More Cuts to Irish Rail Feared...

[Thomas J Stamp]

From todays Irish Independent:

THE Government has dramatically withdrawn a €36m bailout for CIE that it had approved just two months ago with the aim of preventing major cuts in bus and rail services.
The Irish Independent has learned that the semi-state transport company will be told it has to either sell assets or borrow money to keep its services in operation this year.
The U-turn means that further cuts in services operated by Iarnrod Eireann and Dublin Bus are likely, with passengers also facing fare increases.
In July, Transport Minister Leo Varadkar announced a €36m cash injection to ensure that CIE remained "adequately funded for the immediate future".
However, this newspaper has learned that none of the money was ever handed over. CIE had expected to receive it in the coming weeks.
A spokesman for Mr Varadkar confirmed that the cash offer had now been withdrawn.
Selling assets and borrowing money are being explored as an interim solution to the company's cash crisis, until a new business plan is developed.
"At present, the Government is exploring alternative ways to make up the shortfall -- other than exchequer funding -- including the sale of non-core assets and new credit facilities," said Mr Varadkar.
"The company is working to develop a business plan that will allow the company to operate on a financially sustainable basis in the coming years."
Despite not yet filing its accounts for 2011, unpublished figures obtained by the Irish Independent show that Iarnrod Eireann and Dublin Bus face a loss of almost €40m because of falling passenger numbers and cuts in their state grants.
The two companies had been relying on the €36m payment to keep services running. Bus Eireann will not receive any of the money and is expected to post a modest surplus of €500,000 for 2011.
CIE said it was up to the Government to decide how the additional funding was secured.
"The means of providing the additional funding to CIE is a matter for Government," a spokesman said. "We have, in any event, been exploring the sale of assets. There are ongoing discussions with regards to the ongoing funding of the group."
Documents released under the Freedom of Information Act show that the Department of Transport is closely monitoring finances in CIE and that high-level meetings have taken place in recent months at which the company's dire financial situation was highlighted.
Passengers
CIE's state payments, called the subvention, have dropped by more than €60m since 2008, with further cuts due in the coming years.
It was paid €242m this year, with payments expected to fall to €209m by 2014.
The situation became so bad earlier this year, that Irish Rail requested early payments of its subvention for July and August because of mounting pressures.
Passengers have already been hit with fare increases this year of up to 6pc, with more expected, and Iarnrod Eireann has announced some cuts in rail services at off-peak times.
- Paul Melia
Irish Independent

http://www.independent.ie/national-n...n-3255610.html

so, off to the AIB along with Tallaght Hospital.

[Mark Gleeson]

It will likely turn out that such a cash injection was illegal under EU rules.

It does have the hallmarks of a set up, as no one seemed to have a breakdown as what the 36 million was to pay for, or how 36 million happened to be decided upon

Interestingly you will find that Irish Rail has no physical assets in either land or property to sell...

[karlr42]

This whole bailout debacle is a real mess, hopefulyl one day we'll here the real story behind it all.

As for selling assets, IE are on top of that already, selling the 2700s and 8200s and Mk3s. I don't see them being able to sell much land though, which is CIE's biggest asset, in this climate. One thing they might look at is selling old alignments to interested parties(greenway/cycling route people), if at all possible to eke some money out of that. Closing the WRC might help as well.

As for borrowing money- is that even possible in this economic climate? Borrowing that much money, not for investment, but just to keep things ticking over, seems incredible to me, and if a company is reaching that point it is in serious trouble, surely?

Shame really, if earlier this year DU had been selected as the PT scheme to fund(and not Luas BXD) things would be in a very different situation now. At this rate, the incoming CEO might not even have a job, and I might have to think of moving much closer to work.

[Thomas J Stamp]

selling the 2700's, 2600's and the Mark3 will realise diddly sqwat, scrap for the mrk3 anyway.

there are a pile of 201 locos loitering about in the back of inchcore doing nothing except worrying that they will go the way of 216 and be stripped for parts. Yes, that is a loco less than 20 years old being scrapped.

some of the 22k are owned by transport for ireland.

everything else is owned by CIE.

perhaps, after 18 months in office, the minister might get around to reading his brief.

as for borrowing money, who owns AIB but the state so its just more mathematical accounting than reality, though the irony of a state owned bank pulling an o/d to a state company is delicious. In effect it would be turned into a long term loan anyway.

[Mark Gleeson]

Scrapping the redundant fleet might net 10 million but thats a once off gain. What we need is reform of day to day

The NTA are at pains to state they own all Dublin Bus buses since the WG class, but after some inquiries they do not own any rail vehicles

[dowlingm]

They could sell the 8500s to Porto Alegre (just swap the 1.5kV transformer for a 3kV) and drag the 2700s and 8200s back into service to fill the gaps remaining after Howth and Greystones are dieselised
http://www.railwaygazette.com/news/s...2/oktober.html

[Thomas J Stamp]

TRANSPORT Minister Leo Varadkar has accused CIE of not delivering the reforms needed to reduce its costs.
Despite cutting staff and making savings of €175m since 2008, the company will not get any more state funding until it makes these reforms, he warned.
His comments came after the Irish Independent revealed earlier this week that a €36m emergency bailout for Iarnrod Eireann and Dublin Bus had been withheld, despite being promised last July.
Mr Varadkar confirmed the money was available, but would not be paid until a deal was secured with unions on changes to work practices, the sale of non-core assets went through and new lines of bank credit secured.
"There's been very little progress on many of those fronts ," he said at the launch of 80 new vehicles for Dublin Bus.
"I can't, in clear conscience, hand over additional taxpayers' money until the companies and unions do their bit, too.''
The minister said: "There's no deadline. We're not going to allow the public transport system to collapse. The €36m in additional subvention is still available but while it might solve the problem for this year, it might not solve the problem for next year. I can't have the companies coming back every three months looking for more."
Last July the Government announced a €36m cash injection into CIE.
But none of the money was handed over, and now passengers face the prospect of cuts in bus and rail services and additional fare hikes.
Both Iarnrod Eireann and Dublin Bus expect to report a loss of €40m for 2011 and are relying on the €36m payment to keep services running.
Bus Eireann will not receive any of it and is expected to post a surplus of €500,000 for 2011.
- Paul Melia
Irish Independent

plot thickens a little

[Thomas J Stamp]

From todays Irish Times

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The Irish Times - Friday, October 19, 2012
Varadkar says public transport near failing

MARIE O'HALLORAN


THE PUBLIC transport system will collapse next year unless CIÉ implements a realistic business plan, Minister for Transport Leo Varadkar has warned.
In a stark declaration to the Dáil he said €36 million was available for the transport group this year. However, if the semi-State did not make progress in its reforms there would be no money left by the middle to the end of next year to keep it operating.

“Then there will be no choice and public transport will fail.”
Mr Varadkar issued the warning as Fianna Fáil transport spokesman Timmy Dooley questioned why the Minister had withdrawn €36 million from CIÉ two months after he approved it.

Mr Varadkar has ordered the semi-State body to develop a realistic business plan, cost reductions within the group, the sale of non-core asses and the securing of new credit facilities.

Without these reforms, public transport will collapse by the end of next year, the Minister said.

This year he might be able to “take money from one pocket and put it into the other, rob Peter to pay Paul, and kick the can down the road, but I am running out of pockets and I am running out of road”.

If there was no progress on the business plan and other reforms “I will not be able to find the money to keep the companies operating by the middle to end of next year. Then there will be no choice and public transport will fail.”

Mr Dooley said the Minister was giving the company an “exceptionally short timeframe” in which to cut costs and it “could spell disaster for public transport”.

“CIÉ has cut services in rural and urban areas to balance its books and that is impacting on the company’s ability to maintain its comprehensive network.”

The Clare TD said the company already faced a deficit of €40 million this year and the only way it could be dealt with was to increase fares and reduce services.

“When the Minister was in opposition he hit out at fare increases and he was right to do so but he seems to have changed his mind.”

Mr Varadkar said he did not expect CIÉ to find €36 million by the end of the year but it had to make progress “so it does not require an additional subvention next year because I will not have it”.

He acknowledged that CIÉ was struggling with a very difficult financial situation. The Government in July approved €36 million so the companies could continue to operate until the end of 2012.

This brought the total subvention for the year to €278 million. This subvention was higher than in 2010 and “the fifth highest level of subvention ever”.

He said the €36 million had not been handed over since the announcement because “despite a lot of hard work and best efforts insufficient progress has been made to date”.

Even if the funding was provided it would only give “a very short breathing space to CIÉ”.

He said that “to the extent that I can, I will not allow public transport to collapse”.

“The money is available but it will only get the companies to the end of the year.

“I will not have enough money next year, and €36 million will not solve the problems of the company next year.”

What The Miinister is trying to get across here isnt clear at all. I am taking it that he is planning to cut the subsidy next year and that CIE must live within it 100% with no extra funding, as was the case this year.

He has actually doen an interesting thing this year, and played quite cleverly with CIE. We know they apparently ran out of money in August (mid-year) and needed an extra €36 million. He has looked and come to the conclusion that this could happen again next year but here's the thing - he hasnt handed over the €36 million yet, and CIE has managed to work away and may not need the money after all - and that is before extra cuts have been announced.

Interesting that he also says they can go to the banks next year if they want. Looks like the bluff has been called on CIE.

[karlr42]

He's just firing an opening shot in FG's war to privatise all public transport(and anything else they can manage). There is clearly some pressure on Ireland to shrink its rather large public sector.

Maybe any governments since the creation of the state invested meaningful money into creating a public transport network, and into proper planning and zoning to maximise PT usage, CIE wouldn't need bailing out. But the situation suits the current Minister for Transport and I suspect the DoT itself, who want to just wash their hands of the whole shebang and hand it over to the Veolias and Sercos of the world.

[Thomas J Stamp]

he mentioned luas a lot last night on how it has no subsidity - apart from the billions it cost to build it.

the reality is that the subvention to CIE is one of the lowest in Europe, and it is a part of the programme for government to reduce it.

now, some months ago I went into the whole issue of the subsidy on the boards.ie infrastructure forum. To avoid repetition I wont report it, but the basic question is framed in the context of the fiscal treaty we passed this year. This commits the state to a balanced or almost balanced budget, and I caluclated the maximum we can borrow/deficit on the budget of about 1 to 2 billion a year.

The question, will each department have to balance its budget, and will each agency within or semi state do likewise.

Interestingly, I forsaw a situation for local authorities having to run themselves out of their local household/rates tax. This appears to be the intention as County Councils will be free to set the Household Charge in their area.

So, will this mean that CIE must come in on Budget without a sibsidy sometime in the near future? Perhaps. I cannot see the intercity operation surviving in that senario. A very basic skeletal service at most. I cannot see the attraction of it to a private operator, unless it is tendered as one lump, and even then, I cant see it being anything like the system we have today.

If you want the service we have, we need a subsidy. What amount is the question. The Minister believes, and it would seem correctly, that there is terrible wastage going on. That €36 million would ahve been wasted, down a black hole. It hasnt been. The next question is how much of a black hole is there?

[dowlingm]

Over here in North America there tends to be a firm separation of capital and operating when discussing cost recovery and systems are benchmarked against each other. Most systems tend to use a headline number of % of operating costs recovered from fares. 60-80pc is considered good with anything over 90 usually considered as almost too good if it means the system is being run overcrowded or at a high fare price point. However much of their rail system is supported by federal grants (sort of like EU structural funds) which aren't expected to show a direct financial return.

[Standing Passenger]

The Irish Times - Friday, October 19, 2012
Varadkar says public transport near failing

MARIE O'HALLORAN



Mr Varadkar has ordered the semi-State body to develop a realistic business plan, cost reductions within the group, the sale of non-core asses ..........
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I always suspected there was "ass" as well as "horse"-power involved in that company. The Minister is onto something here.

I myself think that the demise of CIE is all caused by the re-opening of the Athenry to Ennis section. Just like ILDA shut down railfreight I blame West On Track for shutting the rest of it. The new chief of IE appears to be the recipient of a hospital pass.

By the way when can we hope to see Dublin bus drivers agree to open the centre doors on their shiny new fleet? Did those who procured these buses not realise that Dublin bus drivers don't do centre doors. It dos'nt bode well for the flexibility the Minister is hoping for.

[Colm Moore]

Originally Posted by karlr42

He's just firing an opening shot in FG's war to privatise all public transport(and anything else they can manage). There is clearly some pressure on Ireland to shrink its rather large public sector.

Realise that all bus services are expected to be tendered by 2014-15 and rail 5 years later.