transport Xtra: 31 Jul 2009

The Government has announced plans to electrify the railway lines between London, Bristol and Swansea and Manchester and Liverpool in a £1.1bn programme to be completed by 2017.
OHL.jpg
Electrification will reduce transport’s carbon dioxide emissions, say ministers

The plans for the Great Western Main Line will see the lines between London Paddington, Reading, Oxford, Newbury, Bristol, Cardiff and Swansea electrified within the next eight years at a cost of £1bn.

Electrification of the Great Western Main Line could also affect the location of the western terminus of the Crossrail east-west London rail line. “With electrification now to be extended to Reading, it would be possible for Crossrail to operate to Reading, rather than Maidenhead, from the outset, and this option will now be considered by the Government and Transport for London,” the DfT said.

The line between Liverpool and Manchester via Earlestown will be electrified in the next four years at a cost of £100m.

Detailed planning would start straight away on the Great Western Main Line work, the Government said, with early engineering work taking place between 2012 and 2014 and the bulk of the engineering being carried out between 2014 and 2016.

“As with other rail investments, the cost of electrification will be funded by Network Rail and supported by the Government,” the DfT said. “Over the medium term this £1.1bn investment in electrification will be self-financing, paying for itself through lower train maintenance, leasing and operating costs. This means that this investment can take place without reducing already planned infrastructure enhancement work.”

Conservative shadow transport secretary, Theresa Villiers, said electrification would help reduce carbon dioxide emissions but added: “Gordon Brown is living in a fantasy land if he thinks this comes for free, without any cost to the taxpayer. Yet again Labour are maxing out Network Rail’s credit card, leaving the taxpayer to foot the bill.”

“After Lord Mandelson announced cuts in the transport budget [LTT 3 Jul], how can we believe that Labour can announce £1.1bn of new spending without impacting on existing transport commitments or putting further strain on public finances already stretched to breaking point?” Villiers added. “Gordon Brown needs to come clean about what current transport schemes could now face cuts to pay for today’s announcement.”

The Liberal Democrats also expressed some scepticism. “The transport secretary will argue that these electrification schemes are self-financing,” said transport spokesman Norman Baker, “and it is true that the figures do show them covering their costs, albeit over 40 years.”

Baker also expressed surprise that the Midland Main Line had not been chosen for electrification, either instead of or in addition to the Great Western Main Line.

“The incremental costs of electrifying the Midland Main Line are, in fact, lower than elsewhere, given that the line already has wires as far north as Bedford,” he said.

The Government’s position on the Midland Main Line is that work is ongoing to assess its potential for electrification and that the Great Western Main Line has been given priority in part because the fleet of Intercity 125 trains operating on the line is due to be replaced en masse in the next few years, which is not the case with the Midlands line. “Rolling stock fleets tend to last 30-40 years, so the replacement of the Intercity 125 fleet over the next decade creates a ‘once in a generation’ opportunity to electrify the route.”

July 30, 2009

Thousands wrestle with nightmare journey - rail strike shuts Liverpool St

London Evening Standard: 30.07.09
Dick Murray and Rashiq Razaq

London commuter rail lines were brought to a near-standstill today by the start of a 48-hour strike.
Liverpool-St-station300709.jpg
The near-empty concourse at Liverpool St

National Express East Anglia services to and from Liverpool Street station were crippled with just a skeleton service for its thousands of passengers.

More than 150,000 passengers faced major disruption, with many taking hours longer to get to work and some giving up and going home.

The regular timetable was scrapped and replaced with an emergency hourly service to London from Colchester and Southend Victoria.

The Stansted Express also ran once an hour instead of every 15 minutes and there was a “small number” of peak trains on the Norwich to London route. All were “very crowded”.

Other routes from the east run by different operators, including the East Coast main line, c2c and First Capital Connect, suffered worse overcrowding than usual as commuters tried other routes into London.

Union bosses, who ordered the strike in a long-running row over pay and working conditions, said the action had been “solidly supported”. Pickets, including RMT leader Bob Crow, were on duty at the main stations, including Liverpool Street, and train depots.

Three further 48-hour stoppages are scheduled for consecutive Thursdays and Fridays in August and the unions have refused to rule out more.

The industry's two most powerful unions, Aslef and the RMT, combined forces to bring virtually the entire franchise to its knees.

Mr Crow, at the picket line at Liverpool Street, said: “The strike has been solidly supported across the franchise. The vast majority of services are completely shut down. Company managers are running a token ghost service on a handful of lines as a publicity stunt.”

He added: “Every single line is running with a serious delay. We're available today. We're calling on the company to get around the table.”

He said the strike had been caused “by greedy National Express bosses who have soaked up £2.5 billion in taxpayer subsidy in the past 10 years and are now milking the franchise for every penny they can get while treating their staff like dirt.”

Andrew Chivers, the company's managing director, condemned the strikes as “unrealistic and unnecessary”. He said: “The unions' demands are totally unrealistic, especially in the current climate. We have offered salary increases above the rate of inflation and remain available at any time for discussions to reach a sensible, affordable and fair agreement.” He said Aslef “among a variety of demands” wants a minimum pay increase of 2.5 per cent, a four-day working week and a four per cent increase in the number of train drivers employed by the company.

Andy Morrison, district officer for Aslef, said the claims were “total fabrication”. “We have never put a figure on the pay claim and have never demanded 2.5 per cent. Nor have we demanded a four-day week across the company.

“This dispute is not just about pay — there is also a breakdown of industrial relations.” The unions say National Express has offered “peanuts” with only a 0.5 per cent pay rise or a lump sum of £200 to East Anglia employees.

They say the company can afford to pay more after having slapped an inflation-busting six per cent fare increase on commuters in January and cutting 300 jobs.


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National Express rail strike strands London-bound commuters

Guardian: 30 July 2009
Dan Milmo, transport correspondent

Busy East Anglia route left with only hourly services amid pay dispute between troubled operator and unions

A-train-National-Express.jpg
A train National Express east coast mainline service

National Express has been left running about one in 18 of its East Anglia services because of the strike. Photograph: Luke Macgregor/Reuters

Hundreds of thousands of commuters on one of Britain's busiest rail routes endured a chaotic journey into work this morning as strike action brought National Express East Anglia (NXEA) to a near-standstill.

Passengers were forced to stay home or take the bus, car or tube into work as NXEA was reduced to operating hourly services. The East Anglia franchise ferries 2 million people a week from Colchester, Southend and Norwich to London Liverpool Street in the capital's Square Mile financial district.

Tourists were affected as the route from Stansted Airport to London was cut to one train per hour. On a normal weekday NXE operates 1,800 services on its line but today expects to run 100 trains.

Andrew Chivers, the managing director of the franchise, apologised to passengers stranded in commuter towns such as Chelmsford, Braintree and Colchester: "We are extremely disappointed that the ASLEF and RMT unions have called this industrial action over their salary demands, despite lengthy negotiations where we have offered the unions a salary increase above the rate of inflation."

The Rail Maritime and Transport (RMT) union and drivers' union Aslef said their members "solidly supported" the two-day walkout, which could be followed by three further 48-hour stoppages in the coming weeks.

The RMT said managers were running a "token" service on a few lines but most were "crippled".

The strike comes after NXEA's owner, National Express, plunged into a first-half pre-tax loss of £48.1m due to the cost of quitting its £1.4bn east coast franchise. The government is determined to strip the group of the East Anglia contract as punishment but National Express said today it was prepared to challenge this in court if necessary.

National Express makes loss after East Coast exit

Guardian: 30 July 2009
Dan Milmo

• Operator announces pre-tax losses of £48.1m
• Exit from East Coast rail franchise cost group £54.7m

National Express has become a takeover target following its admission that its £977m debt burden is unsustainable. Photograph: National Express

National Express's costly exit from the £1.4bn East Coast rail franchise dragged the public transport group into the red over the first half, with pre-tax losses of £48.1m.

The bus, coach and rail operator has become a takeover target in recent weeks following the planned abandonment of the London-to-Edinburgh route, the resignation of its chief executive and the admission that its £977m debt burden is unsustainable. Those problems weighed heavily on first half results as National Express posted a pre-tax loss of £48.1m for the six months to 30 June, against a profit of £52.4m for the same period last year. The group took a £54.7m hit from the restructuring of its rail businesses in anticipation of handing back the East Coast contract later this year.

Today's results come as hundreds of thousands of rail passengers face disruption as National Express East Anglia workers go on strike.

National Express's debt burden, accumulated by a spending spree that saw it become a leading player in the Spanish coach market, was reduced by more than £200m to £977m over the period, but it is still fighting to avoid a covenant breach and National Express said this morning that it will scrap its dividend until borrowings are reduced further.

Jez Maiden, finance director, said the group would consider a rights issue or disposals as it strives to meet a covenant test in December that limits the group's borrowings to no more than 3.5 times its earnings before interest, tax, depreciation and amortisation. The multiple currently stands at 3.2 following concerted work on costs since January, the group said today, but analysts still believe a cash call is highly likely. "We will continue to look at other opportunities and options including equity and other disposals. But we have made no decisions," he said.

National Express said it was still awaiting an update from the consortium that made an all-cash approach for the group last week. The group's largest shareholder, the Cosmen family, and private equity firm CVC have linked their interest to a number of preconditions, including a demand that National Express retains its remaining two franchises. Maiden said National Express was seeking clarification on what he called a "complex" approach. "We are evaluating what we received and going through a number of questions that have arisen from what is quite a complex and conditional interest. But at this point it is too early to say what the result of the evaluation will be." National Express also declined to comment on the interest of Stagecoach, a rival public transport operator, which is also in talks with the bid consortium about picking up National Express assets as part of the deal.

National Express reiterated that, according to its lawyers, the government has no right to strip it of its profitable c2c and National Express East Anglia franchises under so-called "cross default" guidelines. "The group would oppose any such attempt," it said. However, National Express indicated that rail will be a lesser priority in the years to come as it told investors that it will focus on its "core divisions" of coach and bus. Rail remains the group's biggest earner by revenue, accounting for 44% of turnover, but it is now the least profitable division – accounting for just 3% of operating profit over the period.

The outlook for its rail businesses remains poor, the group said today. Underlying revenue at its three franchises rose by just 1%, with growth "markedly lower" than previous periods as the recession saw fewer journeys and, most damagingly for East Coast, a trend of passengers switching to cheaper pre-book and standard-class tickets. As a result, the East Coast franchise lost £20m between January and June. In a dig at the Department for Transport, which has refused to renegotiate the East Coast contract, National Express said it had limited ability to cut costs on the route because the DfT had written such tight specifications into the deal. "National Express East Coast is expected to remain loss-making for some time," said the group. It added: "This has been a common problem across all the country's long-distance franchises, where the impact of falling GDP on business and discretionary travel behaviour is felt earlier and more acutely than on commuter-orientated franchises."

National Express also owns a coach and bus operation in the UK and a school bus division in the US. Total group revenues rose 4.4% to £1.4bn over the period, with all divisions affected by the recession. The operating profit at UK bus and coach fell by 21% to £21.8m, with rail just scratching out £2.5m thanks to East Anglia and c2c, while the Spanish coach business saw profits fall by £3m to £28.6m and the school bus division reported a fall in profits from £25.9m to £24.7m.


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UPDATE: National Express Swings To 1H Loss, Scraps Dividend

DOW JONES NEWSWIRES: JULY 30, 2009
By Kaveri Niththyananthan

LONDON (Dow Jones)--U.K.-based transport group National Express Group PLC (NEX.LN), the subject of takeover attempts, Thursday said it was suspending its interim dividend payment after it swung to a first-half pretax loss due to losses at its East Coast rail franchise in the U.K.

The bus and rail company, which was earlier this month stripped of the franchise by the U.K. government, booked GBP20 million of losses at East Coast and said it would stop running the franchise during the second-half of the year. It will then focus on its bus and coach operations in the U.K., Spain and North America.

The company said it still hasn't found a replacement for Chief Executive Richard Bowker, who announced his departure on the same day the U.K Government said it would take control of East Coast.

Takeover interest in National Express has been prompted by a 60% collapse in the company's share price in the past year. The company is on an unstable financial footing, having built up large debts just as the recession took hold in the U.K.

It booked a pretax loss for the six months to June 30 of GBP48.1 million, compared with a profit of GBP52.4 million in the same period a year earlier. Revenue fell 4.4% to GBP1.42 billion, from GBP1.36 billion, while its net loss was GBP36.8 million, from a GBP35.7 million net profit a year earlier.

Private equity group CVC Capital Partners and members of Spain's Cosmen family, the largest shareholder in National Express with an 18.7% stake, have made an indicative proposal to buy the company. Rival Stagecoach Group PLC (SGC.LN) has also said that it is in exclusive talks to buy some National Express assets should a bid for the U.K. transport operator prove successful.

National Express' own strategy is focused on reducing debt, strengthening its balance sheet and cutting costs. It said it is on target to deliver GBP40 million in annual savings.

Jez Maiden, Group Financial Director, told reporters the company is looking at reducing its debt position and options include equity fund raising and a further disposal of assets.

The interim dividend won't be paid so the company can focus on debt reduction. It has already reduced net debt by GBP200 million since the start of the year by reducing capital investment by 40% and improving working capital. At June 30, net debt was GBP977.5 million.

Maiden gave no details on how negotiations were developing with CVC Capital, only adding National Express is evaluating its options.

Earlier this month, the U.K. government said it would strip National Express of its East Coast rail franchise because it couldn't support it financially.

At 0727 GMT, National Express shares were down 3 pence, or 1%, at 337 pence.


See also:

National Express heads for the buffers

Reuters: July 30th, 2009
Neil Collins

You might have thought that the Spanish had learned from observation that British transport businesses are much riskier than they look. Ferrovial’s purchase of airports operator BAA has turned into a financial plane crash, but perhaps it’s the hope of clawing back some of its paper losses on National Express that has encouraged their fellow Spaniards in the Cosmen family to consider buying the whole business.

National Express is barely sustainable in its current form. It has infuriated the British government by walking away from a big rail franchise when it couldn’t sustain the price it had recently agreed to pay. As a result, it faces the prospect of having to fight to hold onto the other two, in the knowledge that these are the last it will ever get.

On Thursday it scrapped the dividend and the directors added that there was “significant doubt” about the company’s ability to continue as a going concern. They are having to struggle on without the wisdom of Richard Bowker, who as chief executive drove them into this rusty siding, and a share price that went from 10 pounds to 3 pounds during his three years at the controls.

There’s a curiously binary outlook now. An inciteful analysis from Pali International can’t see any value for a bidder paying more than the current 344 pence, since that implies an unattractive internal rate of return of around 17 percent. Even that assumes a new owner can persuade the government to view the company as a bona-fide owner of rail franchises again. Brian Souter at rival Stagecoach is keen to buy bits of the business, but he’s not known for over-paying, and there have been no talks. As Pali concludes; “We would not regard 300p as a floor if [the bidding consortium] walks.”

National Express used to be a decent, if rather dull, business running long-distance buses. As so many others have done, its board was seduced by the idea that a dependable cash flow was crying out for a “more efficient” (ie debt-laden) balance sheet. The shareholders know better now. It’s no wonder the Spanish are cross enough to try and take it away.


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Debt threatens to derail National Express fight against takeover bid

The Times: July 31, 2009
Helen Power, David Robertson

The heavily indebted company must refinance £460 million of debt by September 2010 and faces more stringent loan covenant tests

Takeover target National Express warned yesterday that there was a “material uncertainty” about the transport group’s ability to continue as a going concern, adding to the pressure to sell the business.

The heavily indebted company, which is fighting a £500 million bid from CVC, the private equity house, and Spain’s Cosmen family, must refinance £460 million of debt by September next year and faces more stringent covenant tests on its loan from this December.

However, National Express’s management said: “We have a reasonable expectation the group has adequate resources to continue in operation.”

The company has £373 million of undrawn funds in its bank account and said it continued to consider an equity raising and disposals to help to shore up its battered balance sheet.

It has obtained a temporary waiver from lenders, relaxing its net debt covenant, but from December it must keep borrowings below 3.5 times earnings before interest, tax and depreciation (ebitda), tighter than the current level of four times ebitda.

National Express said yesterday that borrowings stood at just 3.2 times ebitda, but conceded that “covenant compliance remains dependent on actions which are yet to be delivered”.

The group plunged into the red in the first six months of the year when it was forced to write off £54.7 million after being stripped of its loss-making East Coast Mainline franchise.

The company, which made a £36.6 million loss compared with a profit of £35.9 million last year, also announced that it would axe its interim dividend to save cash and reduce debt.

National Express said the move should help it to stay within its banking covenants and assist with refinancing €540 million (£461 million) of debt by next year. Cost-cutting in the first half has already reduced debt by £200 million to £977.5 million.

Ray O’Toole, the chief operating officer, said he was encouraged by recent fundraising at other companies and believed National Express’s banks and other investors were supportive.

The move to strip National Express of the East Coast franchise prompted a flurry of interest from potential bidders for the bus and trains group.

Stagecoach has also thrown its hat into the ring, saying that it was in exclusive talks with CVC about joining its consortium with a view to breaking up National Express, and has also reserved the right to make its own bid. Stagecoach is thought to be most interested in its rival’s bus operations.

The CVC consortium is believed to have offered about £500 million for the company, but National Express’s management is holding out for a minimum of 400p a share, which would value it at about £620 million.

In a note yesterday Cazenove analysts said they believed the fair value for National Express was between 400p and 530p and that a bid would have to be at a premium of 5 per cent to 10 per cent of 400p to be successful.

July 28, 2009

Arriva passengers face litter-strewn trains because of union litter boycott

Daily Telegraph: 28 Jul 2009
By David Millward, Transport Editor

Passengers on Arriva Cross Country face travelling on rubbish-strewn trains because members of the Rail, Maritime and Transport union will refuse to collect litter.

The union has also banned overtime working on the line which runs services from south west England to northern Scotland.

Arriva is one of a number of train operators facing industrial action over the next few weeks from both RMT and the train drivers' union, ASLEF.

The action on Arriva, in a dispute over pay and conditions, will start on Monday and will continue throughout August.

"It will make a real difference, when you think of the number of newspapers and other rubbish you find on trains," said an RMT spokesman.

"Collecting litter is not part of our members' job description and they do this out of goodwill."

Meanwhile industrial action from both unions will also see services being reduced on National Express East Anglia and on the Stansted Express.

This will mean disruption on trains linking Liverpool Street to Colchester, Norwich and Southend Victoria.

Passengers on Northern Rail also face disruption on Aug 6 as a result of a joint strike by both RMT and ASLEF.

In addition passengers on London Midland could also face disruption with station staff, who are members of RMT, balloting on industrial action.

Stephen Hammond, a Tory transport spokesman, urged the unions and companies involved in the disputes to resume talks.

"There will be considerable inconvenience to passengers. We are concerned that there are a number of disputes and the impact that they will have on the economy."

July 27, 2009

Capitalism blamed as rail failure redivides Berlin

Financial Times: July 27 2009
By Chris Bryant in Berlin

Concrete walls, watch-towers, barbed wire and armed border guards for decades prevented Germans travelling across Berlin from the east to the west.

But, as the German capital gears up to celebrate 20 years since the fall of the Berlin Wall, leftwing commentators are claiming that capitalism, not communism, is now keeping the two apart.

For the S-Bahn - the suburban commuter railway running into and around Berlin that became a symbol of the cold war divide - has come grinding to a halt.

More than two-thirds of the network's 550 trains were withdrawn from service last week and the main east-west line closed after safety checks following a derailment showed that about 4,000 wheels needed replacing.

Hundreds of thousands of Berliners have been forced to get on their bikes or use alternative, overcrowded routes to work, while tourists weaned on stereotypical notions of German punctuality and efficiency have been left inconvenienced and bemused by the chaos.

Deutsche Bahn, the national railway operator, is under fire for cutting staff and closing repair workshops at its S-Bahn subsidiary in an attempt to boost profitability ahead of an initial public offering, which has since been postponed.

For businesses dependent on the custom of S-Bahn passengers, the partial -suspension of services is no joke.

"For the past two or three days it's been really bad. Customers are down by more than half," said an employee at a clothing-alteration service situated below the deserted S-Bahn platform at Friedrichstrasse station, in the former East Berlin.

"German trains are world famous. I didn't think -something like this could happen."

A columnist for Tagesspiegel, a Berlin-based newspaper, observed that the number of S-Bahn carriages rendered unusable by management incompetence was only slightly fewer than the total damaged by the Red Army in 1945.

Others note that even the Berlin Wall itself did not prevent S-Bahn passengers travelling between west and east, so long as they held a West German passport.

The East German authorities continued to operate the S-Bahn in West Berlin after partition of the city following the second world war until the 1980s. West Berliners eventually boycotted this service in protest at the communist regime.

But now it is being claimed that capitalism is driving passengers away.

"The chaos in the Berliner S-Bahn is a lesson in the consequences of capitalism. It is a graphic depiction of where subservience to financial markets' greedy pursuit of profit ultimately leads," Ulrich Maurer, chief whip of the radical Left party, said.

Deutsche Bahn has apologised for the inconvenience but insists that cost-cutting was not the problem and blames the train manufacturer instead.

"Even if we had had twice as many employees and three times as many workshops . . . it would not have prevented these wheels from breaking," Deutsche Bahn said.

Nevertheless, S-Bahn -Berlin's entire senior management was forced to resign this month after it emerged that they had not ordered sufficient safety checks.

The repairs, refunds and lost fares could leave Deutsche Bahn up to €100m ($142m, £86m) out of pocket, according to one estimate. A full service is not expected to resume until December.

MPs urge rail franchise reforms

BBC News: 27 July 2009

The rail franchise system is "a muddle" which allows train companies to "take advantage" of passengers and needs reform, a report by MPs has warned.
NXEC.jpg
The report called National Express's rail operation a 'high profile failure'

The Commons transport committee said operators were making profits in good times but forcing the government to step in when revenues fall.

And they charged "unacceptable" fare rises of up to 11% above inflation.

The Association of Train Operating Companies said four-fifths of passengers bought discounted tickets.

The MPs urged the government to run East Coast trains itself.

They said nationalisation could be a way of comparing the performance of the public and private sectors.

The report found operators had exploited a loophole to charge "unacceptable" fare rises.

Passengers had to go to "extraordinary lengths" to get cheap fares and that fares had risen out of all proportion to the rest of the economy, it said.

Tighter rules will now tie all prices to inflation plus 1% - resulting in cheaper fares by next January.


"The franchise mess is beyond reform and the only real solution is a return to public ownership of railways" - Bob Crow, RMT general secretary

The committee's Labour chairwoman Louise Ellman said: "The fare rises we saw this year were excessive.

"Companies cream off profits in good times, but leave passengers to pick up the bill when hard times hit."

The report found the current structure had allowed rail operators to hike-up prices at the worst possible moment.

But Mrs Ellman said the price formula that allowed companies to take advantage in 2009 would remain in 2010 - when changed economic conditions should have the opposite effect.

Transport Secretary Lord Adonis has now closed a loophole which allowed train companies to increase prices of certain journeys if average fares remained within rules.

'High profile failure'

Mrs Ellman said: "We are pleased Lord Adonis has decided to tighten the rules and to hold firm in face of pressure from operators.

"The system which allowed unreasonable fare rises this year will be kept in place next year when it will be disadvantageous to train operators."

The MPs pointed to the "high profile failure" of operators GNER and National Express as evidence of underlying problems.

Shadow transport secretary Theresa Villiers said: "Rail users will not welcome the conclusion of this report which is scathing about the way Labour has run the rail franchising system.

"The government has failed to tackle the problems on our railways, creating a franchise system which resorts to pricing passengers off the railway to deal with overcrowding."

"The system is run in a fragmented fashion by companies whose principal aim is profit" - Penny W, Exeter

Bob Crow, general secretary of the RMT union, said: "This report exposes the chaos of the franchise system.

"The franchise mess is beyond reform and the only real solution is a return to public ownership of railways."

Peter White, professor of public transport systems at the University of Westminster, told the BBC that franchising was a delicate balancing act.

"If franchises were awarded for a longer period of time, that could have substantial benefits," he said.

"For example, they could invest in improved ticketing systems such as smartcards.

"But the problem is that if you've made a long-term franchise commitment and the company runs into difficulty, you must have some means of curtailing that franchise over a shorter period."

Lord Adonis said reforms to improve the rail franchising system were being considered - including longer franchises.

The "risks and rewards" of the rail industry are shared between operators and the government, he said.

He said: "When the rail franchising system was examined by the National Audit Office last year they found that it was delivering good value for money, and steadily improving services.

"The government will consider the committee's report and respond fully in due course."

See also:


Rail franchising criticised as a muddle

Financial Times: July 27 2009
By Robert Wright, Transport Correspondent

The current system of rail franchising is a muddle that has not served passengers' best interests, a parliamentary committee says in a report issued today.

Publication of the Rail Franchises and Fares report by the Commons transport select committee follows the announcement by National Express on July 1 that it would be forced to default on its obligations under its east coast rail franchise . The Department for Transport (DfT) has said that, when that happens later this year, it will temporarily take over operation of the franchise .

According to the report, National Express's problems on the east coast - along with the withdrawal of GNER, the previous franchisee on the route, from its contract in December 2006 - are "indicative of the underlying problems in the current franchising model".

The MPs' report is the latest contribution to a growing debate over the future of the rail franchising system, under which private companies are awarded the exclusive right to run passenger trains on certain routes in return for agreeing either to pay the DfT a set sum or to accept a set subsidy each year.

The DfT has announced its own inquiry into the system's future, and will consider awarding franchises longer than the current seven to 10 years. Michael Roberts, chief executive of the Association of Train Operating Companies, has also called for reform.

The report claims other franchises could be facing similar financial difficulties, citing Stagecoach Group's dispute with the Department for Transport over its South West Trains franchise .

Stagecoach has insisted its problem, which could cost it £100m if unresolved, results from mistakes by the DfT rather than fundamental financial problems.


See also:


MPs call for radical overhaul of rail franchises

Guardian: 27 July 2009
Dan Milmo, transport correspondent

• Transport secretary Lord Adonis pledges to reform system
• Stagecoach linked to bid for National Express

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The failure of National Express to retain the east coast mainline franchise has triggered a takeover battle

The government pledged to reform the rail franchise system yesterday as Stagecoach became the latest public transport group to be linked with National Express, owner of Britain's biggest rail contract.

Lord Adonis, the transport secretary, said he would consider longer franchises after severe criticism from MPs in a report published today that describes the rail network as a "muddle".

National Express is expected to hand back the east coast main line franchise later this year after admitting that it cannot afford a contract that requires payments of £1.4bn to the government by 2015. The admission, and the departure of Richard Bowker, the train operator's chief executive, have left the company in disarray and sparked a potential takeover battle.

Stagecoach was linked with a bid for National Express yesterday, less than a week after FirstGroup renounced its interest. Sources close to the situation now expect Stagecoach to come under pressure from the Takeover Panel, which oversees mergers and acquisitions in the City, to clarify its intentions. Stagecoach has reportedly appointed Deutsche Bank to explore an all-share takeover offer.

The Perth-based bus, coach and train operator has been tipped to move for National Express since last week, when National Express received an approach from its largest shareholder, the Cosmen family, and the private equity firm CVC Capital Partners.

Last night it was reported that National Express is set to reject the Cosmen-CVC bid early this week on the basis that it puts too low a value on the company.

FirstGroup, another public transport operator, has dropped its interest in National Express after attempts to broker an all-share takeover were rejected. Analysts believe that a cash offer of around 400p per share, valuing National Express at more than £600m, could persuade a reluctant board to sell the business.

GNER was forced to hand back the east coast main line franchise in 2006 and the committee said the two "high-profile failures" were indicative of the underlying problems in the franchising model.

Adonis yesterday defended the franchising model, but admitted the case of National Express raised wider concerns.

National Express argues that it has limited responsibility for the east coast line because the franchise is owned by a special purpose vehicle and not the parent group. MPs and trade unions have warned that such a stance allows train operators to make profits from contracts when times are good and then walk away from them in an economic downturn.

"I am considering reforms to improve the rail franchising system, including longer franchises and a reform of the special purpose vehicle model for managing individual rail businesses," Adonis said.

In its report on the rail network published today, the House of Commons transport committee said: "There is no point in involving the private sector if it simply takes the profits in the good times, leaving the taxpayer to pick up the tab in bad times."

Adonis said he would launch a consultation on the reforms before reletting the east coast franchise next year, after a brief spell in public ownership. The committee urged the government to take a more radical step and keep the London-to-Edinburgh route under state control.

"The service could then be used as a comparator for other types of franchises, both in terms of financial viability and passenger service quality," said the committee.

The MPs said it was "unacceptable" that National Express might "cling on" to its other rail franchises (East Anglia and the London to Tilbury and Southend route c2c). They were also concerned about the lack of information available over the financial stability of other operators.

The east coast failure has triggered a takeover battle that could change the shape of the public transport sector.

MPs worry recession could see Virgin abandon West Coast railway line

Liverpool Daily Post: Jul 27 2009
by Rob Merrick

A GROUP of MPs will today urge the Government to come clean over growing fears that the recession could force Virgin to walk away from its flagship West Coast rail contract.

The Liverpool to London route is among several franchises described as "facing financial distress", in a highly-critical report by the Commons transport select committee.

The report high lighted how Virgin West Coast's revenue growth over the 11 months to March this year was a puny 0.5%, as the economic crash took its toll on ticket sales.

And it warned of the dire consequences for the public purse if Richard Branson's company went the way of East Coast operator National Express – which handed back the keys earlier this month.

The committee, chaired by Liverpool MP Louise Ellman, also launched a fierce attack on ministers for ignoring its warnings of three years ago that the franchise system was broken.

And it turned its fire on attempts to create a fairer fares system, warning that passengers must still go to "extraordinary lengths" to obtain affordable tickets.

On July 1, Transport Secretary Lord Adonis revealed that a publicly-owned company would be set up to run trains on the East Coast line at the end of the year.

The move followed the refusal by crisis-hit National Express to put in any further funding – and the government's refusal to renegotiate the contract.

Today's report, entitled Rail Franchising Off The Rails, suggests other train operators may follow suit, raising fears about no fewer than four franchises, including Virgin West Coast.

And it concludes: "If more franchises were to default, the financial implications could be very serious indeed, perhaps jeopardising funding for other transport projects.

"We are concerned that there is a lack of information available to us regarding the financial stability of franchise operators. Many more franchises may be struggling to meet their required financial agreements, without our knowledge."

Mrs Ellman said her committee's 2006 warning – made just weeks before GNER defaulted on its £1.3bn East Coast contract – had been "vindicated".

And she said: "The failure of two major contracts in three years is evidence of serious underlying problems with the current franchising model.

"There is no point involving the private sector if companies can cream off the profits in good times, but leave passengers and taxpayers to pick up the bill when hard times hit."

The report's conclusion was that franchises should be longer, to encourage greater investment and discourage 'back door fare rises', such as charges for seat reservations.

On fares, the MPs condemned the huge hikes last January – of 6% on regulated fares and 7% on unregulated – and attacked their still-complex structure.

The report said: "Even passengers who understand the system often have to spend considerable amounts of time finding the best deals, often only available on the internet."

Stagecoach in talks with consortium bidding for National Express

Guardian: 27 July 2009
Dan Milmo, transport correspondent

Group opens discussions with private equity firm CVC and large shareholder the Cosmen family about acquiring some National Express businesses in the event of a successful takeover.

Stagecoach joined the bidding fray for National Express this morning as it confirmed it is in talks to join a Spanish-led consortium stalking the public transport group.

The Perth-based bus, rail and coach group has opened discussions with private equity firm CVC and the Cosmen family, the largest shareholder in National Express, about acquiring some of the group's businesses in the event of a successful takeover offer.

"Stagecoach confirms that it is in exclusive discussions with the consortium regarding the possible acquisition by Stagecoach of certain businesses and assets of National Express in the event that the consortium acquires National Express," said the company. It is believed Stagecoach is interested in the UK rail, bus and coach operations of National Express, although it could combine both companies' US bus operations as well.

The National Express board will have to consider the cash offer from the Cosmen consortium today. However, it is understood that the National Express executive chairman, John Devaney, is minded to concentrate on restoring the debt-laden group's financial health rather than accept a bid to take it private. If the board agrees with his argument, the offer could be rejected as soon as today, although investors may put pressure on directors to accept a proposal that reportedly values National Express at 400p a share – or just over £600m.

Stagecoach added that it will consider "all other options" regarding National Express, having appointed Deutsche Bank to advise on a potential all-share offer for the group.

National Express has become a takeover target after building up debts of £1.2bn that are threatening to breach loan covenants. A row with the government over its £1.4bn east coast rail franchise, which it expects to abandon later this year, has also weakened its hand strategically after the transport secretary, Lord Adonis, pledged to bar National Express from bidding for rail contracts in the future. Devaney has also launched the process to recruit a new boss following the surprise resignation of Richard Bowker, National Express chief executive, on the eve of the announcement that the group is stepping away from its east coast contract.

Some analysts argue that the east coast row could make the group a more attractive takeover target because without the onerous London-to-Edinburgh contract the business generates strong profits. According to research by Astaire Securities, National Express will generate cash flow of around £150m a year if it loses its rail franchises. Lord Adonis is determined to strip National Express of its c2c and National Express East Anglia contracts if it abandons east coast. National Express wants to retain its remaining contracts, which produce healthy profits, and is willing to take the dispute to the high court. The dispute is expected to loom over any takeover battle for the group, whose shares rose 4.7% to 362p this morning, valuing National Express at £529m.


See also:

Stagecoach hedges bets in National Express bid

Times Online: July 27, 2009
David Robertson

Stagecoach said today that it was in talks to buy parts of National Express but is also considering a full £600 million bid for the struggling bus and trains group.

In a statement, Stagecoach confirmed that it was in exclusive negotiations with a consortium consisting of CVC Partners, a private equity group, and the Cosmen family of Spain, National Express’s largest shareholder, to buy some of its rival’s assets.

CVC and the Cosmen, which own 18.5 per cent of National Express, said last week that they planned to make a bid for the company, which was stripped of the prestigious East Coast Mainline railway franchise last month.

However, Stagecoach also wants to keep the option of making a full bid for National Express open.

“In addition to its discussions with the consortium, Stagecoach will continue to consider all other options in relation to National Express,” the company said today.

Brian Souter, Stagecoach’s chief executive and founder, is thought to have been working on a bid for National Express for several weeks and has appointed Deutsche Bank as adviser.

National Express said last month that it would not be able to pay the Government the £1.4 billion it agreed to run the East Coast Mainline. The line has effectively been nationalised and the government has warned that it may strip National Express of its other rail franchises.

Meanwhile, Richard Bowker, the chief executive, has stepped down to take a job in the Middle East.


See also:

National Express to reject bid

Financial Times: July 27 2009
By Robert Wright, Transport Correspondent

National Express is set to reject a takeover bid from Spain's Cosmen family and CVC, the private equity group, rebuffing an approach that was expected to value the group at more than £500m.

The company would reject the offer early this week, a person familiar with the situation told the Financial Times yesterday.

National Express will argue at its interim results on Thursday that its plans for an independent future, which centre on cutting costs and paying down debt, offer better value than either of the preliminary approaches it has received.

Last week, FirstGroup, the bus and train operator, said it was walking away from early stage talks about a merger with National Express, which then said it had received a preliminary approach from another party, later revealed as the CVC consortium .

The Cosmen family is National Express's largest single shareholder, with an 18.5 per cent holding, and Jorge Cosmen is its deputy chairman. The consortium had been expected to bid £500m, about 325p per share, for National Express. But the board has signalled it is unwilling to consider bids lower than about 400p, an equity value of almost £620m. The shares rose 21¾p on Friday to 345¾p after CVC confirmed its interest.

National Express is expected to argue against a sale soon, citing the effect of the recession on valuations of its business, which includes buses and coaches in the UK and Spain, train operations in the UK and school buses in North America.

But the company needs to refinance hundreds of millions of pounds of the £1.2bn debt it acquired in part through acquisitions including the Alsa bus business previously owned by the Cosmens and Continental Auto, a Spanish coach operator.

Bid interest in National Express has grown this month since it had to announce it would offer no further support to its loss-making East Coast rail franchise. The government is to take over the franchise when funds run out.

Stagecoach Group and Go-Ahead, two of the five companies that dominate the UK bus and rail industries, have been considering potential offers for the group and Stagecoach has appointed banking advisers. Neither has approached National Express about any offer. Stagecoach and Go-Ahead have declined to comment on the likelihood of a bid.

July 24, 2009

Cosmen plans Express takeover bid

Press Association: 24 July 2009

The largest shareholder in National Express has joined forces with a private equity firm to table a takeover approach for the beleaguered transport business, it has emerged.

Spain's Cosmen family, which owns 18.5% of National Express, is working with buy-out firm CVC on the potential deal.

The UK's biggest transport firm, FirstGroup, pulled out of a possible takeover on Wednesday citing "uncertainties" over the business - but National Express said at the time it had received another approach from an unnamed third party.

CVC confirmed the speculation in the Financial Times but did not comment on reports that the interest valued National Express at £500 million.

The Cosmens took their stake in 2005 when National Express entered the Spanish coach and bus market with the acquisition of Alsa, which was owned by the family.

Jorge Cosmen is currently deputy chairman of the UK firm, which employs 43,000 people through operations in the UK, North America and Spain.

CVC said in a brief statement that an indicative proposal had been made to the board of National Express. Shares were almost 8% higher after the statement.

CVC is said to have written to the board three days ago, although National Express is looking for an offer of around 400 pence - more than £600 million - before engaging with any bidder, the FT says.

Earlier this month, National Express was forced to walk away from its loss-making East Coast rail deal after failing to renegotiate the franchise with the Government.

The firm, which is almost certain to hand over the franchise to the Government by the end of the year, has been warned it could lose its two other rail franchises - East Anglia and London commuter service c2c.


See also:


CVC confirms interest in National Express bid

Times Online: July 24, 2009
Martin Waller

The biggest shareholder in National Express, the transport operator, has confirmed that it is considering an offer for the debt-burdened transport company.

CVC, Capital Partners, the venture capital group, this morning confirmed reports that it had teamed up with Spain's Cosmen family to make an "indicative proposal" for a cash bid.

Earlier today, National Express said it would press the Cosmens, its biggest shareholder, over the reports that they and CVC planned a takeover bid worth more than £500 million.

"We're trying to clarify the intentions of this new prospective bidder," a National Express spokesman said. The Cosmen family took a 9.9 per cent stake in National Express in 2002 when they sold their coach and bus operation in Spain in 2006 and have since built their stake by judicious market purchases to 18.5 per cent.

They and CVC are considering an offer for National Express, which is burdened with £1.2 billion of debt. The CVC statement said there was "no certainty that any offer will be made in relation to National Express".

Earlier this month the company was forced to announce the abandonment of the East Coast rail route after faling to extract more money from the Government. The franchise is due to be handed back by the end of this year.

The Spanish approach was notified to the stock market yesterday, but the company failed to identity the potential bidder. An earlier possible offer, from rival transport firm FirstGroup, was subsequently withdrawn.

Reports suggest National Express is holding out for as much as £6 a share before entering bid talks, somewhat in excess of the Spanish approach. National Express shares were 14p higher this morning at 338p.

Other transport companies are thought to be looking at National Express, but none has revealed an intention to bid.

See also:


Spain's Cosmens court NatEx

Financial Times: July 24 2009
By Lina Saigol and Robert Wright
Additional reporting by Gill Plimmer

Spain's Cosmen family has teamed up with CVC, the private equity group, to make a joint takeover bid for National Express, in a deal that could value the debt-laden transport group at more than £500m.

The family, which is the biggest shareholder in National Express with 18.5 per cent of the shares, sent a letter to the board of the company three days ago, according to people close to the situation.

National Express disclosed the takeover approach in a statement to the Stock Exchange yesterday after FirstGroup, the initial bidder, walked away.

National Express refused to name the new bidder and said its intentions were "not yet known".

National Express shares rose 4.4 per cent to 324p.

People close to the situation said the Cosmen family and CVC wanted to acquire all of National Express and roll over its £1.2bn of debt to its existing group of lenders, which includes Spanish banks.

However, the board of National Express is thought to be looking for a bid of at least 400p a share, valuing National Express at nearly £620m, to engage with any new bidder.

FirstGroup's decision to walk away appears to have been at least partly motivated by the cool reception it received from National Express.

Stagecoach and Go-Ahead, National Express's rivals in the UK bus and rail industry, are also both considering their options, but have yet to approach the company.

Any bid by the Cosmens would be a bold move by the family, who received their initial 9.9 per cent stake in 2005 as part of the £262m National Express paid them for Alsa, their privately held bus and coach operation. Jorge Cosmen, Alsa's president, is National Express's deputy chairman.

National Express last night declined to comment on the identity of the bidder. Stagecoach also declined to comment, while Go-Ahead could not be contacted.

National Express has been struggling under the weight of its debt, which was mostly assumed in its takeover of Alsa and the £450m all-cash takeover in 2007 of Continental Auto, another Spanish coach operator.

On July 1, it was forced to announce that it would offer no further support to its lossmaking National Express East Coast rail franchise.

Aerial support for Vestas as hopes of government help dashed

Isle of Wight County Press: July 24, 2009
By Martin Neville

A MESSAGE of support for the Vestas sit-in protestors streaked across the sky last night (Thursday). A banner attached to a plane proclaimed: "Save Our Jobs Save the Island."
aerial.jpg
The banner on the RMT plane showing support for the Vestas workers, which reads Save Our Jobs, Save the Island. Picture by Laura Holme.

Bob Crow, general secretary of the RMT, which funded the flypast, told hundreds of supporters outside the factory that the union would air-drop food supplies to the sit-in protestors from a helicopter if necessary.

Given the government is most unlikely to nationalise the Vestas plant to save jobs for the Island, Labour councillor Geoff Lumley approached the Secretary of State for Energy and Climate Change, Ed Miliband MP, on Wednesday.

Cllr Lumley wanted to explore the possibility of a local consortium being set up to take over the plant and using new government grants to change blade production to meet UK offshore demand .

However, Cllr Lumley has learnt this is not an option available to the Island, primarily due to the absence of 'assisted area’ status for the Isle of Wight.

Cllr Lumley said: "I am massively disappointed and frustrated that there seems to be no alternative way forward, at least in the short term.

"However, nothing has been lost by my approach and I will continue to seek ways in which these 600 jobs can be retained."


See also:

Vestas dispute: Red and green coalition forms to fight wind plant closure

Guardian: 23 July 2009
Terry Macalister

Wind turbine workers stage jobs fight sit-in at the Vestas factory on the Isle of Wight

Police keep watch as staff members stage a sit-in the Vestas Wind Systems factory in Newport, Isle of Wight following the company's announcement to close the wind turbine manufacturing plant. Photograph: Chris Ison/PA

A unique "red and green" army of trade union and environmental campaigners was on the march in an attempt to save from closure Britain's only major wind turbine manufacturing plant.

Up to 500 people are expected outside the Vestas plant at Newport on the Isle of Wight tomorrow night where 25 workers are engaged in a sit-in, while further demonstrations are being planned simultaneously outside the Department of Energy and Climate Change in London.

Greenpeace said the Vestas dispute promised a historic change from a situation where the labour movement and environment activists have found themselves on different sides of the fence, with one wanting to shut down polluting industries and the other defending jobs.

"Although we have always tried to highlight the employment opportunities that could flow from a low-carbon economy, historically there has been animosity between the two sides. If we can build this new alliance and break down those perceived barriers then there all sorts of exciting opportunities," said John Sauven, UK executive director of Greenpeace.

The RMT transport union endorsed the Vestas dispute as a springboard for closer co-operation, with its general secretary, Bob Crow - better known for addressing striking London Underground workers - visiting the wind plant today. He said: "There is an interesting coalition growing around Vestas that builds on issues where we have common cause such as public transport, which is really green transport. But this is a unique situation [on the Isle of Wight] involving globalisation, recession and the kind of low-carbon manufacturing jobs that everyone can relate to."

The growing protests are embarrassing the energy and climate change secretary, Ed Miliband, who last week promised that thousands of new jobs would come from a new, low-carbon economy and now finds himself on the defensive over a decision by a cash-rich company to close a plant directly involved in renewable energy.

Miliband said he had been trying hard to help avoid job losses. "They [Vestas] are keeping a protoype facility at the factory and we are currently considering an application from them for government help to test and develop offshore wind blades in a facility which would employ 150 people on the Isle of Wight initially and potentially more later," he said.

In April, Vestas announced plans to shut the manufacturing side of the Isle of Wight business with the potential loss of 600 jobs, saying it could produce blades cheaper in America.


See also:


Why Vestas closed Isle of Wight plant

Guardian Letters: 24 July 2009

Seumas Milne misses the reality of the problems faced by Vestas and hence the real solutions (Even the Isle of Wight wants Miliband to buck the market 23 July). The factory makes onshore wind turbines, not for Britain and Europe but a different-sized turbine for the US. It has now opened a US facility to serve that market. For months, we have worked with the company to understand what would be required to convert the factory to making onshore blades for the UK. The issue for Vestas was not subsidies, but how it could get enough orders. Despite a 67% rise in offshore wind generation last year and a 29% increase in onshore wind, they do not yet have sufficient orders. We need to grow the market and central to that, as Vestas has said, is planning.

Ditlev Engel, chief executive of Vestas, says Britain is "probably one of the most difficult places in the world to get permission". That is why the planning rules are being changed next year. But while the rules matter, so does public opposition or support. We are unlikely to be a centre for onshore wind production if applications are consistently turned down. So we have to win a political argument.

In the meantime, there must be a strategy for the Isle of Wight. Not just support for the workers losing their jobs, but a strategy to work with Vestas. It is keeping a prototype facility at the factory and we are considering an application for help to test and develop offshore blades in a plant which would employ 150 people initially and potentially more later. Alongside this, we will invest £120m in offshore wind manufacturing and £60m in the marine industry. This is an active industrial strategy to create low-carbon jobs throughout the country.

Ed Miliband MP,
Secretary of state for energy and climate change

Lord Adonis holds key to National Express takeover

Guardian: 23 July 2009
Dan Milmo and Andrew Clark

Any bidder for group will need transport secretary's approval if it wants to buy its rail franchises
Andrew-Adonis.jpg
Lord Andrew Adonis at Ashford International station, Kent. Photograph: Martin Godwin

The transport secretary, Lord Adonis, could play a role in a takeover of National Express after it emerged that the government must sanction bids for the public transport group's franchises.

Any suitor for National Express needs Adonis's consent if it wants to buy the group's rail businesses.

According to Department for Transport guidelines, a franchise agreement will be in default if there is a change in the identity of the person who "controls" the company.

The new owner must submit "plans to honour franchise obligations" including proposals for "the long-term future of the franchise". A key factor in National Express becoming a takeover target is its onerous £1.4bn east coast franchise, which it expects to hand back to the DfT later this year.

If the transport secretary is concerned that the new owner will trigger a repeat of the east coast fiasco by reneging on the group's remaining franchises, those contracts could be declared in default and taken over by the government.

Shares in National Express rose 4.4% to 324p today, valuing the group at £475m, after it revealed yesterday that it had received its second approach in just over a month.

The Financial Times reported last night that the Cosmen family, wealthy Spaniards who own about 18.5% of National Express, had joined up with CVC, a private equity group, to make a joint takeover bid.

The suitor entered the fray hours after FirstGroup, a rival public transport operator, said it would not bid.

A source close to National Express said employees were becoming worried and disillusioned about its future – and that the Cosmen family were crucial players: "A lot will depend on the Cosmens. They can obviously control what the destiny of the company is."

The Cosmens are understood to be very reluctant to see any dilution of their stake in National Express, whose assets include coach operations in the UK and Spain and a highly rated UK bus business.

The attraction of National Express to a private equity buyer was underlined last week by Astaire Securities, which estimated the group would generate £150m next year, even without any rail earnings.

National Express expects to hand back Britain's largest rail contract this year but is determined to hang on to its remaining rail businesses, the profitable National Express East Anglia and c2c franchises.

However, Adonis is determined to enforce cross-default clauses that would allow the DfT to kick National Express out of the rail business altogether in the event of a default on the east coast line.

Analysts have warned that a new National Express owner faces problems, including a potential ban from bidding for rail contracts, if it takes over the business without resolving the east coast problems.

July 23, 2009

Turbine workers talk of sit-in life

BBC News: 23 July 2009
by Michael Stoddard, BBC South

The 25 or so workers into the fourth day of a sit-in protest at the Vestas wind turbine site on the Isle of Wight say morale is high, but what is it really like on the inside?
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The workers have only been getting a few hours sleep a night

The all-male group have been sleeping on the floor, washing in a sink basin and running low on food.

One of the workers, who did not want to be named, said: "There are a few stinky bodies and it is hard being away from your family and kids but we've managed to stay in touch on our mobiles which has been great.

"One guy has even called us up after seeing the publicity and asked for our mobile numbers and topped our phones up with £10, it's great to see such support."

They are protesting at Danish company Vestas Windsystems plan to make 625 workers redundant at the end of this month, despite rising profits.

The men have been telling each other jokes in a bid to keep spirits up.

'Face sack'

"One of the guys found a pair of latex cycling shorts in the office, so we all had a good laugh when he put them on and ran around.

"Just little things like that keep the atmosphere good."

He jokingly added: "It's all guys here so good to be away from the women for a while."

The protester said the experience is probably similar to being on the television show Big Brother.

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The workers say morale is still high inside the factory

"It is a bit, but no arguments yet.

"We are pretty cut off from the outside world and food has been running low, there's no television and we've been mostly listening to the radio.

"We've just been living on things like sausage rolls, pasties, crisps and a few bits of fruit. We could really do with a KFC.

"But we've all seen the survival shows and know we can go a while without food as long as we have the basics.

"There's a water machine in the office and a coffee and tea vending machine.

"There's a toilet so there's no problem with that and a few guys brought some spare socks and clothes."

Vestas has now erected a fence at the entrance to the site to stop people throwing food up to a balcony for workers, but the firm has agreed to deliver food supplies.

The workers have also claimed the firm has told them they have been sacked and will lose redundancy pay.

'Not much sleep'

The men locked themselves in a first-floor office of about 40ft by 40ft on Monday evening and have been staying up at night in shifts to guard the doors.

"A lot of us had not had much sleep. I've been getting about two hours a night.

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A fence was put up on Wednesday

"But we've been turning office chairs upside down and using the head rests as pillows even though they are not the most comfortable.

"This protest is a last-ditch attempt to save our jobs, we want the government to come down here and help us."

The group have vowed to continue their sit-in for "as long as it takes".

The worker said the managers are still coming into work on the floor below.

"So far only the middle managers have spoken to us, not the big bosses," he said.

"It started with a few phone calls, then we spoke through a crack in a door but today we let one in with the food.

"He said we had made our point and come down, but we want action first."

Vestas has not commented on the protest and only told the BBC a consultation on the site's future is on-going.

The firm has previously said the factory was being closed due to reduced demand for wind turbines in northern Europe.


See also:


Wind turbine protesters continue sit in as police accused of blocking food

Times Online: July 23, 2009
Chris Smyth and Ben Webster, Environment Editor
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Supporters of the protest outside the factory (Chris Ison/PA)
A mini-climate camp is growing up around the protest at the Vestas plant

A handful of men - tired, hungry and soon to be unemployed - stood cheering on the balcony of a wind turbine factory on the Isle of Wight, in what has become an unlikely front line of a clash over the future of Britain’s green economy.

About 25 workers were last night still inside the Vestas plant outside Newport, three days into a sit-in which has grown increasingly bitter. The occupiers of Britain’s only significant wind farm factory have accused managers of trying to starve them out and yesterday three people were arrested as protesters outside tried to deliver food supplies.

Last night the workers said managers had given them a new ultimatum to leave immediately or face arrest, prosecution and the loss of their redundancy payments when they do finally emerge. One of them, Mark Smith, told The Times: “We told them we’re not coming out. It was unanimous.”

Robert Brown, a member of the Law Society’s criminal law committee, said police had been acting unlawfully by blocking food deliveries: “Since when has it been the function of police officers to starve out protesters? And since when has it been a crime to carry sandwiches to protesters? It never has been.

“It is scandalous that the police refused to allow the food through. Giving the protesters food would help keep them calm and be more likely to prevent a breach of the peace.

“There is no law in this country that says that protest is unlawful. There does not appear to be any evidence that a breach of the peace is taking place at the factory.”

On the roundabout outside the factory, green campaigners and trade unionists created a miniature climate camp. Veteran activists were keen to turn the close of the Vestas factory into a parable of Britain’s failure to create green jobs.

Last week The Times revealed that the factory was closing down its production line within hours of the Government pledging a five-fold increase in the number of wind turbines in Britain. More than 600 people are due to be made redundant on July 30 - 525 in Newport and 100 at a related facility in Southampton.

The company has blamed the closure on the UK planning system’s obstruction of wind farms.

About 200 workers and supporters gathered outside the factory gates last night to show their support.

“It was really good, really uplifting to see all those people supporting us,” Mr Smith said.

The occupiers have demanded nationalisation of the plant, or an increase in redundancy payments, currently set at twice the statutory minimum. Andrew Turner, the Isle of Wight’s Tory MP, visited the factory yesterday and after talks with the management said that nationalisation was “not on the table”.

In the early hours of yesterday, a supporter from Kent was arrested when he rushed on to the factory premises and tried to attach food to a rope lowered by the protesters from a balcony. Ben Leamy, 38, was held for several hours but released without charge.

His custody sheet accused him of being “armed with supplies of food”. The arresting officer wrote: “Believed that the DP was going to supply the food. In doing so, fear that that the protest would be prolonged and therefore possibility of breach of the peace. Arrested to prevent same.”

Mr Leamy said: “I made it all the way to the rope with a huge bag of sausage rolls, scotch eggs and fruit and in another three seconds it would have been on its way up. Then they just piled on and grabbed me.”

At lunchtime there was a sign that police had softened their tactics, as more than a dozen protesters outside crossed the police line and threw food up to the occupiers.

Officers stood by as sliced loaves, scotch eggs and packets of ham rained down on to a balcony held by the occupiers. Private security guards tried to block the resupply but seemed reluctant to use violence. Many of the provisions were lost in hedges as protesters’ aim proved erratic.

A 28 year-old man was arrested on suspicion of assaulting a police officer as the crowd entered the factory grounds. Later a 49-year-old man was arrested on suspicion of a breach of peace as contractors erected a metal fence to prevent further incursions.

Mr Smith said: “We’ve got sausage rolls, biscuits, fruit. It will last for a little while."

One worker added: “It’s about time someone stood up to the managers. But I honestly don’t think it will make much difference,” one said. “We might get a bit more money out of it, but that’s it. It’s all too little too late.”

Electric trains to cut UK travel times

Financial Times: July 23 2009
By Robert Wright, Transport Correspondent

Millions of passengers on some of Britain’s busiest rail routes will on Thursday be offered the prospect of faster, more reliable and cleaner journeys when the government unveils plans for major electrification for the first time since rail privatisation.

Routes between London and Swansea will be the first to be electrified since 1991. The main Liverpool to Manchester route, the world’s first inter-city railway, will also be converted.

Journey times from London to Swansea will be cut by 19 minutes after electrification, while Liverpool to Manchester times will fall to 30 minutes from 45.

Thursday’s announcement will disappoint passengers in the East Midlands, where there had been strong support for the electrification of the line from London to Nottingham and Sheffield. Although the Department for Transport says electrification plans for the route are being considered, work is unlikely to start until 2017.

The plans will be unveiled at a cabinet meeting in Cardiff where Gordon Brown, the prime minister, will say that the electrification programme is “vital to building a 21st century transport system”. Compared with diesels, electric trains are cheaper to buy and operate, produce fewer carbon emissions, tend to break down less and can accelerate faster.

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Rail electrification map for UK News

The cost of the £1.1bn project will be met via borrowing by Network Rail, the rail infrastructure owner, whose debt is off the government’s balance sheet. The Department for Transport will meet the extra interest costs imposed over the period until 2014, for which the company’s funding is fixed.

The work will be further good news for specialist rail contractors, such as Balfour Beatty, Germany’s Siemens and France’s Colas. They are already benefiting from major projects, including the £3.5bn cross-London Thameslink programme and the £900m East London line project.

The resumption of electrification marks a significant change to the government policy of just two years ago, when ministers strongly argued that new electrification projects were unnecessary. Both Network Rail and train operators lobbied strongly for the electrification programme, saying it would make such significant savings that it would, in time, pay for itself.

As part of the electrification plans, a tender announced under the government’s fiscal stimulus plan last autumn to purchase 202 new carriages for diesel trains to relieve overcrowding will now be shelved. Train operators on the routes affected had been eager to see the vehicles ordered because overcrowding is expected to become worse in the years leading up to electrification.

Lord Adonis, transport secretary, said on Wednesday it would have been absurd to order new diesel trains while work to put up wires was under way.


See also:


Passengers and freight to benefit

Financial Times: July 23 2009
By Robert Wright, Transport Correspondent

The large-scale electrification programme due to be announced on Thursday by the Department for Transport will test how far the nation’s rail system has put behind it the poor co-ordination and spiralling costs that marked its nadir earlier this decade.

Chart of the electrification of the UK rail network Not since work on the London-Edinburgh east coast main line finished under British Rail in 1991 has the industry attempted such a big shift to “electric traction”. For close to 20 years, track owners and train operators have sometimes seemed to be working at cross-purposes.

Trains bought for routes south of London in the past decade sat unused for several months because neither the train operators nor Railtrack, then owner of the network, had realised that the existing power supply could not cope with the requirements that would be made on it by the new rolling stock.

Electrification also looked poor value for money in an industry whose basic costs had soared following the Hatfield crash of October 2000 as Railtrack, then owner of the rail network, struggled to catch up with a huge maintenance backlog.

The 50 per cent increase in unit costs after the Hatfield disaster would have cancelled out the savings in operating and maintenance costs that electrification is designed to achieve.

Nor was electrification an appealing option if the price to be paid was excessive disruption. The upheaval that accompanied the £8.9bn upgrade of the London-Glasgow west coast main line suggested the industry would struggle to carry out the work necessary to put up electric wires without driving away significant numbers of passengers.

As recently as July 2007, when the transport department announced its priorities for rail spending over the 2009-14 period, ministers and officials argued strongly against further electrification.

Key to the change of heart is the conviction held by the department and Network Rail, the rail infrastructure owner, that the programmes to be announced on Thursday can be carried out economically and with minimal disruption.

In an echo of the days of British Rail – when electrification projects were often justified by cost savings – Network Rail’s assessment that electrification would eventually pay for itself has tipped the balance in favour of the project. It will borrow the money itself to fund the work, ensuring there will be no additional pressure on already strained public finances.

The department has won a battle with the Treasury over the spending involved, partly by arguing that train leasing costs, which are in some measure borne by the government through subsidies, will fall.

The key question will be whether the scheme can be completed as quickly and cheaply as Network Rail hopes. The company is to buy an electrification “factory train” – a mobile production line – that should allow the work to be done efficiently, mostly at night. The work is likely to go to one of a small number of specialist contractors in the field such as Balfour Beatty, Germany’s Siemens or Colas, the French civil engineering contractor. A long-term electrification programme that encourages such contractors to invest in electrification expertise and equipment would help reduce costs, Network Rail believes. The department currently estimates the value of the programme at £1.1bn.

It will also be vital to ensure that the work avoids the pitfalls into which many industry observers believe the east coast main line project fell. While the project itself was relatively low-cost – it totalled about £400m – many observers believe that Treasury pressure led to the downgrading of specifications for the overhead wires. As a result, they have been prone to collapse in high winds, causing significant delays.

If such problems can be avoided, electrified lines will offer significant benefits.

Electric trains are far less vulnerable than diesels to breakdowns, can generally accelerate faster, are cleaner, less noisy and ultimately cheaper to run. Those advantages should make Thursday’s announcement one of the most positive for Britain’s rail passengers and freight users in many years.

£848m rail station plans go on show

Reading Evening Post: July 23, 2009
By Paul Robins

The £848 million revamp of Reading station has gone under scrutiny at a public exhibition.
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An artist's impression of Reading's new railway station

The month-long display will give people a chance to cast their eye over detailed plans to improve transport links in the town centre to accommodate the major rail scheme.

Network Rail’s project, which includes the creation of new entrances and interchanges north and south of the station, will lead to a major overhaul of the surrounding pedestrian, bus, taxi and car routes.

Proposals include two-way bus access through West Street and St Mary’s Butts, while Valpy Street, Station Road and the northern end of Blagrave Street would be made one-way to all traffic.

The most dramatic change would be Friar Street, where the western end – close to West Street – would be made two-way for buses and taxis, while the other end near the Town Hall would be one-way westbound from the junction with Station Road.

Those going along will also be able to see the latest images for the pedestrianised concourse area in front of the station, which would result in the closure of Station Approach to all vehicles.

The multi-million pound station upgrade will include five new platforms and a 30-metre wide bridge over the tracks to increase its capacity to 35 million passengers a year.

Councillor Tony Page, Reading Borough Council’s lead member for transport, said: “The next few years will see a massive transformation, not only to the station itself but also to the areas to the immediate north and south.

“We want to inform local people and businesses about the benefits that will flow from the changes.

“Reading Borough Council, Network Rail and adjoining property owners are working together to improve the local environment, strengthen public transport, cycling and pedestrian links to the area and at the end deliver a world class regeneration scheme.

“I hope people will take the opportunity to be updated on these exciting developments.”

Plans of the proposed changes will be on display in the window of 40 Station Hill until Friday, August 21.

The council has also organised a series of drop-in sessions where transport officers will be on hand to answer questions.

These will be held in Committee Room 1 at the Civic Centre tomorrow from 10.30am and 4pm, at the Station Hill office where the plans are displayed on Tuesday, August 4, from 2pm to 8pm and on Saturday, August 15, from 11am to 3pm, and in the Silverthorne Room in Reading Town Hall on Thursday, August 20, from 2pm to 8pm.

New bidder for National Express as First Group pulls out of takeover

The Guardian: 23 July 2009
Jill Treanor and Julia Finch

• Suitor believed to be European private equity firm
• First Group withdraws after Takeover Panel ultimatum

National Express was at the centre of fresh takeover turmoil last night after rival transport operator First Group walked away from making a formal offer for the troubled rail and bus group and another unnamed bidder appeared on the scene.

There was intense speculation about the identity of the new suitor, understood be a European private equity company.

First Group, which initially approached National Express in June with proposals for an all-share merger of the two businesses, ditched its plans after its target asked the City's Takeover Panel to impose a "put up or shut up" deadline for it to make a formal offer.

Within minutes of Britain's biggest transport firm announcing its withdrawal, National Express disclosed it had received an approach "in connection with a possible offer for the group from another third party whose intentions are not yet known".

National Express, which is in turmoil following the resignation of chief executive Richard Bowker and its decision to walk away from the loss-making £1.4bn east coast rail franchise, said in a statement: "There can be no certainty that this approach will lead to an offer being made for National Express, or as to the terms on which any offer might be made."

Under Takeover Panel rules, First Group is now banned from bidding for six months unless a rival offer emerges. The group, operator of the First Great Western rail franchise and yellow school buses in the US, had wanted to do the deal on friendly terms, but was rebuffed.

National Express said at the time it was concentrating on implementing a number of initiatives to strengthen the business and did not consider it appropriate to enter into merger talks.

A merger of the two groups would have created a business carrying more than 1.4 billion bus passengers and 409 million rail passengers in the UK a year.

Sir Moir Lockhead, the First Group chief executive, said last night: "In making a preliminary approach to the board of National Express, our intention was to enter discussions with a view to seeking a recommended merger that would create a significant British transport group, in a stronger position to compete with state-run companies across Europe. We believe this combination would have offered a highly compelling proposition to both sets of shareholders."

First Group said it had decided it would be "inappropriate" to consider a formal offer "at this time" because of the uncertainty facing National Express, which has been warned that the Department for Transport might strip it of its other franchises, East Anglia and c2c, the London to Tilbury and Southend operation.

But it said it reserved its right to return with an offer in the event of a rival bid being made or if it received the backing of the National Express board.

National Express had refused to enter into discussions with First Group even though it does not have a chief executive after the decision by Bowker to depart for the Middle East, and the controversy over the east coast main line.

National Express had been trying to renegotiate the franchise on the London to Edinburgh route – for which it had paid £1.4bn – and received the approach from First Group just two days before the dramatic move by the Department for Transport.

National Express was warned by the transport secretary, Lord Adonis, that there might be grounds to terminate its two other rail franchises after it refused to continue funding the east coast line.

The cash-strapped firm had been contracted to run the franchise until 2015, but funding is now expected to run out later this year. The problem with the franchise was that National Express had to pay back to the government a total of £1.4bn in premiums over the life of the deal. But passenger growth has stalled in the recession and the company was unable to renegotiate the franchise with the DfT.

Adonis subsequently announced that a new public organisation – East Coast Main Line Company – would operate the line.


See also:


National Express receives second takeover approach

Times Online: July 22, 2009
Ian King, Deputy Business Editor

Troubled bus operator reveals second takeover approach minutes after FirstGroup said it was walking away from a possible bid

Crisis-hit bus and coach operator National Express tonight revealed it has received a second takeover approach - just moments after would-be buyer FirstGroup walked away from a possible bid.

First, Britain’s biggest transport firm and best known for its controversial operation of the First Great Western rail franchise, dropped plans to bid after being handed a ‘put up or shut up’ deadline from the Takeover Panel - which in turn was responding to a request from National Express.

First said that, in view of the uncertainty surrounding the position of National Express, it would be “inappropriate” to consider a formal offer “at this time”.

Sir Moir Lockhead, deputy chairman and chief executive of FirstGroup, stressed that it had always been the company’s intention to pursue a merger — which, on last night’s closing share prices, would have created a business worth a combined £2.135billion — on a friendly basis.

He said: “In making a preliminary approach to the Board of National Express, our intention was to enter discussions with a view to seeking a recommended merger that would create a significant British transport group, in a stronger position to compete with state run companies across Europe.

“We believe this combination would have offered a highly compelling proposition to both sets of shareholders.”

First is now barred from bidding for National Express for another six months unless a rival bid emerges, the target’s board agrees to a deal or if there is a “material change” in circumstances.

Less than an hour after First’s statement, National Express responded, revealing news of a second approach.

Describing First’s proposals as “highly preliminary” and “on unspecified terms”, National Express said: “The board did not consider it appropriate to enter into discussions with FirstGroup.

“The group subsequently received an approach in connection with a possible offer from another third party whose intentions are not yet known. There can be no certainty that this approach will lead to an offer being made for National Express or as to the terms on which any offer might be made.”

National Express, which is currently without a chief executive following former chief Richard Bowker’s decision to take a job in the United Arab Emirates, was rocked last month when the Department for Transport stripped it of the right to run the key East Coast Mainline rail franchise.

The DfT’s move, on July 1, followed a failed attempt by National Express to renegotiate the terms of the franchise and came just two days after First — which operates America’s iconic Greyhound buses — made its approach. Mr Bowker agreed in 2007 to pay £1.4billion to the DfT for the right to operate the franchise for eight years but this has been made financially unviable by the recession.

National Express chief operating officer Ray O’Toole, who has assumed responsibility for the company’s day-to-day running since Mr Bowker’s departure, has since stressed that it should not lose its other rail franchises as a result of losing the East Coast franchise. The company, whose stock market value currently stands at just under £475million, has debts of £1.2billion. Analysts expect a rights issue to help reduce that in due course.


See also:

National Express shares rise on fresh takeover interest

Daily Telegraph: 23 July 2009
By Louise Armitstead and Ben Harrington

National Express shares rose more than 4pc as investors reacted to a fresh takevover approach for the troubled bus and rail operator from a mystery suitor.

After the market close on Wednesday, the company said it had received a second takeover approach just moments after rival FirstGroup dropped its plans for a bid.

Analysts have speculated that the suitor could be fellow UK transport group Stagecoach, as well as European operators - such as SNCF, the French operator, and Deutsche Bahn of Germany - and private equity players.

"I imagine a lot of people are looking at National Express - there are not a lot of assets of that scale around right now," Investec analyst Joe Thomas tells Reuters, referring to the firm's bus operations in the UK, North America and Spain.

Stagecoach shares were flat in early trading, while FirstGroup rose 0.3pc.

FirstGroup said it had decided not to make a formal offer, citing "uncertainties" surrounding its rival's UK rail franchises last night.

An hour later National Express said it had "received an approach in connection with a possible offer for the group from another third party whose intentions are not yet known".

FirstGroup, which runs First Great Western and is also Britain's biggest bus operator, said National Express had sought a "put-up-or-shut-up" ruling by the Takeover Panel.

Sir Moir Lockhead, deputy chairman and chief executive of FirstGroup, said: "In making a preliminary approach to the board of National Express, our intention was to enter discussions with a view to seeking a recommended merger that would create a significant British transport group, in a stronger position to compete with state-run companies across Europe.

"We believe this combination would have offered a highly compelling proposition to both sets of shareholders."

On Wednesday's closing prices, a combination of the two transport companies would have created a business worth £2.14bn.

The removal of FirstGroup's bid interest adds to the pressure on National Express to embark on a rights issue to relieve the burden of its £1.2bn debt pile. Analysts believe National Express, which had a market value of £400m before the approach, needs to raise about £400m from investors.

Three weeks ago FirstGroup made a "very preliminary" all-share offer for National Express. Days later, National Express was rocked when the Government announced plans to nationalise the company's flagship East Coast Mainline rail franchise. The company said it would run out of money to operate the service by the end of the year. Richard Bowker, the company's chief executive, resigned at the same time.

Mr Bowker won the East Coast franchise in 2007. However, by agreeing in the terms of the deal that National Express would pay £1.4bn to the Government for the right to operate the franchise for eight years, he was blamed for putting unmanageable strain on the company's finances.

National Express said it had already sounded out shareholders about a possible rights issue before FirstGroup's approach.

Although the response was said to be tepid at the time, banking sources believe that without the problematic franchise, National Express may need to raise only £250m, which may be more acceptable to shareholders.

FirstGroup is now barred from bidding for National Express for another six months unless a rival bid emerges, the target's board agrees to a deal or if there is a "material change" in circumstances.

SNCF loses freight market share

AFP: 23 July 2009

PARIS - SNCF is losing yet more ground in the freight sector to private operators who have seen their market share rise sharply in recent months, even though the economic situation remains difficult.

The market share of new entrants in the sector rose from 8.3% in December 2008 to 12% in May 2009, according to data provided by Réseau Ferré de France (RFF) [French Network Rail], confirming information in business paper, Les Echos.

"The introduction of competition in rail freight has undoubtedly been a success," said Hervé de Tréglodé, Deputy Director General of RFF. "The new railway companies are seeing their market share increase steadily."

"The challenge of the opening up of the market was far from won at the beginning. Three years ago, we read in the press: 'It can’t happen, France is a very closed and economically very difficult", he said.

The CGT-railworkers’ federation, the largest union at SNCF, for its part, "deplores freight liberalisation”.

The union said it had observed "a spate of incidents and accidents, which have occurred in recent months, involving private rail operators for whom cost reduction and lowering working conditions are the rule."

In a statement, CGT reported two accidents that took place last weekend. The first concerned a EuroCargoRail freight train which "derailed, tearing up 350 meters of track in Forbach (Moselle), disrupting freight, TGV [high speed] and TER [regional] traffic.

The other accident involved a Colas Rail freight train, a subsidiary of Bouygues, at Saint-Hilaire-au-Temple (Marne), which has also derailed tearing up the track and the catenary systems,"according to the union.

However, RFF claims not to have found "accident rates higher for new railway undertakings in comparison with incumbents."

The freight sector is deeply affected by the economic crisis. The RFF benchmark index of train-km, i.e. the number of trains multiplied by distance travelled by these trains, fell from 9 million in June 2008 to 6.6 million in May 2009.

SNCF turnover in the first half of 2009 declined by 4% to 11.94 billion euros, sealed by the collapse of its business freight and logistics.

It plans to restructure its own freight industry, for example by reducing "wagon-load freight" (a small quantities business activity) and engaging in high speed freight transport. A meeting of the Economic Committee of the Central Works Committee (CCE) on the topic is scheduled for July 28.

The international freight lines in Europe have been open to competition since 2003, domestic routes in France since 2006.

Seven companies in addition to SNCF today operate trains in France (Veolia, EuroCargoRail, Colas Rail, B-Cargo, Europorte 2, CFL-Cargo, VFLI).

July 22, 2009

RMT pledges full support to Vestas occupation – Bob Crow to visit factory tomorrow

RMT: July 22 2009
vestas occupation.jpg
TRANSPORT UNION RMT today pledged full support to the workers occupying the Vestas wind turbine factory on the Isle of Wight and confirmed that RMT general secretary Bob Crow will be making a solidarity visit to the occupation at 6pm tomorrow evening (Thursday 23rd July). RMT had begun an organising drive at Vestas prior to the occupation into the unions growing offshore energy section.

Bob Crow will be making a solidarity visit to the occupation at 6pm tomorrow evening (Thursday 23rd July). RMT had begun an organising drive at Vestas prior to the occupation into the unions growing offshore energy section.

The Vestas factory is the only unit in England manufacturing wind turbines. The Danish company which owns it are trying to close the factory down with the loss of 625 jobs blaming the British government’s lack of commitment to renewable energy. The company is reported to have made profits of $56 million in the first quarter of this year alone – a rise of 70% on last year.

The factory has been under workers occupation since Tuesday. Communication lines into the factory have been cut and deliveries of food and water have been blockaded by private security guards. This morning, those involved in the occupation have been threatened with summary dismissal and an activist passing food through the fence was arrested.

Bob Crow, RMT general secretary, said today:

“Nothing underlines the attack on job and communities that has been unleashed in the UK by greedy bosses and incompetent politicians better than the occupation at Vestas.

“Here you have over 600 skilled workers in the only wind turbine factory in England, delivering sustainable and green energy for the future, threatened with the dole because of a row between the company and the government.

“We know from workplace reports that this company is aggressively anti-union and RMT salutes the courage of those who have taken the brave decision to occupy the factory. They deserve the full support of the whole trade union movement. The fact that an activist has been arrested this morning passing food to the occupation shows that the police are now involved in a drive to starve the workers out. That’s a disgrace.

“There’s a simple solution to this dispute. The government should nationalise the factory, protect the jobs and show that they are walking the talk when it come to green and renewable energy.”

Ends

London to Cardiff rail line will be electrified to cut carbon footprint

Guardian: 21 July 2009
Dan Milmo, transport correspondent

One of Britain's busiest rail lines is to be electrified in a move that will introduce greener and more reliable services for millions of passengers.

The government is finalising plans to transform the Great Western mainline as part of a drive to reduce carbon dioxide emissions from transport. The programme will involve installing hundreds of miles of electric cables as well as alterations to tunnels, bridges and stations on one of Britain's oldest rail routes.

An announcement could come as soon as Thursday, although the financing is still being put in place. The Department for Transport (DfT) and Network Rail, owner of Britain's rail infrastructure, have discussed electrifying the route from London Paddington to Cardiff, taking in Reading and Bristol, as well as the popular commuter route from London to Oxford.

However, the programme is expected to be carried out in phases over the next decade in order to minimise disruption.

Britain lags behind many of its European counterparts in electrical coverage of its rail system, with only 40% of the 20,000-mile network electrified. Lord Adonis, the transport secretary, has pledged to electrify swaths of the network, led by Great Western and the Midland mainline from St Pancras to Sheffield, in order to reduce carbon dioxide emissions from transport by 14% by 2020.

Train operators said electrification would bring quicker and more reliable services for passengers, as well as giving rail a green edge over car and air travel. Michael Roberts, chief executive of the Association of Train Operating Companies, said: "Electrification brings with it the dual benefits of helping to make rail services more attractive to customers and drawing them away from cars and planes. It also relies on lower-carbon sources of energy." First Great Western, the main operator on the Great Western network, carries 84 million passengers a year.

According to Network Rail, the diesel trains that travel on the Great Western route emit at least double the carbon dioxide output per mile of an electric train. The government-backed company has also calculated that it will cost £800,000 a track mile just to erect the cabling. Once work on tunnels, bridges and culverts is added in electrifying the 118-mile stretch from London to Bristol could cost £380m, according to Network Rail.

It is understood that the DfT and Network Rail have discussed funding the work through an increase in Network Rail's borrowings. Network Rail's debt is underwritten by the state and the government will pay off the interest over a number of decades, minimising the immediate impact on the taxpayer.

Stephen Glaister, professor of transport and infrastructure at Imperial College London, said the benefits of electrifying thousands of miles of railway track would be undermined if trains were not powered by energy produced from low-carbon sources such as nuclear plants or wind farms. Otherwise, electrification would simply increase demand for electricity from coal- and gas-powered plants, he added. "The government has to clarify where the electricity is coming from. In a world where nuclear power is declining and renewables cannot fill the gap, where else is it going to come from apart from burning more coal and gas?"

Lord Adonis, the transport secretary, said last week: "Transport accounts for a significant amount of our domestic emissions. Therefore decarbonising this sector has to be front and centre of efforts to meet our obligations and commitments to tackle climate change."

The government is also encouraging greater production, and acquisition, of electric and hybrid cars as part of its low-carbon policy.


See also:


Railway line 'to be electrified'

BBC News: 22 July 2009

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Electrifying the London to south Wales line would be done in stages, the Guardian says

There are reports the rail line between south Wales and London is to be electrified, with an announcement possible as early as Thursday.

Last week a report by Welsh MPs said electrification between Swansea and London should be a top priority.

The Department for Transport said it planned "shortly to set out plans for a major programme of electrifications".

The Guardian newspaper claims the UK government is "finalising plans" to electrify the Great Western mainline.

The report said this would be part of a drive to reduce carbon dioxide emissions from transport and would involve electrifying the route from London Paddington to south Wales, including Oxford, Reading and Bristol.

I'm 60 soon and I have my doubts whether I will ever travel on an electrified train all the way through to Cardiff
Rail expert Christian Woolmar

Welsh Affairs Select Committee said it would also lead to significantly better and faster services for passengers.

The Department for Transport (DfT) responded to the committee's report by saying it had been "working closely" with the Welsh Assembly Government "to examine the detailed case for electrification of the Great Western main line between London and Swansea".

The Guardian claimed the electrification of the line would be staged over the 10 years to 2020 to minimise the delays and disruption it would bring.

'Wet and damp'

But rail expert Christian Woolmar downplayed the idea of an electrified rail line reaching south Wales any time soon.

He told Radio Wales: "There has been talk about this for years and years, but hold your horses, it's not going to happen instantly.

"Probably this will to be carried out in stages. There would be initial electrification to places like Newbury, effectively London suburban trains.

"Then they might do it to Bristol and eventually through to Cardiff but possibly Swansea, then maybe right to the end of the line, who knows?

"But that's really way ahead and there is a big obstacle, of course, between London and Wales, and that's the Severn Tunnel.

"It's pretty wet and damp in there and there might not be enough room to electrify it without digging out the tunnel somewhat, so it will be a big barrier.

"I'm 60 soon and I have my doubts whether I will ever travel on an electrified train all the way through to Cardiff. But I might travel on the [electrified] London suburban network."

A DfT spokesperson said: "As we made clear in the document 'Building Britain's Future, as part of our continued shift towards low carbon modes of transport we plan shortly to set out plans for a major programme of rail electrifications."

Bonus set to dominate NR meeting

UKPA: 21 July 2009

Anger over six-figure bonuses for top Network Rail (NR) bosses is set to dominate annual meeting of the not-for-dividend rail infrastructure company.

NR has no shareholders but directors are answerable to more than 100 "members" including rail union chiefs who are expected to speak out against the bonuses at meeting in Bristol.

Unions were joined last month by politicians, rail regulators and passenger groups in condemning the bonuses, which saw some NR chiefs receive bonus packages in excess of £300,000.

Those criticising were upset at the scale of the bonuses given the fact that the West Coast Main Line has suffered continuing delays despite a £9 billion NR upgrade being completed last December.

There were also accusations - strongly denied by NR - that the company had attempted to "bury bad news" on the day Michael Jackson's death dominated news coverage.

NR chief executive Iain Coucher had already announced that he would not be taking his annual bonuses, but he still qualified for £150,000 as part of a three-year rolling incentive plan bonus.

The Office of Rail Regulation chief executive Bill Emery had said that his office was "surprised and disappointed" that the bonuses has not been "significantly reduced" this year.

The Liberal Democrats said passengers would be shocked to hear "rail bosses were being rewarded for failure" while rail union TSSA said the bonuses were "completely unjustified".

The RMT transport union said the bonuses were "a kick in the teeth" for RMT members whose jobs were under threat, while rail customer watchdog Passenger Focus said the bonuses would seem "premature" to Virgin and London Midland passengers who were "still waiting for a reliable service to arrive" on the West Coast line.

Louise Ellman, chairman of the House of Commons Transport Committee, said: "Network Rail must become more accountable. It is unacceptable for the £9 billion upgrade of the West Coast line to be followed by so many delays. Network Rail must improve its efficiency so that delays and diversions are reduced."


See also:


Network Rail's '£6million man' under fire over huge bonuses for directors

London Evening Standard: 22.07.09
Dick Murray
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Network Rail boss Iain Coucher, "The Six Million Pound Man”

Rail boss Iain Coucher was today labelled "The Six Million Pound Man" as protesters angry at the huge bonuses received by Network Rail directors gathered outside the company's annual meeting.

An actor dressed as the Fat Controller waved a banner carrying a picture of the chief executive with the words: "Wanted: The Six Million Pound Man. Iain Coucher has been paid £6million by NR in the past seven years. Nice work if you can get it."

Public members of the not-for-profit NR threatened to dominate the meeting with rows over the six-figure bonuses. But directors are set to defy mounting anger and keep their money.

A spokesman said bonuses to all staff were a reward for "improving the railway". Mr Coucher will receive a bonus of £150,000, taking his pay package to nearly £1million. The top six directors took £1.21million in bonuses on top of salaries worth £2.5million.

Their critics were upset at the scale of the bonuses given that the West Coast Main Line has suffered continuing delays despite a £9billion NR upgrade.

A pre-AGM meeting of NR members in Bristol last night was "overwhelmingly hostile" to the bonuses, said Gerry Doherty, general secretary of the TSSA transport union. He added: "Iain Coucher and his cronies win the Brass Neck of the Year award for taking these completely unjustified bonuses."

Louise Ellman, chairman of the House of Commons transport committee, said today: "NR must become more accountable."

July 20, 2009

Eurotunnel may bid for HS1 rail link

International Freight Weekly: 20 July, 2009
By James Falkner

Company sees potential for high-speed line to reinvigorate tunnel's freight business

Eurotunnel has confirmed its interest in bidding for the rights to operate the High Speed 1 (HS1) rail link, when the UK government puts it up for tender later this year.

John Keefe from Eurotunnel said any bid the company would make would depend on the specifics of the deal.

"The company is in a good position with the financial restructuring to put together a bid, " he said.

Eurotunnel still struggles to attract freight trains - despite its restructured pricing package - but the HS1 line connects London’s St Pancras International directly with the Channel Tunnel and is capable of carrying high-speed shuttle trains as well as conventional freight wagons.

"We are crying out for rail freight, " Keefe said. "Capacity is way, way in excess of demand and, at the moment, the vast majority of trains are Eurostar.

"There are literally a handful of freight trains going through the tunnel each day.

"Some days it is one, other days it is five, but those are the kind of numbers we are talking about. The capacity is massively greater than that - it is hundreds of trains a day.

"We have traction operators available to pull trains through the tunnel, but the issue is getting the organisation of rail freight either side so it actually comes to the tunnel and goes through it."

He said the HS1 line had the potential to reinvigorate the tunnel’s freight business, but only if shippers were willing to use it.

"We need to get more rail freight through the Channel Tunnel onto rail. The capacity exists, but what doesn’t exist is the logistics and co-ordination."

He said the big rail infrastructure operators have to work together to provide the pathways, so people can run long-distance trains at reasonable speeds.

"You can lose a train for days in a network between point of origin and point of destination, and the customers want their logistics chain managed as tightly on rail as it is on road, " said Keefe.

"They want to know exactly when it leaves the point of departure and exactly when it is going to arrive at destination.

"When the railways can provide that kind of service, then they will have a real competing offer.

"At the moment, they are not joined up."

He said Eurotunnel would seek to grab that opportunity for its traction provider Europorte 2, if others did not.

In 2010, the line will be deregulated and open access rights will begin, allowing rail operators to directly compete on the line.

Sistema Ferroviario Central railway project attracts bids from several suitors

Financial Times: July 20 2009
By Gavin Sullivan

Colombia’s proposed USD 602.6m overhaul of the country’s 1,050km Sistema Ferroviario Central railway line has attracted bids from several players including Spain-based Grupo RENFE and Colombia-based Odinsa, a government source told mergermarket.

According to a spokesperson from INCO, the government entity responsible for the sale, the Colombian government is offering a 30-year operational concession of the railway in exchange for a USD 187.5m capital injection from a private partner.

The spokesperson said the government would invest USD 415m in the two-year infrastructure project that the private partner will be responsible for carrying out.

The spokesperson would not release the names of companies who have expressed interest, but noted that the project has attracted attention from both national, and multinational investors and contractors.

According to the government source, in addition to Odinsa and Grupo RENFE, US-based Translogistics, and local Colombian groups Sociedad Portuaria de Santa Marta, Fidupetrol and Cicon, will all likely be preparing offers.

Interested companies will have until the end of July to present offers, the spokesperson said, anticipating that a final deal would be reached with a future private partner by the end of August.

An analyst attributed the high-level of interest in Sistema Ferroviario Central to the opportunities associated with connecting the country’s natural resource rich Magdalena river valley, with the Caribbean-based ports in the coastal city of Santa Marta.

According to the analyst, the potential amount of cargo for the new rail system is estimated at 2.2m tons annually. The analyst noted that the Colombian government is expecting demand for the rail system to increase by 3.8% annually, for the duration of the 30-year concession. The types of cargo along this railway include coal, cement, iron, steel and cereal.

The analyst said another benefit for a future operator, is that upon completion of the restoration, the Sistema Ferroviario Central will link up with Concesion Ferrea del Atlantico, which operates an existing, and expansive network of railways on the Atlantic coast.

In the analyst’s opinion, the Santa Marta-based Sociedad Portuaria de Santa Marta holding, which runs the Caribbean port, would stand most to benefit from control of the railway. The analyst was, however, doubtful of the group’s ability to lead the restoration process.

Once complete, the Sistema Ferroviario Central will extend from Villavieja, in the area of Huila, to the town of Chiriguana, in the Caribbean region of Cesar.

The Colombian government has been working with advisors from the Colombia-based consultancy group, Concol on the development of the project, the spokesperson added.

Fears over commuter rail services

BBC News: 18 July 2009

Commuter train services to Weston-super-Mare could be under threat, according to the town's MP.
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Mr Penrose is concerned train services to Weston could be massively cut

John Penrose is concerned that plans to electrify the line between Paddington and Bristol do not include Weston.

He believes the town would be cut off as high-speed electric trains would not be able to run on the existing track that is designed for diesel engines.

Mr Penrose has written a letter to the Secretary of State for Transport, Lord Adonis, seeking clarification.

"This could mean a massive cut to our current levels of service and would be a giant step backwards, said the MP for Weston-super-Mare.

"We would return to unacceptable levels of overcrowding and would end up pushing people off the train and back into their cars, adding to the already-overcrowded M5."

The government is currently assessing the viability of electrifying the Great Western Main Line, as a more energy-efficient way of train travel.

July 17, 2009

UK rail inquiries moving to India

BBC News: 16 July 2009

All calls to National Rail Enquiries will be handled by Indian call centres from next March, the BBC has learnt.
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ATOC says the move will lead to "significant savings"

The Association of Train Operating Companies (ATOC), which runs the service, said it had agreed an exclusive contract with an Indian firm.

ATOC insisted that the change would not reduce the quality of the service.

The news came as an outsourcing firm said it was cutting more than 100 jobs at a rail inquiries centre in Yorkshire because of the India move.

Outsourcing firm Ventura said it was in consultations with staff at the facility in Wath-upon-Dearne.

Reduced usage

The number of calls to the service has fallen in recent years as a growing number of passengers use the internet, or the automated Train Tracker phone system, to access train times.

"Call centre operations now represent only some 7% of rail inquiries and this proportion continues to fall, with the internet rapidly growing in importance for passengers looking for journey information," said ATOC.

"In the last financial year, the amount of calls handled fell by 24.5%."

ATOC said its internal monitoring showed that levels of customer satisfaction were the same for call centres in the UK and India.

It added that: "We can achieve significant savings by moving to one supplier and it makes sense to do so."

Rail consumer watchdog Passenger Focus said it would monitor the effect of the call centre move on rail users.

"Passengers care that telephone and other information services are correct, useful and remain free or low cost," said Passenger Focus chief executive Anthony Smith.

"Where they are based is not so relevant."


See also:

National Rail to outsource all calls to India

Times Online: July 16, 2009
Peter Stiff

National Rail Enquires is to outsource all calls to India in a cost-cutting move that puts more than 100 jobs at risk.

Call centre staff in India already handle about two thirds of the calls to the train times hotline, with the remaining enquires fielded in South Yorkshire by employees of Ventura, a UK business.

It is believed staff only found out about the change, which will take place from December, last night and that redundancies at Ventura are inevitable.

Ventura said it had entered into a 90 day consultation period with more than 100 employees and that it was in talks with other clients about additional work to help the company maintain work volume and minimise job cuts.

The Association of Train Operating Companies (ATOC), which runs the services, said the group’s UK contract was coming to an end and that it was more cost effective to outsource the remaining calls to India.

It added that service levels would not be compromised by the move, with customer satisfaction equal for calls both to the UK and Indian centres.

The move comes after the number of calls to the hotline has fallen 25 per cent in the past year as passengers plan their journeys online rather than over the phone. Only 7 per cent of enquires are now telephone-based.

The decision by ATOC comes as a number of companies look to bring call centre jobs back from India to the UK, with BT revealing yesterday that it would bring at least 2,000 call centre jobs in India back to Britain. Powergen, Abbey and Orange have already closed some or all of their Indian call centre operations.

Cotswold rail redoubling engineers move on site

Transport Briefing: 17/07/09

Redoubling of the Cotswold rail line will get underway in earnest this weekend with more than 100 engineers employed at sites along the route
chiping_camden.jpeg
Chipping Camden tunnel: Network Rail will restore double track through Brunel structure

Phase one works for the £50m project will prepare the ground for the installation of new infrastructure and additional track between Oxford and Worcester - due to be laid throughout 2010.

Engineers will reposition nearly 10 miles of existing track to make room for the new line. Since the Oxford, Worcester and Wolverhampton line was singled in the late 1960s the track follows a route that consists of sections of the old southbound or northbound lines. In many places these existing tracks have been centred, leaving insufficient space for a second line to be laid. Therefore, existing track has to be repositioned to provide the space required for a double-track railway.


Work will also involve constructing 21 miles of new surface concrete cable route, installing 30 miles of new cable and relocating 60 sets of signal equipment. In addition, engineers will lay extra track through the 157 year old Chipping Camden/Mickleton tunnel, designed by Brunel, using a high-tech construction train. The work in the tunnel will include removal of the existing track, ballast and drainage system. More than 12,000 tonnes of materials will be removed from the 811m long tunnel. A new 2,000m drain will be installed to alleviate flooding in the future.

The initial programme of work will take place over a six week period from 18 July to 1 September while the design of the core engineering work is being carried out. Trains will be diverted or replaced with bus services while the line is closed.

Chris Rayner, route director for Network Rail, said: "One of the biggest challenges for this first phase is finding the opportunity to carry out the work without disrupting the daily operation of the railway and the community. To minimise any disruptions, we will be constructing infrastructure off-site whenever possible, providing a diversionary route as an alternative and carrying out our work in phases without having to close a long stretch of line at one time."

Train operator First Great Western's project manager for the scheme, Martin Barnett, added: "The North Cotswolds line is a particularly congested part of the railway, which means small delays tend to have more of an effect on our customers than they should. Once complete in early 2011, the redoubling of the track will provide extra capacity for more trains to carry more customers should demand continue to increase, and help sustain improved performance in the area."

As part of its ongoing effort to reduce the impact of railway operation on the environment, Network Rail will be cleaning most of the existing ballast and recycling it after removing all the contaminants.

Failures to 'join up' transport

BBC News: 17 July 2009

Important transport projects such as high-speed rail and road links between Wales and England are not being given enough priority, MPs say.
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Electrifying the London to Swansea line is a priority for the MPs

The Welsh Affairs Select Committee is calling for better co-operation between UK and Welsh ministers to create a joined-up public transport policy.

It also wants later timetabling of trains between south Wales and London to promote entertainment and tourism.

Both UK and Welsh governments say ministers are in close communication.


TRANSPORT REPORT SUMMARY
Rail Greater coordination of different rail franchises is needed. A failure to predict passenger increases, insufficient rolling stock and high peak fares is "highly disappointing". First Great Western - later timetabled trains to maximise entertainment, sport and tourism opportunities, while electrification should be a "priority"
Road Improvements to road networks are being held back by poor strategic project planning
Buses Anomalies between English and Welsh bus pass systems must be removed, particularly for those travelling longer distances
Air Many Welsh passengers fly from airports in England, either because of geographical proximity or because Cardiff does not serve the destination they need. Public transport links from Wales to Liverpool, Manchester and Birmingham airports "inadequate"
Source: Welsh Affairs Select Committee report

It suggested that high peak-time fares were discouraging people from leaving their cars at home.

Those passengers who did decide to take to the train found there was often insufficient rolling stock, especially at busy times.

Track upgrades

The committee said there had been only minor improvements to the service on the First Great Western main line, and the general level of service remained "unacceptable".

"If people are going to be persuaded to leave their cars at home and take public transport, then the services they use must be up to scratch," said the committee chairman, Dr Hywel Francis.

The committee's report on cross-border transport warned that important road links were not being funded as they were not a priority for English regions.

It also said trains were not good enough.

"Although we heard of some examples of good practice, for example in the north-east, too many opportunities for improvements are being missed."

Top of the list of priorities for the MPs is the electrification of the rail line between London and Swansea.

The committee said it would lead to significantly better services for passengers.

The report also suggested that later running of trains from south Wales would help promote entertainment and tourism in the area, something it said had been seen in cities like Bristol and in Yorkshire.

"The DfT, the Welsh Assembly Government and local authorities on both sides of the border must review their priorities and ensure closer working" - Dr Hywel Francis, MP

David Jones, the MP for Clwyd West, who is a member of the committee, said the freight industries in England and Wales currently operated as if they were in different countries.

"We were quite impressed with the Welsh road freight strategy. The difficulty is that it's not linked up with the English one," he said.

"And of course the big problem is that most heavy freight journeys either end or start in England.

"We are now arriving at the situation where the English department for transport and the Welsh Assembly Government are in some respects behaving as if they're in totally different countries and possibly in different parts of the world. And this is something we have really got to start addressing."

Both the Department for Transport (DfT) and the Welsh Assembly Government said rail transport was a vital issue for them.

"The government will be investing £15b in the rail network across England and Wales over the next five years, and we have been working closely with the Welsh Assembly Government to examine the detailed case for electrification of the Great Western main line between London and Swansea," said a DfT spokesperson.

'Closer working'

"We expect to make an announcement on this in due course"

But in their report, MPs were also unhappy at the way the DfT allowed regional authorities in England to take some decisions on road priorities.

It said it was not acceptable for the department to leave such matters to bodies with limited budgets and remits.

"The DfT, the Welsh Assembly Government and local authorities on both sides of the border must review their priorities and ensure closer working," added Dr Francis.

The committee was also critical of public transport links to major airport hubs, such as Birmingham, Liverpool and Manchester.

Scrapped

It said that cross-border traffic could also be reduced if Cardiff airport served more destinations.
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Plans for an M4 relief road and new Cardiff airport road have been dropped

However, the mention of Cardiff airport in the report will be contentious, coming just days after it was announced that plans for a new airport access road in the Vale of Glamorgan were being dropped.

The area's MP John Smith said the decision was "economic lunacy" and a "reckless decision for the Welsh economy".

The Deputy First Minister Ieuan Wyn Jones also announced on Wednesday that plans for a six-lane M4 relief road around Newport were being scrapped, after the cost rose to £1bn from its £340m estimate in 1998.

Responding to the MPs report, a spokesperson for the assembly government said officials and the Deputy First Minister continued to work closely with their UK counterparts.

"We also work closely with local authorities to improve planning and delivery of transport issues in Wales, for example in the development of the national transport plan," added the spokesperson.

German rail watchdog plans mass safety check

Reuters: Jul 16, 2009
Reporting by Markus Wacket and Dave Graham

BERLIN - All goods wagons operating on German railways should be subjected to additional checks in the light of a recent series of accidents and breakdowns, the country's railway supervisory authority said on Thursday.

In a letter published on its website, the Federal Railway Authority (EBA) said that following an accident last month in Viareggio, Italy that killed 22, as well as other incidents, "supervisory measures" to guarantee safety were needed.

"All wheelset axles used in goods wagons should be subjected to appropriate non-destructive testing to confirm they are free of cracks within a period of time that guarantees safety," the authority said, without specifying a deadline.

A spokesman for the German Transport Ministry said an agreement on how to proceed should be reached as quickly as possible with other European rail watchdogs.

A spokeswoman for German national rail operator Deutsche Bahn [DBN.UL] said the company had no comment for now.

In the letter addressed to rail firms operating in Germany dated July 13, the EBA gave them until to Friday to come up with a written response to its recommendations.

The capital Berlin is currently experiencing delays to rail transport due to maintenance work on its inner-city metro trains, many of which are out of service.

July 16, 2009

Network Rail fined for derailment

BBC News: 16 July 2009

Network Rail has been fined £70,000 after a train travelling at 90mph derailed in Norfolk because of a poorly maintained level crossing.
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The Office of Rail Regulation (ORR) brought the prosecution

Network Rail admitted failing to ensure the health and safety of passengers, road workers and train crew at an earlier hearing at Norwich Crown Court.

The crash took place in the early hours of 12 September 2006 at Croxton level crossing, near Thetford.

No-one was killed or seriously injured in the crash.

Network Rail was also ordered to pay £25,000 costs.

The Office of Rail Regulation (ORR) brought the prosecution against Network Rail.

Uneven panels

A spokesman for ORR said that shortly before 0555 BST a lorry had dislodged a heavy rubber panel in the crossing surface which was then hit by at least two other vehicles.

One car was lifted and spun out of control after it hit the "ramp" created by the panel, the ORR said.

Shortly afterwards, the train hit the panel causing it to derail as it went over the crossing.

The car drivers, seven passengers and train crew suffered minor injuries.

An investigation by ORR's railway safety directorate found the panel was not supported by a sufficient number of sleepers.

It also discovered Network Rail missed a number of opportunities to re-space the sleepers despite being told about the loose panel, and that there was insufficient training for staff.

Post incident inspection of the crossing also found a number of other uneven panels.

Russian Railways gets $500 million loan from EBRD

MarketWatch: Jul 15, 2009
By Polya Lesova

NEW YORK -- Russian Railways, the state-controlled rail monopoly, will receive a $500 million long-term loan from the European Bank for Reconstruction and Development.

The 10-year unsecured loan would be the largest single investment since the EBRD was founded in 1991 to support projects in 30 countries from central Europe to central Asia, the bank said Wednesday. The loan "would allow the state-owned railway to restructure its balance sheet and support the completion of reforms of the world's second largest rail system despite the economic crisis and market contraction," EBRD said in a statement.


See also:


EBRD approves $500 mln loan for Russian Railways

RIA Novosti: July 15 2009
155529559.jpg
Russian Railways (RZD) - RIA Novosti Sergey Venyavsky

MOSCOW - The European Bank for Reconstruction and Development (EBRD) has approved a $500 million long-term loan to Russian Railways (RZD), the top European lender said on Wednesday.

"This would allow the state-owned railway to restructure its balance sheet and support the completion of reforms of the world's second largest rail system despite the economic crisis and market contraction," the EBRD said.

The 10-year unsecured loan facility would be the largest single investment since the EBRD was founded in 1991. The transaction brings the amount invested by the EBRD in nine Russian rail projects to nearly $1.2 billion following the Russian government's decision in 2001 to launch a structural reform of the country's railway system, the bank said.

"This loan would be closely tied to the ambitious reform goals that RZD and the government have set themselves, including restructuring of freight operations and improving sector regulation," the EBRD said.

Commenting on the loan approval, EBRD Business Group Director for Infrastructure Thomas Maier said that the bank, which has been deeply involved in Russian reform programs, was proud to participate in the process.

"By providing these long-term funds to RZD, the bank is contributing to a more efficient match between the assets and liabilities of Russian Railways, thus freeing up resources for the priority goal of upgrading the rail network," Maier said.

RMT members vote four to one for action at Arriva Cross Country

RMT: July 15 2009

RMT members working for Arriva Cross Country have vote overwhelmingly by four to one on a 55% turn out to take action in a dispute over a breakdown in industrial relations around pay and a series of issues relating to working conditions.

The RMT ballot, for action short of a strike, concluded yesterday and has given the union a solid mandate to take the dispute forward. RMT reps from across the company will meet next week to decide on a strategy.

Arriva Cross Country runs rail services over a wide geographical area stretching across England and into Wales and Scotland.

Bob Crow, RMT General Secretary, said today:

“Our members have voted by a massive four to one margin for action on Arriva Cross Country and that solid mandate is a reflection of just how angry they are at the company’s divisive approach to both pay and a range of issues relating to working conditions. It’s that approach which has led to this breakdown in industrial relations.

“RMT company representatives will now discuss the strategy for taking this dispute forward at a meeting next week.

“RMT remains available for talks and we would encourage Arriva Cross Country to take the opportunity to sit down and work out an agreement on pay and service conditions which gives all staff a fair deal.”

Ends

Rail staff announce four strikes

Press Association: 15 July 2009

Rail workers on National Express East Anglia are to stage four 48-hour strikes in a dispute over pay and conditions.

The Rail Maritime and Transport (RMT) union and Aslef said their members will walk out from July 30, August 6, August 13 and August 20.

RMT leader Bob Crow said: "RMT are in no doubt that the failure to make any kind of meaningful pay offer to staff on National Express East Anglia is all about the company trying to milk the franchises that they have left, fatten up their profits and make their staff pay for a crisis which was cooked up in the boardroom by senior managers who have now jumped ship.


See also:

RMT members vote nine to one for strike action on National Express East Anglia – strike dates announced

RMT: July 15 2009

RAIL UNION RMT announced today that members working on National Express East Anglia have voted by a massive nine to one majority in favour of strike action in a dispute over pay, conditions and reorganization.

RMT will be taking strike action on the following dates. ASLEF have confirmed that their members will be striking on the same days:

00.01 hrs Thursday 30th July to 23.59 hours Friday 31st July

00.01 hrs Thursday 6th August to 23.59 hrs Friday 7th August

00.01 hrs Thursday 13th August to 23.59 hrs Friday 14th August

00.01 hrs Thursday 20th August to 23.59 hrs Friday 21st August

This week, RMT revealed that National Express has made nearly half a billion pounds in profits from their rail operations over the past ten years while sucking in £2.5 billion in subsidies over the same period

RMT have also issued a call to the government to take urgent and decisive action over National Express as it emerged that not only are the company planning an all out fight to hold onto the East Anglia and c2c franchises, contrary to the cross-default rules, but are also sending signals that they may even fight to retain the East Coast Main line despite the announcement by Lord Adonis two weeks ago that it is to be renationalised.

Bob Crow, RMT general secretary, said today:

“RMT are in no doubt that the failure to make any kind of meaningful pay offer to staff on National Express East Anglia is all about the company trying to milk the franchises that they have left, fatten up their profits and make their staff pay for a crisis which was cooked up in the boardroom by senior managers who have now jumped ship.

“RMT members have shown in this ballot that they are not prepared to be the victims of the National Express franchise chaos and that they are determined to fight for a decent pay rise and for decent working conditions. This company has made half a billion in profits out of our members over the past decade, it’s a scandal that they are offering their staff peanuts in return.”

July 14, 2009

Amtrak unveils first rail car funded by stimulus

Associated Press: 14 July 2009
By RANDALL CHASE

BEAR, Del. — Amtrak has wasted little time using its $1.3 billion slice of the federal stimulus package, unveiling the first of 81 passenger cars to be restored with the help of economic recovery funds.

Passenger car no. 25103, damaged a few years ago in a yard collision but now completely refurbished — complete with that "new car" interior smell — was shown off Monday at Amtrak's maintenance facility in Bear. More than 100 hard-hatted workers joined Amtrak president and CEO Joseph Boardman in celebrating completion of its restoration.

The car, refitted at a cost of about $687,000, will rejoin the Amtrak fleet next week and will be used on long-distance routes stretching from Toronto to Miami.

With ridership increasing by about 25 percent over the past three years, Amtrak is welcoming the additional seating capacity that will be provided by cars brought out of storage for repairs. Cars like the one displayed Monday can seat 60.

Members of Delaware's congressional delegation said that while past presidents seemed cool to the needs of mass transit, the Obama administration seems to truly believe in passenger rail.

"Our day has come," said Democratic Sen. Tom Carper.

Republican Rep. Michael Castle acknowledged that he was no fan of the $787 billion stimulus package, but said he wants to ensure that Amtrak remains a viable mode of transportation.

"I think we have an administration that cares, and I think the vice president has a lot to do with that," said Castle, referring to Vice President Joseph Biden, who rode the rails regularly during his long career in the Senate.

The funds allocated to Amtrak are part of the $9.3 billion set aside in the stimulus package for rail transportation. State governments, as well as Amtrak, are competing for a share of the other $8 billion available.

Some of the proposals being discussed include a Chicago-St. Louis high-speed line that could cut travel times to two hours from the current five, an 800-mile-long high-speed line stretching along the California coast, and a proposal by governors of New England states to improve and expand train service throughout that region.

Amtrak expects to spend about $90 million in stimulus money it's already been awarded to upgrade 81 passenger cars and 15 diesel locomotives — part of the $845 million in stimulus funds allocated for railroad and station capital improvements. The agency will spend another $450 million in stimulus money for security upgrades at stations, bridges, tunnels and other locations.

Amtrak has added a third shift and hired 55 workers at its heavy maintenance facility in Delaware, which is responsible for the overhaul and wreck repair of passenger railcars, to help restore a total of 60 cars by February 2011 at a cost of $58 million. Amtrak's chief mechanical officer, Vince Nesci, described the undertaking as a "pretty ambitious and aggressive project."

Similar work is slated for Amtrak shops in Beech Grove, Ind., where 21 out-of-service passenger cars will be rebuilt.

July 13, 2009

Rail staff face 'smile police'

BBC News: 11 July 2009

A Japanese rail firm has introduced a system to check that staff are smiling enough at all times.
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The smile scanner aims to improve service to customers

Computerised scanners around 15 Tokyo stations will measure the smile's curvature to ensure it is broad enough.

Those failing to measure up - literally - will be advised to look less serious and more cheerful.
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Traditional Japanese smile mask

The system will also be introduced at a hospital in Osaka to check staff friendliness and at a truck stop to measure the tiredness of drivers.

The BBC's Roland Buerk, in Tokyo, says that the Japanese highly value customer service.

It is standard practice, our correspondent explains, for smartly-dressed train conductors to bow as customers enter and leave train carriages.

The software has been developed by Japanese firm Omron.

They suggests that future applications may include shops - where they could be positioned to measure the reaction of customers to products on display.

Minister warns Brown over spending cutbacks

The Independent: 13 July 2009
By Michael Savage, Political Correspondent
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Adonis will not accept sacrifice of £8bn high-speed rail line amid pressure on public finances

Lord Adonis, the Secretary of State for Transport , has become the first senior minister to launch an offensive against cuts to his major spending plans, ruling out any withdrawal of support for his ambitious high-speed rail line despite growing pressure on the Government to cut some big projects.

In an interview with The Independent, Lord Adonis issues a clear message to sceptics as well as to the Prime Minister that he will not tolerate any attempt to sacrifice the high-speed line, which could cost the public around £8bn.

It comes as pressure grows on Gordon Brown from his own party to "come clean" over spending and admit that some sacred cows will have to go. Data released by the Centre for Economics and Business Research today suggests that around £100bn in tax rises and spending cuts will be needed by 2018 to restore the public finances.

The Prime Minister's support for a high-speed rail line, ultimately linking London to Glasgow, was central to the deal that saw Lord Adonis move to the Department for Transport (DfT) last year. Allies believe he could walk out of Mr Brown's Cabinet should backing for the project waver. The Government's spending plans beyond 2011 remain a mystery, though the Chancellor, Alistair Darling, has promised that more details of future spending will be laid out ahead of the next election. Mr Brown has said that "hard choices" will have to be made, but has stubbornly refused to reveal where spending cuts will come.

However, Lord Adonis signalled that he will not compromise over his chosen pet project, despite the prospect of a decade of spending cuts. "High-speed rail is a long-term project. The fact that we have constrained finances for the next few years shouldn't lead us to constrain our ambition," Lord Adonis said. "On the contrary. What we're planning for is the infrastructure we will need over the next generation. We won't be spending serious money on it for at least five years. The bane of infrastructure planning in this country has been the failure to think for the long term and to cancel projects because of very short-term funding constraints."

The jockeying among ministers for a major slice of a limited pot of money is set to kick off in earnest after the Pre-Budget Report in the autumn, when Mr Darling will announce his projections for the economy. The Independent understands that some tentative discussions over future spending plans have begun at an official level.

Currently, several departments are working on the basis that they will continue to be looked upon favourably by the Treasury. Officials at Ed Balls' Department for Children, Schools and Families are hoping that the Government's pledge to raise the compulsory age for education or training to 17 in 2013 and 18 two years later will save them from major cuts. However, the Secretary of State for International Development Douglas Alexander's aid budget is only guaranteed to rise until 2013. No commitments have been made beyond then.

Doubts over the future of high-speed rail have increased over recent weeks, with Britain's transport budget already under intense pressure – and it could yet be raided further to prop up other departments. The recession has triggered clauses committing the Government to help rail companies cover losses in expected revenue, while the renationalisation of the East-coast mainline rail franchise also looks set to leave a hole in the DfT's accounts running into hundreds of millions of pounds.

But Lord Adonis said that "neglect on the part of successive governments" had left Britain's transport infrastructure lagging behind that of other countries. "I believe passionately that we will only become a thoroughly modern country when we have a thoroughly modern transport system," he said. "Developing the plan for high-speed rail is as big a reform as we have carried out. The Prime Minister is absolutely committed to that, too. If we are going to be a successful country in the 21st century, we are going to need a modern rail system that must include high-speed rail between our major conurbations."

He admitted there would be "difficult decisions" to make on spending over the coming years, but high-speed rail must not be included in any cuts or delays. "The difference between doing it [the high-speed line] soon and doing it in another generation would be huge," he said. He is determined to have a clearer read out of costing and timescale for the project by the end of the year.

Meanwhile, the Labour MP Jon Cruddas told The Independent that Mr Brown needed to end his Government's "sense of denial" over the future of spending. "We can only start to have the debate about what we will champion when we acknowledge the consequences of a massive, global recession," he said. "I don't know anyone who doesn't realise spending cuts are coming – they understand that the world has changed. But we are letting the Tories off lightly by not comparing what our priorities are to theirs in the new financial climate."

Yesterday, Britain's top civil servant also warned that any future government would have to deal with the "immense" challenge of much tighter public finances. Sir Gus O'Donnell, the Cabinet Secretary, told the BBC that future ministers would have to decide where their priorities lay in light of shrinking budgets across Whitehall. Vince Cable, the Liberal Democrat Treasury spokesman, has also called on both the Tories and Labour to concede that some "big programmes" will have to go.


See also:


Lord Adonis warns 200mph rail upgrade should not be abandoned

Daily Telegraph: 13 Jul 2009
By James Kirkup, Political Correspondent

Lord Adonis, the Transport Secretary, has warned Gordon Brown not to abandon plans for a multi-billion pound rail upgrade programme as the Government's finances worsen.
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Lord Adonis, the Transport Secretary, has warned Gordon Brown not to abandon plans for a multi-billion pound rail upgrade Photo: HEATHCLIFF O'MALLEY

With the national debt rising to £1.4 trillion, economists predict spending will soon have to be cut to rebalance the budget.

That must not mean the end of Government plans to build a new 200mph rail link from London to Yorkshire and Scotland.

Lord Adonis is a rail enthusiast who sees the £8 billion high-speed project as central to his job.

He asked to move to the transport department last year in order to argue for it, and some colleagues believe he would quit rather than see it sacrificed.

"High-speed rail is a long-term project. The fact that we have constrained finances for the next few years shouldn't lead us to constrain our ambition," Lord Adonis said.

"On the contrary. What we're planning for is the infrastructure we will need over the next generation. We won't be spending serious money on it for at least five years," he said in an interview with the Independent.

"The bane of infrastructure planning in this country has been the failure to think for the long term and to cancel projects because of very short-term funding constraints."

Lord Adonis is one of several Cabinet ministers fighting to protect big projects from cuts. His department's budget has already been raided to help pay for Mr Brown's council housing plans.

Yesterday, the head of the Civil Service, Cabinet Secretary Sir Gus O'Donnell, said officials were already drawing up options for ministers to achieve savings and rebuild public finances, which could include big cuts in government projects.

Lord Adonis spoke as a new report forecast spending cuts and tax rises worth £100 billion to rebalance the public finances.

The Centre for Economic and Business Research, a think tank, said the measures would be needed to get the UK's budget deficit down to £50 billion by 2014-15.

And it added that without tax rises and spending cuts, the deficit would plunge to £158 billion that year, it suggested.

The CEBR says that if the Conservatives win the next election - as bookmakers predict - the gap will be plugged with £20 billion in tax rises and £80 billion spending cuts.

If Labour retains power, it forecasts £40 billion of tax hikes and a lower level of spending cuts - £60 billion.


See also:


Lord Adonis 'could walk out of Cabinet' if support for £8bn high-speed rail line is dropped

Daily Mail: 13th July 2009
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Lord Adonis has ruled out withdrawing his support for the £8billion high-speed rail line

Lord Adonis has become the first Cabinet minister to issue a clear warning against spending cuts in his department.

The Secretary of State for Transport has ruled out withdrawing his support for the ambitious £8billion high-speed rail line linking London to Glasgow, despite mounting pressure on the Government to cut some big projects.

The news comes as calls increase for Gordon Brown to admit the scale of public spending cuts.

The Centre for Economics and Business Research today released data which suggests a total of £100billion in tax rises and cuts will be needed to restore public finances by 2018.

Supporters of Lord Adonis believe he could walk out of the Cabinet if backing for the high-speed line is dropped.

The Prime Minister's support for the proposal, which would see journey times between London and Manchester reduced from two hours and 30 minutes to one hour 22 minutes, was a key part of Lord Adonis's decision to move to the Department for Transport last year.

Mr Brown has said 'hard choices' will have to be made, but has refused to reveal the full extent of public spending cuts.

In an interview with the Independent, Lord Adonis said: 'High-speed rail is a long-term project. The fact that we have constrained finances for the next few years shouldn't lead us to constrain our ambition.

'What we're planning for is the infrastructure we will need over the next generation.

'The bane of infrastructure planning in this country has been the failure to think for the long term and to cancel projects because of very short-term funding constraints.'
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The £8billion new high-speed line would run between London and Glasgow

Discussions over future spending plans are believed to have already started, ahead of the Pre-Budget Report and Chancellor Alistair Darling's projections to the economy in the autumn.

Doubts over the future of high-speed rail have increased after the recession triggered Government clauses to help rail companies making losses and the re-nationalisation of the East Coast franchise.

Lord Adonis said: 'I believe passionately that we will only become a thoroughly modern country when we have a thoroughly modern transport system.

'If we are going to be a successful country in the 21st century, we are going to need a modern rail system that must include high-speed rail between our major conurbations.'

Yesterday, Cabinet Secretary Sir Gus O'Donnell told the BBC that future ministers would have to make decisions on their priorities in the face of shrinking budgets.

Vince Cable, Lib Dem treasury spokesman, has called on the Tories and Labour to admit that some 'big programmes' will have to go.

Eurostar Deutsche ban

FT European View: July 13 2009
By Paul Betts european.view@ft.com

Eurostar, the operator of high speed train services from Paris and Brussels to London via the Channel Tunnel, is to assume European company status.

This is not because it has become such a glittering symbol of European integration. Far from it. The move is designed to give France’s state railway company SNCF control of Eurostar and prevent its German rival, Deutsche Bahn, from securing a competitive foothold in the Channel Tunnel rail operator. The Germans had been considering buying out LCR, the British partner in the Eurostar consortium, in what the SNCF took as a declaration of war against the French company ahead of the liberalisation of European international passenger rail services in December this year.

After intense French lobbying, the Eurostar consortium will be turned into a European company with SNCF holding a 55 per cent controlling stake. LCR will own 40 per cent and the Belgian railways 5 per cent. The French have also taken out an additional insurance policy against the Germans by securing pre-emptive rights to buy out the British or Belgian partner should they decide to sell.

July 10, 2009

SNCF takes control of Eurostar to conquer Europe

Le Figaro: 10/07/2009
Fabrice Amedeo

The French public sector company has won a victory over Deutsche Bahn as it confirms an order for 35 new TGV trains.

SNCF is facing up to its competitors by taking a firm stance. With less than six months left until liberalisation of international passenger transport, the executive board of the public company gave its approval on Friday 10 July for transformation of the Eurostar consortium into a European company. Now, Eurostar will no longer be a combination of French, British and Belgian railway companies, where every decision was taken unanimously, but instead one company where 55% of the capital resides with SNCF, 40% with London and Continental Railways (LCR) and 5% with the SNCB. With this development, SNCF is literally taking control of Eurostar. That bodes well for preparations for competition in passenger transport. But it is also a victory over Deutsche Bahn. The German rail operator wanted to take advantage of the change of status between the capital components of the company by buying up the portion of the British railway company.

Now, Eurostar will be the armed wing of the SNCF to attack its competitors. As of 13 December next, international routes between Brussels-Paris-Marseille may be offered by SNCF's competitors. In return, the public sector company SNCF will be able to propose international routes through its European neighbors. Internal discussions, are of the view that Eurostar could do so.

This announcement concludes a period of internal-examination in SNCF at the prospect of seeing foreign competitors in its own backyard. Since September, when it took a capital stake in the Italian high speed train operator Nuovo Trasporto Viaggiatori (NTV), SNCF's only feat of arms in preparation for the opening up to competition is to establish an autonomous directorate for stations under the direct hierarchical responsibility of its President. This formula has attracted the anger of its future competitors who feel that the conditions for equitable access for all operators to stations in France are not being met.

Freight in a state of bankruptcy

The Board of Directors of SNCF last Friday also endorsed a call for tenders for 35 new TGV train sets. This 1.2 billion Euro contract will allow SNCF to have new trains that will be able to operate from 2015 in Germany, Italy and the Benelux countries.

The firm order is nonetheless accompanied by an optional extra 65 TGV sets, which could bring the final order to 100 trains.

Alstom, Bombardier and Siemens are still awaiting bids for the sale of the century. SNCF has talked about 300 train sets to replace its current TGV fleet, which entered service in early 1980 and is at the end of its life. But the economic crisis has overtaken everything. It ended the rising turnover in the high speed passenger rail sector. And it has plunged the freight sector especially into a bankruptcy situation without precedent. With SNCF freight losing at least 600 million Euros this year, the public sector company can hardly maintain the huge tender it promised for summer 2009.


French original:

La SNCF prend le contrôle d'Eurostar pour conquérir l'Europe

Le Figaro: 10/07/2009
Fabrice Amedeo

L'entreprise publique remporte une victoire face à la Deutsche Bahn. Elle confirme une commande de 35 nouvelles rames TGV.

La SNCF attend ses concurrents de pied ferme. À moins de six mois de la libéralisation du transport international de passagers, le conseil d'administration de l'entreprise publique a donné vendredi son aval à la transformation du consortium Eurostar en société européenne. Dorénavant, Eurostar ne sera plus une association des chemins de fer français, britanniques et belges où toute décision se prend à l'unanimité, mais une société dont 55 % du capital revient à la SNCF, 40 % à London and Continental Railway (LCR) et 5 % à la SNCB. Grâce à cette évolution, la SNCF prend littéralement le contrôle d'Eurostar. C'est de bon augure pour préparer la compétition sur le transport de voyageurs. Mais c'est aussi une victoire face à la Deutsche Bahn. L'opérateur a voulu profiter du changement de statut pour s'inviter dans le capital de l'entreprise en rachetant la part des chemins de fer britanniques.

Dorénavant, Eurostar sera le bras armé de la SNCF pour attaquer ses concurrents européens. À partir du 13 décembre prochain, des trajets internationaux comme un Bruxelles-Paris-Marseille pourront en effet être proposés par des concurrents de la SNCF. En retour, l'entreprise publique pourra proposer des trajets internationaux chez ses voisins européens. En interne, il se dit qu'Eurostar pourrait le faire.

Cette annonce met un terme à une période de repli sur soi de la SNCF face à la perspective de voir arriver des concurrents dans son pré carré. Depuis septembre et l'entrée au capital de la société italienne de trains à grande vitesse Nuovo Trasporto Viaggiatori (NTV), le seul fait d'armes de la SNCF pour préparer l'ouverture à la concurrence est en effet d'avoir créé une direction des gares autonomes… sous la responsabilité hiérarchique de son président. Cette formule lui a attiré l'ire de ses futurs concurrents qui estiment que les conditions d'un accès équitable de tous les opérateurs aux gares françaises ne sont pas réunies.

Le fret en situation de faillite

Le conseil d'administration de la SNCF a également validé vendredi le lancement d'un appel d'offres pour 35 nouvelles rames TGV à un niveau. Ce contrat de 1,2 milliard d'euros va permettre à la SNCF de se doter de nouvelles rames, qu'elle fera rouler en 2015 en Allemagne, en Italie et au Benelux.

La commande ferme est néanmoins assortie d'un volet optionnel de 65 TGV qui pourrait porter la commande finale à 100 rames.

Alstom, Bombardier et Siemens attendaient l'appel d'offres du siècle. La SNCF parlait de 300 rames pour remplacer ses TGV actuels, entrés en service au début des années 1980 et en fin de vie. Mais la crise économique est passée par là. Elle a mis fin à la hausse du chiffre d'affaires sur le segment de la grande vitesse. Et elle a surtout plongé le fret dans une situation de faillite sans précédent. Avec un transport de marchandises qui va perdre au moins 600 millions d'euros cette année, l'entreprise publique pouvait difficilement maintenir son gigantesque appel d'offres promis pour l'été 2009.

UK government tells Rail Renewals workers: "Auf Wiedersehen, Pet!"

New Civil Engineer: 9 July, 2009
By Ed Owen

UK Trade & Investment has identified £10.9bn (€12.6bn) of civils work available to UK firms in the rest of the EU.

The work has been generated thanks to stimulus packages around the EU to deal with the economic crisis.

Highlights include:

* France spending €700M on four new high speed railway lines.
* Germany will spend €2.7M on a contract for architecture, engineering and planning in Koblenz.
* Spain is spending €25M on a works contract for the construction of a University in Ceuta.
* Germany is spending €39.5M on railway equipment.
* Deutsche Bahn AG is spending €1.5bn to upgrade its railway coaches

Chief Executive of UKTI, Sir Andrew Cahn said: “The size and scale of the construction and infrastructure initiatives announced in France, Germany and Spain means there are plenty of opportunities for UK business to provide expertise and capabilities.

“It’s not just the projects themselves that are of interest to UK companies, but also the associated services and continuing supply opportunities.”

UKTI stresses that EU spending is transparent and tendering is open to companies in any EU member state. UKTI Business Specialist Steve Spalding says UK companies also have a competitive advantage due to the low value of the pound. “The requirement to achieve “value for money” currently offers UK suppliers a competitive advantage when pricing their products in euros,” he said.

UKTI is planning a series of regional seminars for companies interested in exploring these opportunities as part of its response to help British companies navigate their way through the downturn.


See also:


UKTI: Cash in on EU’s £10bn plans

Construction News:9 July, 2009
By Mark Lewis

UK contractors have been told to target more than £10 billion worth of European building works scheduled to commence under fiscal stimulus packages in neighbouring countries.

Since the onset of the global recession, EU governments in Spain, France and Germany have joined the UK in bringing forward plans for construction and guaranteeing cash for big infrastructure projects.

And UK Trade and Investment, the overseas business arm of the department of Business, Enterprise and Regulatory Reform, has urged UK contractors to be aggressive in seeking contracts on the continent.

UKTI business specialist Steve Spalding said that national sensitivities should not be an issue for UK companies when pitching for work since, under EU rules, companies from each member country must be given the same access to contracts as those from the host.

He added that since the procurement must be “transparent and open to all companies within the EU,” British companies had a compelling sales narrative.

“The requirement to achieve ‘value for money’ currently offers UK suppliers a competitive advantage when pricing their products in Euros,” he said.

UK Contractors’ Group deputy director Rachel Done said that many of its bigger members were international firms with established overseas offices which were well placed to make additional gains on the continent.

While some UK firms may feel there are still borders to securing work within Europe, UKTI chief executive Sir Andrew Cahn said the sheer scale of the projects on the drawing board meant UK companies could expect to pick up many new contracts.

He said: “The size and scale of the construction and infrastructure initiatives announced in France, Germany and Spain means there are plenty of opportunities for UK business to provide expertise and capabilities.

“It’s not just the projects themselves that are of interest to UK companies, but also the associated services and continuing supply opportunities.”

France is investing some £100 billion into its railway stock and stations over the next 20 years and Germany also has a plan to spend more than £600 million upgrading its railways.

Sir Cahn particularly urged smaller contractors with niche skills to look closely at projects and look to UKTI to help “identify and quantify specific opportunities”.

As well as its introductory service, which links companies with key contacts and information, its Passport to Export service is designed to support new and less experienced exporters to gain the skills and confidence they need to operate in export markets.

Businesses receive up to six days’ one-to-one mentoring and consultancy, and grants are available on a match-funded basis.

This week, UKTI will also host a series of regional seminars for companies interested in exploring new business opportunities abroad.

WHAT ARE OUR NEIGHBOURS UP TO?

A snapshot from the UKTI report which show what’s on offer across the Channel

Germany is spending:

* £7.2 million on school and research buildings
* £37 million constructing schools and universities
* £5.8 million on flood protection works
* £40 million on waterway construction in Cuxhaven
* £2.3 million on a contract for architecture, engineering and planning in Koblenz
* £900,000 on road bridge construction

France is spending:

* £16 million on construction works for school buildings in Paris
* £1.1 million on a contract for engineering and inspection in the Rhone-Alpes France

Spain is spending:

* £1.1 million on civil engineering and consultancy projects in Madrid
* £5.4 million on canal construction
* £21.4 million on a works contract for the construction of a University in Ceuta

Source: UK Trade and Investment

July 9, 2009

Crossed lines: Untangling Britain's rail networks

The Independent: 8 July 2009
Simon Calder

The troubles of National Express have provoked renewed despair at the state of our under-funded, over-priced, over-complicated rail network. But are things really that bad? Simon Calder goes on a journey of discovery
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Hitting the buffers

Anyone seeking to have their prejudices confirmed about Britain's rail network being on a one-way, all stations trip to oblivion (probably involving a Bus Replacement Service) must have enjoyed last Wednesday. In the morning, the transport secretary, Lord Adonis, used The Today Programme to strip National Express of its flagship service, the East Coast main line. Later that day, I happened to be travelling from Peterborough to London in the care of said franchisee. The London radio station LBC 97.3 had earlier asked me for an interview about the effects on travellers. The timetable indicated I would have plenty of time to get to the studio in central London. But the express I had planned to catch had seemingly vanished into the Thirsk triangle on its way south from Aberdeen. Twenty minutes later another train appeared, and I told the studio producer I could happily contribute by phone from King's Cross. But somewhere outside Potter's Bar the 125mph train slowed to walking pace, and dawdled down the slow line, in and out of telephonic range. Accordingly, listeners were forced to endure a stutter of statistics about National Express's ambitious arithmetic, followed by a flurry of static, then a squelch and finally some welcome silence.

The interview abandoned, the train lurched into its London terminus half-an-hour late.

King's Cross is the location for platform nine-and-three-quarters, departure point for the Hogwarts Express. Even the wealthy and wise creator of that elusive train, and its notable passenger, Harry Potter, would hardly know where to start to sort out the more surreal aspects of Britain's railways. Trivial examples include the rail-air link between Teesside Airport and Darlington that operates only once a week, and the fact that the nearest sandy beach to London – judging by the fastest journey from a rail terminus – is, er, at Calais. While billions were poured into a project to accelerate travel from London to France and Belgium, urgent improvements that would have benefited far more travellers were overlooked. This morning, commuters between Scotland's two largest cities must endure a slow, noisy journey by diesel train; in any other large, prosperous country (and even small, poor nations) cities as close as Edinburgh and Glasgow would be linked by clean, fast and quiet electric trains. The same applies to Liverpool and Manchester, Leeds and Sheffield, London and Luton ...

You know the tune, to a rhythm of diddly-dee, diddly-dum: decades of underinvestment, plus a botched privatisation, makes a laughing stock of our rolling stock. Britain is surely the only country where a railwayman could complain about the "wrong type of snow". We certainly have the wrong type of rail network. Or do we?

The man best qualified to pronounce on the rudeness of health of the railways turns out to be very polite. He is also the closest Britain has to schedule sorcerer: the Man in Seat 61. Unlike his automotive counterpart, The Stig in Top Gear, Mark Smith does not mind the world knowing who he is – nor that he joined British Rail as a management trainee in the 1980s. He enjoyed a slightly surreal start to his professional life: looking after the line across Romney Marsh on the Kent-Sussex border. "You'd pootle down to Rye on market day and do the ticket office accounts. Lovely, lovely job." In the 1840s, when the web of railways was expanding across Britain, a local clergyman talked of "The World as divided into five parts, namely Europe, Asia, Africa, America and The Romney Marsh". Smith then picked up the poisoned chalice of managing London's most central station, Charing Cross, and went on to join the rail regulator. He progressed to the Department for Transport – until a chance encounter with a £2.95 teach-yourself-the-web book persuaded him to create what would become the leading rail portal, Seat61.com – named after his favourite seat in First Class on Eurostar trains to Paris and Brussels. The website provides free advice and encouragement to anyone who wants to see the world from the comfort of a ground-level window seat.

***

Numerous awards and accolades later, the man who makes a living from unravelling the complexities of rail travel is still prepared to join a journalist on a standard-class journey from London's forgotten terminus: Marylebone station.

Probably more people have visited Marylebone as a stop on the Monopoly board (it's the one between Northumberland Avenue and Bow Street) than have caught a train from here. The station was the last gasp of the great railway century; it opened in 1899, long after the main rail arteries had been laid down. In 1964, The Beatles used Marylebone to film scenes from A Hard Day's Night because it caused the least disruption to commuting life. By the 1980s, you could go anywhere you liked from Marylebone as long as it was Buckinghamshire, Banbury or Birmingham. Traffic had slumped so much that there was serious talk of converting the line north-west through the suburbs into a busway, and demolishing the fine late-Victorian facade to make room for a replacement for Victoria Coach Station.

The Independent's Simon Calder interviews Mark Smith of The Man In Seat 61
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A ragged consortium of railway lovers (a rare species in the Thatcher decade) and well-to-do commuters chased away that plan. But then came privatisation – which every left-thinking traveller knows to have been a disaster. Correct, I asked the man who would presumably rather be in Seat 61 to Paris than on the 2.20 to Banbury?

"I think it's the other way round: I think that the Marylebone and Chiltern Line, one of the best-performing UK operators, sums up what has gone right with privatisation. British Rail modernised the line in 1990. They doubled the train service, they made it far more reliable, they brought in new trains. But when they'd finished, they had no resources to do any more. Chiltern were able to take over, double the service again, so my local station has seen its service quadruple since the 1980s. They were able to bring in new trains, some with wall-to-wall carpet and air conditioning. Marylebone has improved beyond all recognition; we hadn't even got an ATM to get a tenner out of the wall when they started. We've now got all the facilities you could want."

The facility that the traveller craves above all others is punctuality, and the train departed right on time: indeed, Mark Smith says the latest statistics show Chiltern performing marginally better than Swiss Railways. "If all privatised railways were like Chiltern, then I think I definitely would be in favour of it. Don't forget the railways in the UK started as private companies."

Considering we invented the thing, the British have a very uneasy relationship with the railway. Fewer than half of us regularly travel on them, and yet taxpayers pay £1 for every £1 that comes in from fares. As the Birmingham train rattled north-west from London on a trajectory unchanged since the Victorian era, I suggested to Mark Smith that the British have no appetite to spend serious money on proper high-speed lines as found in France, Germany and Japan.

"Every country seems to complain about its own network. Believe it or not, the Germans complain about their network. A lot is in the eye of the beholder. And you ain't ever going to enjoy your commuter train to work."

As we sped towards Buckinghamshire at 75mph, I wondered if Britain would ever get a genuine high-speed line from north to south.

"If we're going to get away from building the ninth runway at Heathrow, and widening the M25 and M1 and M40 to 16 lanes then I think we're going to have to do something. High-speed rail is probably the most environmentally sound way of moving large volumes of people over domestic airline distances. The key thing isn't the speed; the key thing is the journey time. If we can get a journey from London to Scotland under three hours, then we're starting to make huge inroads into the domestic air market. I don't think you can do that by simply upgrading the East Coast or West Coast main lines."

Somewhere around Wembley, we whizzed past a train in the colours of the Wrexham & Shropshire Railway. This enterprise has reconnected north-east Wales and the Borders to London, and is seen by many as a prime example of the benefits of free enterprise applied to the railways. Yet, as the excellent Paddy O'Connell reported on Radio 4 on Sunday, the company is hamstrung by rules that prevent it from picking up passengers in Wolverhampton or dropping them off in Banbury. More Hogwarts-style absurdity, I suggest. Hogwash, says Smith.

"We've got protection in place to ensure that, although we've got 20-odd different train companies, they all act as one network. Everyone has to accept everyone's tickets and there's a big revenue divvying-up at the end of the day. As soon as that 'open access' operator stops at Wolverhampton, part of that revenue disappears off to them. The cost of running the rest of the network remains the same."

Britain's 21st-century railway has a constant tension between the need to be commercially aggressive – to provide a return for shareholders and compete with road and air – and the duty to provide a socially beneficial service. "If an open access operator can make money servicing a market the franchise market has left out, like Hull Trains or Wrexham & Shrewsbury, that's brilliant, and if they want to do so, they can, but not at the expense of the rest of the Government-funded network."

***

Banbury: cross? When you ride a Chiltern train, the chances are you will not arrive ill-tempered to the Oxfordshire market town. Chiltern Railways delivered me on schedule at around a mile a minute. From 2011, trains will be even faster (London-Birmingham in 100 minutes). Two years after that the line from High Wycombe to Oxford will reopen, half a century after Dr Beeching applied thehatchet and closed the link down – along with many other lines that did not deserve to be ripped up (and it must be said, plenty that did).

Of the gaunt skeleton that remained after successive Conservative and Labour transport ministers' wholesale amputations, the feeblest components were the "cross-country" lines, connecting the North-east with the South-west and Sussex with Scotland. A decade ago, Richard Branson's Virgin Group came up with the novel idea of investing in new, fast, comfortable and reliable trains – not words previously used in the same sentence as "cross-country".

For my journey back to London I chose the most awkward journey possible under the terms of my "Super Off-Peak Day Return": the £13 ticket enabled me to return on a succession of four other train operators, to allow me to test the health of some of the limbs of this strange patient.

Things started to go wrong at once. The train from Newcastle, due to transport me to Oxford, had disappeared into the Thirsk triangle. (Perversely, platform indicators that announced its cancellation also informed me "Light Refreshments available" and that "First Class is at the FRONT" of the nonexistent train.) When another southbound train showed up, five minutes late, it had been shorn of Virgin colours. Mark Smith says the franchise system, which saw the innovators replaced on the cross-country line, is soundly based.

"You test the market and reap the benefits for the taxpayer. It's all based on reletting a contract: just as a company would relet its window cleaning contract. They wouldn't stay with the same people for the next 50 years – they'd test the market every so often. That's what the Government does."

Or, as in the case of National Express, the franchisee may say it cannot sustain the contract. In 2007, the transport giant said it would pay half a million pounds a day, every day for seven years, for the right to charge travellers between London and Newcastle a standard-class fare of £266 return. The company soon found that the number of people prepared to pay such fares was dwindling; although passenger numbers are largely unchanged, we travellers are becoming cannier at finding bargains. Britain has some of the most expensive train tickets in Europe, but we also undoubtedly have the cheapest for anyone able to book well ahead and travel off-peak.

Commuters from Oxford have arguably the best links to the capital of any city in Britain. Besides a half-hourly train service to Paddington, they can choose from two competing bus operators, both offering free Wi-Fi. Several train operators now provide internet access – and Mark Smith says that the ability to use a laptop can be decisive for people choosing trains over planes and automobiles: "French Railways are saying the opportunity to plug in a laptop helps them maintain 50 per cent of the market between Perpignan and Paris, which takes about five hours by train; five hours of billable work to your client is not to be sniffed at. If you spent three or four hours struggling through the airport, you'd probably get nothing done."

***

There is no such train as the Adlestrop Ambler, not least because the station on the Oxfordshire-Gloucestershire border at which Edward Thomas's express paused "unwontedly" and allowed him to savour the "willows, willow-herb, and grass/And meadowsweet, and haycocks dry", closed in 1966. The nearest equivalent is the departure that meanders down from Moreton-in-Marsh, pausing wontedly at Oxford at 4.47pm (where I boarded) before continuing to Didcot Parkway. For a sleepy, rural service this three-coach train performed a remarkable trick: on a 10-mile journey, it managed to arrive five minutes ahead of schedule.

Britain's train operators have long known that the easiest way to improve punctuality is to extend scheduled journey times; the only time that counts for the purposes of First Great Western's scorecard is the arrival time at Didcot. Five minutes of "padding" allows for mild disruption and minimises the chances of financial penalties. Twenty years ago, services from Paddington to Reading were scheduled to take 22 minutes; now the very same trains, on the same tracks, take 25 minutes.

No complaints about my short hop to Reading – except that it arrived at exactly the same time as a train to London Waterloo was scheduled to depart. Competing train operators seem to have no interest in easy connections: each morning, if things go according to schedule, the first train from King's Cross to Grantham pulls up at the same instant, 7.10am, that the service to Nottingham departs from the adjoining platform. In other countries this would be a connection; here it's a challenge that only the fit and reckless would undertake. But, says Our Man in Seat 61, this is unmistakably the age of the train.

"I've seen a massive increase in visitors, from about 100,000 a month to over 600,000 a month in the space of three or four years. When I started, people were telling me that they were afraid of flying, or they specifically liked train travel. Now they're telling me two things in the same breath: they're telling me that they want to cut their carbon footprint and they're telling me that they're fed up with the sheer hassle of flying. The world is almost turning on its head; it's poor people who have no alternative who are herded on to budget airlines and the more affluent people who sit back with a glass on red on a high-speed train, travelling at leisure down to the south of France."

***

"This is Earley", claimed the mechanical voice as we approached the first stop from Reading. And he was right. The train arrived early at Earley, and even departed Earley early – South West Trains has a policy of dispatching trains half a minute ahead of schedule. Later in the journey, which revealed just how much placid countryside survives in the Home Counties, a rainbow balanced itself over Longcross – a station that looks positively tropical by the way that the bracken has invaded the platform. Clapham Junction, the busiest station in Europe, is the heart of our railway jungle. I found my way to platform 12 for the last leg, and final train operator: Southern, to Victoria, to complete my long and winding trip from London NW1 to SW1.

The train arrived late and actually managed to double the scheduled journey time to the terminus. It even suffered the ignominious fate of being overtaken by the Gatwick Express, dressed up these days like an Emirates plane (the Dubai airline sponsors it). As travellers tutted and complained into their mobile phones, I realised that the belief "We don't much like trains, because they're late" is hopelessly wrong. In fact, trains are late because we like them so much. The main line from Brighton via Gatwick to London, created by visionary Victorians, can barely cope with the demand by 21st century people for fast, safe travel.

No one makes do and muddles through quite like the British; today's railways, in fact, constitute a remarkable story of extracting the maximum benefit from minimum investment. And I noted the wisdom of the advice that is attached to every email sent out by Mark Smith, the polite and sophisticated Man in Seat 61: "Never travel without a corkscrew and a good book."

World's worst services: The night train to Basra
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Whenever you feel depressed about the state of the railways in Britain, just turn to the latest 'Thomas Cook Overseas Timetable'. The new edition is a bargain at £13.99, the Bible for terrestrial travellers beyond the bounds of Europe. But the tireless compilers have their work cut out to promote travel by train when so many nations appear to be doing their best to dismantle the railways.

From Cuba, an eyewitness tells Messrs Cook that in June Train 3 on the main line from Heathrow to Santiago departed six hours late, and took 31 hours to find its way to the island's second city. The main expresses, says the editor, "are now running every third day instead of every other day", before adding plaintively: "Unfortunately we do not know which days these are."

Passengers in Zimbabwe are having to suffer even more than usual because "Zimbabwe Railways have reduced the days of running of all their services; even those trains that ran three times a week have been reduced to two." In Pakistan, "several services are now running weekdays only instead of daily", apparently in an effort to save fuel.

In Costa Rica, the compilers note that the only long-distance train has "irregular" operations and that it "requires [a] minimum number of passengers to run – actual number unknown".

But there is one glimmer of hope in an unlikely location: "We have had a report that there is now a night train between Baghdad and Basra. It apparently leaves three times a week (which days are unknown) at 1600 and takes 18 hours with no stops en route."

Nationalising the East Coast rail line's a golden opportunity

Daily Mirror: 8/07/2009
By Kevin Maguire

Nationalising the East Coast rail line's a golden opportunity to put the train set back together.

National Express dumped lossmaking routes between London, Leeds, Newcastle and Aberdeen on taxpayers to save itself money.

A company interested in a fast buck instead of high-speed services deserves to be stripped of its two profitable franchises in East Anglia.

And a new publicly-owned operator, Rail UK, created to provide cheaper travel.

Track and stations are already held at arm's length by the Government in Network Rail after the Railtrack disaster.

Ruk could force private firms to raise their game or be nationalised. Beating up the rail network was Tory vandalism that Labour failed to fix.

July 6, 2009

Campaign to restore north-south railway in Wales

Radnorshire County Times: 06 July 2009
By Richard Jones

A CAMPAIGN group in North Wales is fighting for a direct rail link from Holyhead to Cardiff.

Welsh community action group, Yn Ein Blaenau, wants to link North, Mid and South Wales together with a railway through Bangor, Rhyl, Ruthin, Llangollen, Welshpool, Newtown, Llanidloes and Brecon.

Yn Ein Blaenau sees the proposal as a vital to the regeneration and employment prospects of Welsh towns.

The plan is being backed by Llandrindod Wells-born Plaid Cymru candidate, Colin Nosworthy, and has been endorsed by leading environmentalist George Monbiot and the Wales Trades Unions Congress.

George Monbiot explains: "The greenest nation in the UK is locked into unsustainability. It is also bleeding ridiculous. As far as I can discover, this is the only country in Europe which you cannot traverse by rail without spending most of the journey passing through another.
"The only rail link which allows you to travel from north to south crosses the border near Llangollen and doesn't re-enter Wales until it approaches Abergavenny, 100 miles away.

"The railway map of Wales is a classic indicator of an extractive economy. The lines extend either towards London or towards the ports. As Eduardo Galeano established in The Open Veins of Latin America, the infrastructure of a country is a guide to the purpose of its development.

"If the main roads and railways form a network, linking the regions and the settlements within the regions, they are likely to have been developed to enhance internal commerce and mobility.

"Like Latin America, Wales is poor because it was so rich. Its abundant natural resources gave rise to an extractive system, designed to leave as little wealth behind as possible.

"Just as the railway network was developed largely for the benefit of another economy, it was dismantled for the same purpose. Wales was hit very hard by the Beeching cuts of the 1960s.

"Before Beeching, a handful of minor routes existed, which could have enabled a determined passenger who was prepared to make a few changes to travel from north to south, but there was no line either conceived or used as a long distance railway connecting the nation.

"Could such a railway be built? Thanks to the efforts of a remarkable man, the idea is beginning to seep into the national consciousness.

"Archimandrite Deiniol is the only Orthodox priest serving in North Wales. Bull-headed, magnificently bearded, he is the spokesman for Yn Ein Blaenau, a group set up to lobby for the regeneration of Blaenau Ffestiniog.

"There are plenty of lobbyists calling for new roads, but Father Deiniol's plan is likely to be cheaper and more sustainable.

"His survey of the disused railway lines of Wales shows that there is one route – from Rhyl through Denbigh, Rhuthun, Corwen, Newtown, Llanidloes, Rhayader and Builth Road to Dowlais – which would require only two miles of new formation to link Holyhead to Cardiff.

"The One-Wales Line would also knit the other railways of Wales into a coherent network, as it uses the north coast railway and crosses the Cambrian line and the Shrewsbury to Swansea line.

"The least the Welsh Assembly Government should do is to commission a feasibility study and cost-benefit analysis of Father Deiniol's plan. His railway would help Wales looks like a country again, rather than a depot for someone else's empire."

July 5, 2009

Have we reached the end of the line for privatisation?

The Observer: 5 July 2009
Richard Wachman and Tim Webb

First it was the banks, now the government is taking over a key rail service. But it may not be enough to reverse the process begun by Thatcher. By Richard Wachman and Tim Webb
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A train on the National Express east coast mainline service at Kings Cross, the franchise the firm has handed back to the government. Photograph: Luke Macgregor/Reuters

Nationalisation used to be a dirty word, but now it's back in vogue. The government's move last week to nationalise the east coast rail franchise comes in the wake of the state's takeover of parts of the UK banking system, all of which has raised fundamental questions about the success of market-driven capitalism.

That may seem strange given that over the past quarter of a century, it has been a one-way street with the transfer of assets from the public to private sector, a process that was the centrepiece of Margaret Thatcher's governments in the 1980s.

For years, no one questioned the prevailing orthodoxy that the running of companies was best left to the market and that managers would perform better if they were answerable to shareholders rather than civil servants.

"The British people have given up on socialism," Thatcher proclaimed on the eve of her first general election victory in May 1979. People forget it today, but Thatcher was very much a creature of her time. She came to power after large sections of the public lost faith in the state's ability to run businesses - the failure of British Leyland, the government-controlled car manufacturer, was a case in point.
Mixed fortunes - privatisation

According to one veteran of the privatisation of BT in 1984, "Mrs Thatcher embodied a backlash against the state that seemed entirely plausible at that moment. It was said that if companies were left in the public arena, they would be starved of capital and would fail to innovate."

Thatcher's supporters argued then, as they do today, that firms controlled by Whitehall would have to compete for capital with other public sector bodies - for instance, education and the national health service - and that many would sink to the bottom of the pile.

Many privatisations were a roaring success. BT, for example, offered discounted shares to the public during a period when the company was almost universally reviled for its shoddy service and inefficiency.

But since the collapse of the banking system and the state rescue of capitalism itself by government and central banks, the wind is blowing from a different direction.

That doesn't mean that British industry is about to undergo wholesale nationalisation, but many believe that the pendulum has swung too far the other way. Blind faith in global market forces over three decades is viewed as just as short-sighted and dangerous (more so, it seems) as over-dependence on the discredited socialist ideologies that played out in the 1970s.

Mike Kenny at thinktank the IPPR believes that "we shouldn't make a virtue out of either privatisation or nationalisation". He says: "Why does it have to be one or the other? We should look at different ownership models for different industries and decide which one is appropriate on a case-by-case basis."

Richard Reeves at the Demos thinktank says: "We need an agnostic approach to ownership and our thinking needs to be more eclectic and imaginative." Royal Mail, he adds, could become a showcase for employee-share ownership in the same mould as John Lewis, the department store chain.

A senior banker who worked on 1980s privatisations said it was becoming clear that the arguments over privatisation and nationalisation had become "extremely blurred at the edges".

In his view, some things are better produced by government: universal healthcare, defence, justice and policing being the most obvious. But the question of whether the railways had a role in the private sector was open to debate. Other activities were best left to private companies, he says.

But Neil Lawson at Compass, the centre-left pressure group, believes the state must play a much wider role in society than in recent years. He asks: "Are we really saying that we can let the railways fail, the banks collapse or electricity supplies break down? It's poppycock to think that the state should sit on the sidelines."

Jonathan Fenby, of investment research group Trusted Sources, says: "You can close down a company but you cannot close down a rail system. Many industries are so big and important that long-term, central planning is essential."

Different countries have different priorities. In China, for example, social, political and strategic issues play a part in many aspects of public life.

But in Britain, the picture is more complicated, as there is less consensus about what constitutes the public good.

City bankers like Oliver Hemsley at Numis Securities have argued that banks such as RBS should have been allowed to fail and that fitter, leaner rivals such as HSBC and Barclays should have been encouraged to mop up the pieces.

Piers Pottinger, a City public relations executive who steered the privatisations of British Airways and Thames Water, says: "If the state controlled more of our industry, we would be even more indebted as a nation and the public finances would be in a worse state."

It's easy to forget the past, he says. "Although BA today faces severe financial and commercial pressure, for years it was viewed as one of the triumphs of Mrs Thatcher's privatisation programme."

The late Lord King, former head of the airline, was applauded for dramatically improving BA's financial performance and service both prior to privatisation, and after. "It really was the world's favourite airline and everyone loved it. Even the Americans would insist on flying BA, so good was its reputation," says Pottinger.

Evaluating BA's success as a private company would seem to depend on where we are in the economic cycle, but it is a mixed record for other firms taken out of public ownership.

Railtrack was effectively nationalised in 2001 amid safety concerns. But there was also a view that its share price was being propped up by an implicit guarantee that the state wouldn't allow the company to fail - whatever the financial mess it got itself into.

The privatisation of British Gas brought choice and competition into the market, driving down prices for a while, but tariffs have surged in tandem with a rising oil price.

Water companies have invested heavily in modernising a crumbling Victorian infrastructure, inherited from the state, but the cost has been rising prices for customers, despite protests from consumer bodies.

The break-up and privatisation of the old central electricity generating board and supply companies made the new groups sitting ducks for larger and - paradoxically -state-controlled enterprises from France and Germany.

Britain's once mighty, nationalised coal industry is a shadow of its former self, hammered by foreign competition and pressure from environmentalists. British Steel has been acquired by Tata of India as manufacturing has shifted east. Banking has fared worst of all. Although former building societies such as Halifax, Northern Rock and Bradford & Bingley were owned by their members, rather than the government, their decision to ditch mutuality in favour of stockmarket listings has proved disastrous.

Every major building society that converted in the 1990s has been poleaxed by the credit crunch, prompting government intervention or rescue takeovers by more robust competitors.

True, financial failure isn't the preserve of the private sector, as recent troubles at building societies Dunfermline and West Bromwich have illustrated, but that is where the roots of the current crisis lie.

As the financial crisis rumbles on, however, it is privatisation of the railways, tainted by the humiliating demise of Railtrack, that has proved one of the most controversial.

The government's decision last week to nationalise National Express's east coast rail franchise has reopened the debate over why the train operating companies should remain in private hands. Several other operators are said to be struggling to meet franchise payments, and could suffer the same fate as National Express.

The franchising system has faced criticism for blunting the inventiveness and enterprise that the private sector was expected to bring to the industry.

Many view the system as a cloak to conceal how the department of transport can raise money from train operators to offset the huge bills it faces to fund Network Rail, the infrastructure owner.

Nationalising a major route such as east coast makes it harder for government to shift funding from the taxpayer to the user.

Now the question is whether the role of the private sector in the provision of public services will get bigger or smaller. The answer depends in large part on political persuasion.

Conservatives say the government's borrowing binge and need to balance the books mean that departments and local government will be under pressure to cut costs and raise cash from asset sales. Outsourcing and the use of PFIs will increase, they say.

But in the Labour heartlands, there is quiet satisfaction that business secretary Lord Mandelson has shelved plans to part-privatise Royal Mail. Writing in the Guardian, Labour MP Jon Cruddas said: "For Royal Mail, why not try a not-for-profit enterprise that lets in private-sector management and funding but locks out private shareholders who are only interested in the profits they can squeeze out of postal deliveries?"

But David Freud, the City author and former SG Warburg banker, thinks that keeping Royal Mail in the public sector is a mistake. "Look at Holland and Germany, which have privatised their mail businesses and now have leading positions in international logistics," he says.

No one can know for sure who will win the debate about the future shape of capitalism that is now raging. But in a recent defence of finance capitalism, Raghuram Rajan and Luigi Zingales conceded that free markets are vulnerable to attack in downturns because they rest on fragile foundations, depending on the goodwill of politicians for their existence.

The extent of their vulnerability, though, will depend on the severity of the downturn and the political persuasion of the next government.

But no one should be under any illusion that the world has changed a great deal since Margaret Thatcher left Downing Street 20 years ago. Nationalisation, raising taxes and Keynesian economics are back in fashion. And many of the virtues that she claimed for the market place have been shattered by the greed and stupidity of bankers, and the short-sightedness of politicians on both sides of the divide.

Bolivia points to energy and rail nationalisation

AFP: 5 July 2009
Bolivia President Evo Morales.jpeg
LA PAZ — Bolivian President Evo Morales on Saturday hinted that parts of the country's energy and rail sectors, currently backed by foreign capital, could soon be nationalized.

"It is true we have not fulfilled all our promises, we still have railways and we still have energy," Morales said in reference to vows of nationalizing the industries.

The leftist leader indicated the government did not have enough money to allow nationalization to take place immediately, but hinted a move in that direction might be in the offing.

"There will be surprises... I don't want to announce anything yet, I am not sleeping, sometimes it is just about counting the money."

Bolivia's electricity sector, thought to be the target of Morales' comments, is dominated by Spanish firms Iberdrola and Red Electrica, French firm GDF Suez and Britain's Rurelec.

Since taking office in 2006, Morales has nationalized firms in the hydrocarbon, mining and telecommunication sectors.

July 4, 2009

Privatisation has been a train wreck

Guardian: 2 July 2009
Ken Livingstone

With National Express abandoning a franchise, the system is bankrupt. Railway nationalisation is the only rational solution

The temporary nationalisation of the east coast mainline service should be another nail in the coffin of the privatisation of the railways. It shows once again what a bad deal for taxpayers the privatisation of the railways has turned out to be.

The government says it plans to return the franchise as quickly as possible to a private contractor, but it should instead take the opportunity to retain the line in public hands. Following, as it does, the fiasco of Railtrack, which brought the national rail network to the brink of collapse in 2002, and the collapse of Metronet, in charge of two thirds of the misguided public private partnership (PPP) on the tube, this is the right time to plan returning the entire national rail network to public ownership. If the government tossed aside the ideological blinkers of the Treasury and got that message, they would do themselves a great deal of good among passengers and taxpayers alike.

It is a complete con for the National Express group to walk away from the contract, leaving a gap in the national rail budget, forcing the state to bear the cost while the service is re-franchised – possibly at a lower value than the National Express contract – but insisting on its right to continue to operate other franchises unscathed. National Express says it has received "clear and detailed" legal advice that it does not have to hand back its London to Essex franchise and East Anglia routes. So it wants to run away from a problem on one line and let the rest of us pick up the pieces, while continuing to make profits from other lines.

The attempt of National Express to avoid any consequences for their other franchises from their abandonment of the east coast service is just another example of the privateers trying to take the public sector for a ride. As Lord Adonis says, "It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."

Time and again, we have seen the nationalisation of losses and the privatisation of profits. It's also the latest demonstration that it is a fairy tale that privatisation means the private sector takes the risk as well as taking its profit. In truth, every time a privatisation of a vital public service fails, the public sector picks up the tab. This culture of parts of the private sector fleecing the taxpayer has to stop.

Part of the problem is that civil servants are taken to the cleaners in the construction of the privatisation contracts by the private companies' sharper legal teams. One of the rationales for the tube's PPP was that it made no sense to hand billions of pounds of public money for tube upgrades over to London Underground management and civil servants who had such a poor record of delivering. Yet, these same civil servants were left to draw up the detail of the PPP contracts. They were completely turned over by the private sector.

But the real issue is that it is inherently wasteful to run these services on privatised lines. The nature of the privatising companies is that a significant proportion of the profits of their activities have to be paid in dividends to shareholders rather than reinvested in the service. This is money wasted. A publicly-owned company would be obliged to reinvest any revenues back into the transport system.

Furthermore, privatisation is justified on the grounds that the private sector is driven, through the rigour of competition, to be more efficient and more responsive to passengers' needs. This is a fiction in the case of a natural monopoly like a railway. Apart from the brief period of competition among bidders for contracts, there is no day-to-day competition at all – no one is going to build a rival railway line and poach passengers from the private franchisee. They are under no pressure from any competition at all. In such circumstances, it is more rational, and makes more sense in terms of sustaining investment, for rail services to be publicly-owned.

Nor is it the case that public ownership of the rail network naturally has to involve poorer management than the private sector. There are many publicly-owned rail companies all over the world that provide services that British transport users can only envy. The task is to build up good quality management, including the best management from around the world, overseeing real investment that meets the needs of rail travellers.

It shouldn't just be the east coast service that's nationalised and it shouldn't just be temporary. Ultimately, the rail network would be more rationally run in the public sector.

Focus turns to rail franchise system

Financial Times: July 2 2009
By Robert Wright, Transport Correspondent

The collapse of National Express's contract to run the InterCity East Coast franchise is the latest blow to a rail franchising system that has come under increasing criticism from passenger advocates, regulators and, recently, the train operating industry.

The set-up has faced regular criticism for stifling the inventiveness and enterprise that the private sector was expected to bring to the rail industry. Operators are set strict rules by the Department for Transport about how they must operate, with their freedom of action mainly restricted to deciding where to make savings in order to meet the large payments promised to the department to win the franchise.

Many outsiders see the franchising system as a means by which the department can raise money from train operators to offset the huge bills it faces to fund Network Rail, the infrastructure owner. But it may no longer work even as a revenue-raising tool.

The department will now not only forgo most of the £1.4bn it had been pledged over eight years by National Express for the east coast franchise, but also looks unlikely to receive the large sums it had been promised by some other companies.

Both Stagecoach, due to pay £1.2bn to the government over the 10-year life of the South West Trains franchise, and FirstGroup, due to pay £1.13bn over the life of its Great Western franchise, look set to be protected by contract clauses reducing the amount they pay if revenue falls short of expectations.

The likely shortfalls will make it harder for the government to complete the comprehensive shift it had planned in the funding of the rail industry from taxpayers to users. Under plans announced by Ruth Kelly, then transport secretary, in 2007 , the government hoped to cut public funding to 25 per cent of costs by 2014, against 50 per cent in recent years. By 2014, that would represent an annual saving of £1.5bn.

Given the long list of problems, train operators have since May been demanding a serious rethink of the franchising system. Virgin Trains, holder of the West Coast InterCity franchise, yesterday added to those calls.

Yesterday, Lord Adonis, transport secretary, pledged to investigate whether future franchises should be longer. Such contracts might give operators greater incentives to invest and would allow them longer to recover from set-backs, such as the current economic downturn.

Yet Lord Adonis insists there is nothing fundamentally wrong with the system. Less than two months ago, while still a rail minister, he vigorously defended the department's increasing tendency to intervene in the minutiae of operators' businesses - a big bugbear for the industry. "The rail franchise market is vibrant," he said, pointing to the competition, completed last month, for the south central commuter rail franchise .

Such a view could continue to be tenable as long as National Express remains the only big train operator facing severe problems - as looks likely at present. But if others start to run into trouble, the system might start to look accident-prone, particularly since GNER, National Express's predecessor on the east coast, also had to withdraw after making an unrealistic bid.

One senior rail industry figure insists a wider rethink is needed. "It should be more of a sophisticated procurement process that prevents a recurrence of the National Express and GNER problems," said the insider. "We should test bids' deliverability, rather than it just being wishful thinking and blind optimism."

July 3, 2009

EU Commission approves proposed acquisition of the Polish logistics operations of PCC SE by Deutsche Bahn

Linex Legal: Jul 3, 2009‎

European Commission - The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Polish logistics operations of PCC SE of Germany by German rail company Deutsche Bahn AG (DB).

The Commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.


See aslo:


Mergers: Commission approves proposed acquisition of the Polish logistics operations of PCC SE by Deutsche Bahn

Brussels: 12 th June 2009
IP/09/915

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Polish logistics operations of PCC SE of Germany by German rail company Deutsche Bahn AG (DB). The Commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

DB is the German state-owned railroad company active in, inter alia , passenger transport, freight forwarding and logistics (including freight transport) as well as ancillary services.

PCC SE 's logistics activities in Poland are mainly conducted through the Polish companies PCC RAIL S.A., PCC Rail Rybnik S.A. and Trawipol Sp. z o.o (PCC Logistics). These operations cover in particular railway activities, including train haulage/sidings, terminal and fleet management and freight forwarding, port services and sand mining.

The transaction concerns mainly rail freight services in Poland, Germany and cross-border traffic between these two countries. These markets, notwithstanding the full liberalisation of rail freight transport in the EU since 2007, are still characterised by limited competition and strong national incumbents.

In the national Polish rail freight transport market the state-owned incumbent Polish National Railways (PKP) is by far the most significant player. DB is not active in this market and only provides cross-border traffic mainly in cooperation with PKP. PCC Logistics, which is almost exclusively active in the Polish market, has only very limited market shares compared to PKP. The transaction would not lead to an increased market share for PCC in the rail freight transport market. The Commission's investigation found that the merged entity might be even better suited to increase competition in the Polish rail freight transport market and be able to provide seamless cross-border transport for its customers.

Concerning the markets for freight forwarding and other logistics services, both parties only have overlaps in the Polish market with only limited market share. Even after the transaction, the freight forwarding markets would remain fragmented with strong competitors.

More information on this case will be available at:

http://ec.europa.eu/competition/mergers/cases/index/m109.html#m_5480

Czech long-haul passenger rail opening to competition

Thomson Reuters: 07.03.09
Reporting by Jason Hovet; Editing by Hans Peters

PRAGUE - The Czech Transport Ministry unveiled plans on Friday to open up three-quarters of the country's long-haul passenger rail capacity to competition over the next decade.

A shift to open tenders for capacity would come gradually, the ministry said in a statement, though winning bidders would get 10 to 15-year operating contracts.

The move would cut back dependence on the dominant operator, the loss-making state-owned Czech Railways. Some regional links have already been opened to competition.

'We are considering offering 5 to 15 percent of operating capacity each year,' Transport Minister Gustav Slamecka said.

More than 184 million passengers travelled on Czech rails in 2007, with Czech Railways transporting 182 million of those.

The company, though, has showed operating losses in the tens of millions of dollars in each of the recent years.

Local media have reported that Czech group Student Agency, Veolia Transport and Arriva could be among interested operators.


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75 % of CR's rail transport to open to rivals in 10yrs - ministry

Prague Daily Monitor: 7 July 2009

Prague, July 3 (CTK) - The Transport Ministry wants to open 75 percent of long-distance rail transport in the Czech Republic to rival companies within 10 years, according to the ministry's materials made available to CTK.

All express trains running at an order of the Transport Ministry are now operated by national rail operator Ceske drahy. Last year, the ministry paid Kc3.3bn for their operation.

The ministry wants to portion out the passenger rail network into clusters of lines and declare a tender for 5 to 15 percent of services on rail tracks every year. Each tender will involve around three routes.

It will then sign a long-term contract for 10 to 14 years with the winner of the tender. A key condition should allegedly be an increase in the quality of trains and passenger comfort.

The ministry has not made public the date of the nearest tender yet, but Transport Minister Gustav Slamecka said it will do so next year.

The first private express train should appear on Czech rail tracks in 2012 as transport companies reportedly need sufficient amount of time to secure trains.

"We are becoming one of the most liberal countries in Europe. We have chosen the system in such a way so that it does not liquidate Ceske drahy, but forces them to transform," Slamecka told reporters today.

Ceske drahy head Petr Zaluda said the national rail operator has no reason to fear tenders.

"I do not expect we would lose a large share of the market," Zaluda said, but admitted that the liberalisation which the ministry reckons with in its plan is faster than in other countries.

Radim Jancura, the owner of transport company Student Agency (SA) which has been seeking to enter the market for long-distance rail transport for a long time, said the ministry's decision is a victory for all tax payers and passengers.

"It is related to our binding offer to take over half of long-distance tracks in the Czech Republic," Jancura said.

SA has promised new trains and lower fares in its offer. It will also want less money from the state than is now received by Ceske drahy.

Express trains are ordered on Czech rail tracks by the Transport Ministry. This year, Ceske drahy will receive Kc3.8bn for them.

According to available information, the Czech Republic will be an exception in Europe as governments in a large majority of European countries allow rivals to operate only regional trains and maintain monopoly of the national operator in the nation-wide rail system.

The European Union does not require extensive liberalisation, either. Private express trains probably operate only in Great Britain and Sweden.

Slamecka also said today that the number of rail lines in regions should drop by around 12 percent next year.

The reason for the decrease is the loss which regional rail transport sustains every year and lack of money for subsidising it. Regional authorities paid Kc4.7bn for regional rail transport last year, but the loss amounted to Kc3.2bn.

Reputations on line as Japan pulls out stops to win rail contracts

The Times: July 3, 2009
Leo Lewis, Asia Business Correspondent

A global boom in infrastructure projects worth more than £200 billion has prompted Japan to launch its most expansive charm offensive in the international game of railway diplomacy.

From Washington to Ho Chi Minh City, via Delhi and Dubai, Japan has embarked on an unprecedented frenzy of salesmanship. Huge delegations representing businesses and the Government have begun circulating the world’s capitals pitching for any railway projects where Japan thinks it stands a chance of winning the bid.

In its desperation to win, say analysts in Tokyo, Japan is playing one of its favourite cards — huge overseas development aid (ODA) and generously termed loans — with the tacit expectation that those nations accepting them will “buy Japanese” when selecting their train maker. Recent examples have included extending a $5 billion (£3 billion) loan to India for rail upgrades and making a surprise offer to Moscow to help to finance the rebuilding of the Trans-Siberian railway.

In India, particularly, the stakes are high. The recently completed second- phase sections of the Delhi Metro are expected to form the template for similar mass-transit networks in other large cities in future.

Japan’s diplomatic gambit is not restricted to railways. The Government last week offered cheap funding to electricity groups in Australia and the US for the construction of clean-coal generators, with the clear proviso that the technology and equipment used for the projects be Japanese.

A spokesman for Kawasaki Heavy Industries (KHI), the train-making conglomerate, agreed the number of projects financed by ODA and by the Japan Bank for International Co-operation was increasing. The ones funded by Japanese ODA, he said, were particularly interesting because only Japanese companies are invited to bid.

If Japan does not win these contracts now, its reputation as a builder of high-speed trains may be destroyed, runs the official logic in Tokyo. France and Germany have always been fierce rivals but the field has also been joined by South Korea and China for this latest round of massive project tenders.

With projects valued at a combined $100 billion, the Middle East is viewed as potentially the next most lucrative battleground, as the region’s oil states turn their attention away from the combustion engine for public transport amid surging urban populations. The first line of the Dubai Metro opens later this year, while Saudi Arabia, Qatar, Abu Dhabi and others are looking at building substantial rail networks to extend their existing routes. Japanese companies have a strong foothold and are involved in a number of monorail and commuter links. But China, already emerging as a strong player in the region, has made its competitive presence felt, winning the contract to build a monorail in Mecca.

Meanwhile, the Japanese efforts are being stepped up. A 25-man team, consisting of bureaucrats from the Ministry of Economy, Trade and Industry (METI) and executives from KHI, Toshiba, Mitsubishi Heavy Industries and Mitsui, recently returned to Tokyo from Brazil, where they were touting Japan’s ability to build a $15 billion, 500km rail link between São Paulo and Rio. Earlier this week, Yoshiyuki Kasai, the chairman of Central Japan Railway, travelled to Washington to add his weight to company efforts to win contracts to build a new high-speed network in America. If successful, the pickings could be spectacular: the Obama Administration recently promised a $13 billion investment in such a network.

Central to Mr Kasai’s pitch was the promised speed of the trains. In his case, the favoured machine would be the N700, designed to start making the iconic Tokyo-Osaka run at 330km/h later this year. Before those grand assurances were made, some had begun to question whether Japanese bullet trains, despite their reputation, would be fast enough to satisfy potential buyers. A pace of 300km/h is emerging as the minimum requirement of nations planning their first high-speed rail routes.

July 1, 2009

Freight train derails in Italy, kills 12, burns 50

Associated Press: 1 July 2009
By MARTA FALCONI

VIAREGGIO, Italy (AP) — A freight train carrying gas derailed and exploded in the midst of a small Tuscan town, setting off a fire that killed at least 12 people — many as they slept in their homes — and injured at least 50, Italian officials said Tuesday.

The 14-car train was traveling from the northern city of La Spezia to Pisa when a car derailed while traveling through a residential neighborhood beside the train station in the Tuscan seaside town of Viareggio just before midnight Monday.

A train car filled with liquefied petroleum gas, or LPG, sprang a leak, causing an explosion that collapsed five buildings and set fire to a vast area. Homes crumbled or burned, killing residents as they slept.

The exact death toll was unclear as hundreds of rescuers searched through the rubble for survivors.

Guido Bertolaso, the chief of the Civil Protection Department, told reporters at the scene that 12 people had been killed, the ANSA and Apcom news agencies said. He said four people were missing.

Gennaro Tornatore, a spokesman for the firefighters, said 15 people had died, while an official with the hospital in Viareggio, Stefano Pasquinucci, said the death toll stood at 16.

Many of the injured suffered severe burns.

"We saw a ball of fire rising up to the sky," said witness Gianfranco Bini, who lives in a building overlooking the station. "We heard three big rumbles, like bombs. It looked like war had broken out."

His son, Gianni Bini, said he saw a truck driver running away on fire.

"This truck was passing by ... when it was hit by the heat wave and I saw the driver ablaze, getting off and walking away," he said.

Videos uploaded onto YouTube showed a huge plume of fire and smoke towering above Viareggio's low houses. An inferno raged through the night, consuming buildings and cars, while the sound of sirens and explosions pierced the air. TV images showed residents, their bodies blackened by the smoke, being carried away on stretchers.

Pope Benedict XVI expressed his "participation in the pain striking the whole town" and said in a telegram of condolences he was praying for the victims.

Bertolaso called the accident one of Italy's worst railway tragedies. Premier Silvio Berlusconi, who was in Naples for a businessmen meeting, said he would go to Viareggio later Tuesday to take control of the situation.

It was the deadliest train accident since January 2005, when 17 people were killed in a head-on collision between a passenger train and a freight train. The collision occurred in thick fog on a single track line near Bologna in northern Italy, and led to calls for improved train safety.

In Monday's overnight derailment, 10 buildings and dozens of cars were at least partially burned, firefighters said.

Officials said the death toll might increase as 300 firefighters and other rescue teams searched through the rubble.

The city of Lucca's top government official, Prefect Carmelo Aronica, told Italy's RAI state TV that at least 50 people were injured, with 35 hospitalized with severe burns. The ANSA news agency reported that three children were pulled alive from the rubble of their collapsed home shortly before daybreak Tuesday.

About 1,000 people were evacuated from their homes as a precaution, said Viareggio Mayor Luca Lunardini. Tents were set up around the town hall for about 200 people.

As the firefighters worked to contain the blaze, teams specialized in dealing with nuclear, biological and chemical threats were being brought in to prevent the other gas tanks from exploding. Officials said the fire was contained after several hours, but a smell of burning hung in the air.

Some of the victims, including a child, were killed in their homes, said Raffaele Gargiulo, a police spokesman for the nearby city of Lucca, which is in charge of Viareggio. Two drivers on the road alongside the tracks were also killed.

Others suffered severe burns and died at the hospital.

"The condition of the bodies is such that it will be very difficult to identify them," Gargiulo said.

Italy's state-run railways company said the first rail car was registered with the Polish company PKP, while the other 13 cars were registered with the Deutsche Bahn, the German railways. The cars were driven by a locomotive of the Italian railways Trenitalia.

The statement said the first car appeared to derail and explode, pulling another four cars with it. The cause was not immediately clear. However, a spokeswoman for Deutsche Bahn, speaking on condition of anonymity in line with company policy, said "there were none of our cars in the train."

GATX Rail Europe, which is based in Vienna, said it owns the rail cars. CFO Werner Mitteregger added he did not have any details on what caused the accident.

He said a company representative has been sent to Viareggio to gather information. He had no immediate comment on the state or age of the rail cars, saying they were still trying to identify them.

The train's two engineers were lightly injured. While being questioned in the hospital, they said they felt an impact some 650 feet (200 meters) outside the station, shortly before part of the train flew off the tracks, Gargiulo said.

He told The Associated Press by telephone that the derailing may have been caused by damage to the tracks or by a problem with the train's braking system.

EU Transport Commissioner Antonio Tajani called on EU countries to step up safety checks of Europe's rail transport sector, which is increasingly run by private operators.

"Now that we have liberalization we have to step up checks because previously there was national inspection systems, currently its a more wide ranging task and more difficult," Tajani said.

He said he would recommend more frequent checks than the once-in-six-year inspections currently carried out on rail cargo cars, adding that inspections should be based on how many kilometers the wagons run up.


See also


Italian train derailment death toll rises to 22

AP: 4 July 2009

ROME () — The death toll from a train explosion in Tuscany rose to 22 Friday after three injured people died in hospital, Italian officials said.

The Civil Protection said about a dozen of the injured remained in serious condition.

A train carrying liquefied gas derailed around midnight Monday in the seaside town of Viareggio, setting off a massive explosion that consumed nearby homes. Most of the victims were severely burned and only about half of the dead have been identified.

Viareggio's damaged train station partially reopened Friday. Meanwhile, Italian railways Trenitalia said it had suspended transportation of all rail cars registered with U.S. rail and marine leasing company GATX.

The Vienna-based GATX Rail Europe owns the gas cars involved in the derailment. Italian officials have blamed the disaster on the breakage of a wheel axle of one of the cars.


See also:


Italy train blast probe focuses on defective axle

Thomson Reuters: Jul 2, 2009

ROME - An Italian prosecutor investigating the explosion of a freight train which killed 18 people has opened a probe into possible manslaughter and said the buckling of one of the train's parts may have caused the disaster.

"We cannot say more because the investigation is under way," prosecutor Aldo Cicala told reporters on Thursday.

He said victims of the accident, which was triggered by the derailment and subsequent explosion of a railcar carrying liquid petroleum gas, were so badly burned that only three of them had been identified beyond doubt.

Transport Minister Altero Matteoli told parliament on Wednesday a defective axle may have caused Italy's worst rail disaster in years, though the company owning the train carriages said it saw no link between them and the accident.

Matteoli, who visited the site of the incident in the seaside town of Viareggio, said one axle on the derailed railcar, owned by a subsidiary of U.S.-based GATX Corp, was rusted.

"The one that I have seen was three-quarters consumed by rust," he told La Stampa newspaper. "How is it possible that (a few) months after an inspection it was reduced to that condition?

"We need to know whether the inspection was done correctly or if something unexpected occurred," he said.

GATX said in a statement after the accident that it did not see any connection between its wagons and the cause of the disaster, but it was collecting information.

Trenitalia, the state railway company, said on Thursday it would not use wagons supplied by GATX until the U.S. firm provided details on their components.

The Italian company which checked the railcars in March, Cima, said it had informed GATX that some of the wheels were no longer usable. The American company sent replacements, which Cima fitted.

"The repairs were carried out in full respect of the requests made by the company owning the wagons and of European Union requirements," Cima said in a statement on Wednesday.

The director of health at Versilia hospital said the death toll from the accident had risen to 18, including 3 children. Some 26 people were injured, many of them seriously.

Italy has suffered several rail accidents in recent years. In 2005, 17 people were killed when a passenger train collided with a freight train near the northern city of Bologna.

£30bn shortfall threatens rail and road plans

Guardian: 1 July 2009
Dan Milmo, transport correspondent

NXEC-hst.jpg
A National Express high speed train on the east coast main line. Photograph: Alamy

Leak reveals transport funding crisis as east coast mainline nationalised

The full scale of the funding crisis facing Britain's transport system was exposed today as the country's most expensive rail contract was nationalised, while details emerged of a potential £30bn spending gap.
Dan Milmo: how National Express lost east coast rail contract Link to this audio

A leaked industry memo seen by the Guardian warned of "looming spending cuts" on major transport projects after Department for Transport officials described the consequences of restoring order to public finances. There are now fears that major schemes could be delayed, reduced or scrapped in an expenditure freeze. They include:

• The £16bn Crossrail scheme linking Heathrow airport to Canary Wharf and Essex, which could be delayed.

• A £6bn road building programme including the extension of the hard shoulder on Britain's motorways, which could be cut.

• A proposed high-speed rail route could be pushed back by a decade.

• The rail fare cap of inflation plus 1% could be lifted, raising fares.

The DfT's financial constraints were exacerbated as National Express announced it will hand back its £1.4bn east coast contract at the end of the year, the second time in three years that a company has bid more than £1bn for the route and then quit after admitting that it could not afford it. GNER gave up its £1.3bn contract in 2006, only for National Express to place a higher bid less than a year later.

The east coast withdrawal marked a new low in the tense relationship between struggling train operators, who are battling to honour expensive contracts signed before the recession, and the transport secretary, Lord Adonis. He warned that National Express would be barred from the rail market amid uproar that the company was preparing to avoid fulfilling its £1.4bn pledge.

"It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging," he said. The heavily indebted group also rejected claims by Adonis that it had financial problems and that they had contributed to the sudden departure of its chief executive, Richard Bowker, who shocked colleagues with his resignation shortly before announcement.

It also emerged that the DfT is braced for a reduction in its capital expenditure plans that could total £28.9bn over the next decade. The permanent secretary to the DfT, Robert Devereux, told a private industry conference recently that the chancellor, Alistair Darling, expected the public finances to be brought into line over the next 10 years.

In a presentation described as "very stark" by one person familiar with its contents, Devereux indicated that future growth in capital expenditure would be flat and would no longer include a 1.25% annual increase, limiting the outlay on new projects to £7.4bn per year. A transport industry memo produced after the seminar calculated that without the 1.25% escalator, the DfT would have £28.9bn less to spend than expected on new projects over the next 10 years.

The memo added: "We have been expressing concern for sometime now that spending cuts post-2010 could be significant. What was said at this meeting confirms our worst fears."

Transport experts said the constraints on capital expenditure could force the government to delay the completion of the £16bn Crossrail project, which will build twin rail tunnels under London, and also to consider road pricing as a means of funding new road schemes.

Stephen Glaister, professor of transport and infrastructure at Imperial College London, said: "Transport is always the department that tends to get the tough end of the cuts because it is capital intensive and you can do short-term cuts without the results being visible for quite a while. And that's against the picture of a growing market in road and rail. Just to stand still we have to spend a lot of money and that is looking quite unlikely."

The Office of Rail Regulation, which monitors expenditure on Britain's rail networks, has admitted that putting together the next five-year budget for the railways will be "tough" due to the state of the public finances.

There is also speculation within the industry that the £3bn-a-year rail budget will have to be propped up by an increase in rail fares above the current regulated limit of inflation plus 1%.

The DfT said the calculations in the memo referred to the department's "long-term funding guideline" and not to actual budgets, which will be set in the next comprehensive spending review.

"These calculations in no way represent final budgets for the periods referred to and therefore it would be misleading to make assumptions about future spending based on them in isolation," said a DfT spokesperson. The department added that its £6bn roads programme was "progressing".

The industry memo warned, however, that a new comprehensive spending review by a Labour or Conservative government will almost certainly target the DfT. It said: "It has historically often seemed less painful to target transport spending, rather than more 'sensitive' programmes such as health, education and social security."

There is widespread speculation within the rail industry that a legal row between the DfT and one of the largest operators, Stagecoach, is driven by the need to conserve funding within the department. Stagecoach is claiming that it is owed at least £200m from its South West Trains contract and has accused officials of behaving inconsistently over the dispute.