Second year in the Red for GC

[TrainBrain185]

£8.4 Million Loss last year on the back of an £8.7 Million Loss in 2008. According to its recently published financial statement for the year ending 31-12-2009, turnover however grew from £7.1 Million to £11.5 Million.

The lease of rolling stock by GC totalled £3.8 Million last year.

Employees wages and salaries £2.5 Million.

The firm's Directors were paid £189,930 in total.

(Source-Northern Echo 26-08-2010)

 

[MidnightFlyer]

Similar to what WSMR's chief Exec said - use these (excellent) open access trains or you'll lose them

 

[mrcheek]

Theres no way GC would have planned to be profitable in the first two years anyway. Most likely their business plan would have aimed for profitability in the 4th or 5th year at the earliest.

But does anyone know what kind of initial losses they predicted when they started out?

 

[Oliver]

£8.4 Million Loss last year on the back of an £8.7 Million Loss in 2008. According to its recently published financial statement for the year ending 31-12-2009, turnover however grew from £7.1 Million to £11.5 Million.

The lease of rolling stock by GC totalled £3.8 Million last year.

Employees wages and salaries £2.5 Million.

The firm's Directors were paid £189,930 in total.

(Source-Northern Echo 26-08-2010)

Presumably there were quite a lot of start-up costs for the Bradford services. 36% revenue growth looks good, but revenue was only 57% of total costs, so revenue would have to grow 73% in the future for them to break even, assuming steady costs. In short GC still has a long way to go before it's financially stable.

I wish them luck, but given the economic outlook it's going to be tough for them to succeed.

 

[Sir_Clagalot]

try and get on the 1918 KGX-SUN on friday... or watch it arrive at York and take a look! It's the second off-peak train out of KGX in the evening so it is usually rammed, but bank holidays are worse!

 

[Oliver]

try and get on the 1918 KGX-SUN on friday... or watch it arrive at York and take a look! It's the second off-peak train out of KGX in the evening so it is usually rammed, but bank holidays are worse!

I don't doubt what you say; the problem is that there will be hundreds of unsold seats on their other services.

 

[MidnightFlyer]

There were no more than 25 people on the 1604 Donny-Halifax West riding service on Monday, I was the only person in my coach

 

[142094]

I don't doubt what you say; the problem is that there will be hundreds of unsold seats on their other services.

Even if there are unsold seats they'll still be getting revenue under ORCATS

 

[Sir_Clagalot]

Bradford services are slightly different to the Sunderland ones in that they have only been running three months as opposed to almost three years for Sunderland!

 

[Failed Unit]

try and get on the 1918 KGX-SUN on friday... or watch it arrive at York and take a look! It's the second off-peak train out of KGX in the evening so it is usually rammed, but bank holidays are worse!

Depends who is getting the money, if it is full of GC only tickets then this is fine. But if they are interoperable tickets then GC are carrying a train full of people that are putting most of the fare into East Coast. I guess that is swings and roundabouts however as thier will be many other trains that only become viable because of the revenue extracted from East Coast.

{opens that old can of works}

But whatever it will take a while to become profitable for any open access operator, rail isn't a game for quick profits (unless you are Richard Branson that is )

 

[Greenback]

Theres no way GC would have planned to be profitable in the first two years anyway. Most likely their business plan would have aimed for profitability in the 4th or 5th year at the earliest.

But does anyone know what kind of initial losses they predicted when they started out?

I agree. Most businesses that have high start uo costs, as an open access operator must have before they even start earning any money at all, will not even expect to make a profit for several years.

 

[mrcheek]

I agree. Most businesses that have high start uo costs, as an open access operator must have before they even start earning any money at all, will not even expect to make a profit for several years.

Interestingly, if you read the story in full, the company says that the Sunderland route is profitable, and that the losses were incurred on setting up the Bradford service.

And a few google searches found a reference to the company initially claiming that the Sunderland route would be profitable in two years.

So, contrary to some people's negativity, Grand Central are right on track! And long may they continue their success!

 

[Greenback]

Exactly. Making a loss for two years overall does not mean they are behind their forecasts!

 

[OMGitsDAVE]

"BOSSES at a rail firm today praised passengers in Hartlepool for helping them to record healthy North-East returns.
And at a time when Grand Central railway recorded overall end-of-year results of £8.4m losses for 2009, the service covering Hartlepool is well in profit, company chiefs confirmed.

Grand Central Railway's financial statement also shows turnover for the year ending on December 31, 2009, went up from £7.1m to £11.5m."

From the Hartlepool Mail Website.
http://www.hartlepoolmail.co.uk/news/Rail-chiefs-announce-service-profit.6495962.jp


Any comments?

 

[rail-britain]

Shouldn't a "profit", a "loss" then!

I'm not really surprised they have not yet reported any quarterly profits, given all the issues at the beginning and the poor customer numbers
I saw one of yesterdays Bradford services, it had just 6 passengers on it

 

[OMGitsDAVE]

Shouldn't a "profit", a "loss" then!

I'm not really surprised they have not yet reported any quarterly profits, given all the issues at the beginning and the poor customer numbers
I saw one of yesterdays Bradford services, it had just 6 passengers on it

I suppose it has to start somewhere, eh!

 

[TrainBrain185]

I suppose it has to start somewhere, eh!

The big question is, who is propping up these GC multi-million pound losses? How much longer can further year by year losses be sustained before saying hold on. Enough is enough and concede its time to stop saying, "well we gave it our best shot"?

 

[ainsworth74]

If GC were to fold (which would be a bad thing IMHO) it would make the Class 180 situation easier, as then we would have a total of 10 to allocate somewhere, that's a fleet you can actually start doing things with!

 

[rail-britain]

The owners of Grand Central have an "enormous" pot of money to play with
Equally, as an Open Access Operator they have a bond with the ORR to ensure their services continue should the company fail financially

In order to release cash the trains were effectively sold back to Angel Trains on an exclusive lease
This also allowed the Power Cars to have replacement engines, and subsequently more reliable

It would be interesting to obtain a copy of the companies next return from Companies House when it is available to see when they anticipate returning an operational profit
I would expect this to be next summer, after which an application to operate on the WCML would be likely and subsequent order for new rolling stock (probably provided through Angel Trains)

 

[TrainBrain185]

The owners of Grand Central have an "enormous" pot of money to play with
Equally, as an Open Access Operator they have a bond with the ORR to ensure their services continue should the company fail financially

In order to release cash the trains were effectively sold back to Angel Trains on an exclusive lease
This also allowed the Power Cars to have replacement engines, and subsequently more reliable

It would be interesting to obtain a copy of the companies next return from Companies House when it is available to see when they anticipate returning an operational profit
I would expect this to be next summer, after which an application to operate on the WCML would be likely and subsequent order for new rolling stock (probably provided through Angel Trains)

How can a company if it failed financially, be allowed to continue to operate?

Its also a speculative suggestion that a profit could be returned next summer, though it would be pleasant for GC staff and supporters on this forum if you were to be correct.

Though personally, its gonna be a really difficult couple of years ahead for heavyweight operators let alone the small Independant operator like GC.

 

[swt_passenger]

Equally, as an Open Access Operator they have a bond with the ORR to ensure their services continue should the company fail financially...

Isn't the whole point of OAA operators that they run services that aren't required by anyone - so why should they need to continue of they fail?

 

[Sir_Clagalot]

Surely it is to run services that the franchised operators won't even look at, even though there is a sound business case for running them?
And hard financial times in theory should play right into the hands of the small OA operators with their cheaper fares...

 

[tbtc]

Surely it is to run services that the franchised operators won't even look at, even though there is a sound business case for running them?

Is "sound business case" the same as ORCATS-raid?

 

[Sir_Clagalot]

competiton between two operators on one route is good for competition and good for passenger growth in general.

 

[87015]

Is "sound business case" the same as ORCATS-raid?

If TOCs are allowed to play by those rules, then you can't really say O-A operators shouldn't be allowed to.

Those in glass houses and all that...

 

[tbtc]

competiton between two operators on one route is good for competition and good for passenger growth in general.

Its a waste of resources, in the way that competition in the bus industry means two operators chasing each other around the one route (whilst marginal routes miss out). I'd rather have one *good* provider, rather than a meaningless and confusing "choice" (same with schools/ gas providers etc etc)

Open Access can work, but in other areas it can be a real waste of precious stock and paths so that a new operator can get a share of an established passenger flow

 

[route:oxford]

Open Access can work, but in other areas it can be a real waste of precious stock and paths so that a new operator can get a share of an established passenger flow

It's impossible to prove one way or the other, but I wouldn't be that surprised if the HST power cars and coaches/LHCS that were acquired by Grand Central were still lying rotting in sidings if GC hadnt sourced them. Perhaps even scrapped.

 

[142094]

Its a waste of resources, in the way that competition in the bus industry means two operators chasing each other around the one route (whilst marginal routes miss out). I'd rather have one *good* provider, rather than a meaningless and confusing "choice" (same with schools/ gas providers etc etc)

Open Access can work, but in other areas it can be a real waste of precious stock and paths so that a new operator can get a share of an established passenger flow

On the other hand it brings in the competition element that privatisation has been lacking since inception. Competition should mean lower ticket prices, which of course with GC it does in some cases. I'd rather have the option of a choice between GC and another operator on the day than just say EC, but more needs to be done by GC to challenge EC more in areas such as advance tickets, which they seem to be doing by the introduction of print at home cheap tickets from Kings Cross to stations on the North Eastern network.

 

[Anvil1984]

It's impossible to prove one way or the other, but I wouldn't be that surprised if the HST power cars and coaches/LHCS that were acquired by Grand Central were still lying rotting in sidings if GC hadnt sourced them. Perhaps even scrapped.

I agree in a sense they were in a very bad way before GC took them on, someone might have took a punt on them though but not a guarantee they would have