Without additional funding from government there is a real risk to the survival of Eurostar

[StephenHunter]

Indeed, it was turning a profit before the pandemic and as other services elsewhere in Europe have demonstrated, such as Regiojet's Praha-Rijeka service, the demand is definitely there.

 

[Nicholas Lewis]

Indeed, it was turning a profit before the pandemic and as other services elsewhere in Europe have demonstrated, such as Regiojet's Praha-Rijeka service, the demand is definitely there.

Indeed it was turning a pretty good profit according to its 2019 accounts so the potential is there. The collective world is motivated to confront coronavirus each with its own plan and it may seem disjointed currently but we are way off a place that says Western Europe doesn't want to encourage international travel so it will come into its own. Indeed with airlines removing vast amounts of capacity and climate change climbing up the agenda it will come back far stronger in due course imv.

 

[biko]

Why would the British Government want to buy an insolvent French Company? Better off leaving the service for 5 years until the travel market is recovering and setting up a new company to offer the service. I don't see that Eurostar is needed in the short term anymore than Tops Shop debenhams etc.

It's not a French company, but a British company with French, Belgian and Canadian shareholders. It provides an important link to the continent and is the greenest way possible of travelling to the continent. It clearly is a short-term problem, so the UK government will probably get the money back and more.

 

[Skimble19]

Why would the British Government want to buy an insolvent French Company? Better off leaving the service for 5 years until the travel market is recovering and setting up a new company to offer the service. I don't see that Eurostar is needed in the short term anymore than Tops Shop debenhams etc.

5 years? Far too long. I’ll be using them as soon as restrictions are lifted and it’s safe to do so - I suspect many others will too.

Eurostar is a profitable company, it’s current issues are no fault of its own..

 

[Wolfie]

Eurostar is fundamentally a profitable operation. Topshop and Debenhams aren't.

Correct. Also the partial owner of Topshop or Debenhams can't cause HMG all ends of grief...

 

[Chester1]

My take on it is its nothing to do with Brexit rather that it would open the floodgates for support requests for other foreign owned companies that the govt have resisted; Virgin Atlantic, Ryanair, DB (Great Central) etc, etc

Not strictly correct as many companies who have UK subsidiaries have accessed the govt backed loan schemes like Wizz Air who got £300m via Covid Corporate Financing Facility. I believe Shapps was suggesting Eurostar could do the same through Eurostar International Ltd.

Of course just like Vrgin Atlantic Eurostar would need to provide its figures so that the government can assess iwhether it's tapped other resources such as its shareholders first. Virgin Atlantic got a thumbs down so I wonder whether Eurostar suspects they would meet the same fate?

I don't think its about Brexit. The comparison with Wizz Air and Virgin Atlantic is very apt. Wizz Air is a foreign airline that was not desperate but still got a loan. Virgin Atlantic is 51% British owned and was desperate for a loan but didn't get one. Wizz Air offered planes as collateral, Virgin Atlantic didn't have sufficient assets free to offer as collateral.

Eurostar has had Government help through the furlough scheme and can borrow money. Its refused to offer any of its fleet as collateral. The value of its fleet significantly exceeds its liabilities. It could get the money it wants from the UK government but it isn't sufficiently desperate to accept the terms offered (or the French government has ordered it not to).

Maybe but imv its all political French don't want to bail out a service that is mainly driven by UK demand and UK don't want to be seen to be bailing out a French (ie EU) company. At the end of the day the infrastructure and trains are there someone would buy it if the worst happens and the workforce would be TUPEd over. Yes there would be collateral damage potentially from such action as to how investors viewed it but my take is we at end game here over private finance owning strategic assets.

I don't think the French government has any intention of letting Eurostar colaspe. Either DB or the UK treasury would buy it out of administration and either would be embarrassing for the French government.

In order for the government to invest I think Eurostar needs to offer something in return. That could be part ownership, a share of the future profits to repay the money loaned plus intrest or something else such as assets.

Without offering something it will appear to the public that when we sold our share in Eurostar we privatised the profits but are now nationalising the losses. Add in that Eurostar is majority owned by SNCF and Brexit and it's politically undesirable to just give them some money.

There would of course be some pretty serious consequences to all parties if Eurostar shut down. I wonder if we are watching a high stakes game of poker? Eurostar saying we will go under and it will be bad for the UK. Our goverment saying give us something or we will let you fail. Ultimately when Eurostar reaches the point of collapse I suspect some compromise will be found.

I don't even think its poker. The French government know they have to bailout Eurostar otherwise it will go into administration at which point either DB or UK treasury would put in an offer. My guess is that making the UK government look like the bad guys plays well politically and they have instructed Eurostar management to reject terms that the UK government can realistically offer i.e secured loans or buying a share of the company.

5 years? Far too long. I’ll be using them as soon as restrictions are lifted and it’s safe to do so - I suspect many others will too.

Eurostar is a profitable company, it’s current issues are no fault of its own..

Its no fault of their own but it doesn't mean the Govermment should throw taxpayers cash at it without conditions. Neither does green policy or nor economic benefits. A choice has been made within the company (or by the French government) to only accept offers of grants or unsecured loans. That pretty much says everything about how much the company needs help from UK government!

 

[Wolfie]

I don't think its about Brexit. The comparison with Wizz Air and Virgin Atlantic is very apt. Wizz Air is a foreign airline that was not desperate but still got a loan. Virgin Atlantic is 51% British owned and was desperate for a loan but didn't get one. Wizz Air offered planes as collateral, Virgin Atlantic didn't have sufficient assets free to offer as collateral.

Eurostar has had Government help through the furlough scheme and can borrow money. Its refused to offer any of its fleet as collateral. The value of its fleet significantly exceeds its liabilities. It could get the money it wants from the UK government but it isn't sufficiently desperate to accept the terms offered (or the French government has ordered it not to).



I don't think the French government has any intention of letting Eurostar colaspe. Either DB or the UK treasury would buy it out of administration and either would be embarrassing for the French government.



I don't even think its poker. The French government know they have to bailout Eurostar otherwise it will go into administration at which point either DB or UK treasury would put in an offer. My guess is that making the UK government look like the bad guys plays well politically and they have instructed Eurostar management to reject terms that the UK government can realistically offer i.e secured loans or buying a share of the company.



Its no fault of their own but it doesn't mean the Govermment should throw taxpayers cash at it without conditions. Neither does green policy or nor economic benefits. A choice has been made within the company (or by the French government) to only accept offers of grants or unsecured loans. That pretty much says everything about how much the company needs help from UK government!

If you are right and this is a peeing contest between HMG and the French Govt then don't whinge when France does something that will really hurt UK.

 

[paul1609]

If you are right and this is a peeing contest between HMG and the French Govt then don't whinge when France does something that will really hurt UK.

I suspect its more a case of the French Govt. trying to pull one over on HMG (again) and HMG Govt rightly saying no. Personally Id like any government to spend any available money establishing ferry links to other countries than would reduce our dependence on the French stranglehold that is Calais. I am not in anyway anti french, indeed I can see France from the top of my village on a clear day!

 

[Wolfie]

I suspect its more a case of the French Govt. trying to pull one over on HMG (again) and HMG Govt rightly saying no. Personally Id like any government to spend any available money establishing ferry links to other countries than would reduce our dependence on the French stranglehold that is Calais. I am not in anyway anti french, indeed I can see France from the top of my village on a clear day!

You might just see more boats in the Channel too...

 

[talltim]

The only thing I object to is that the owners (mostly SNCF / French Government) have also benefitted from receiving dividends on their investment, so somehow these sums received since 2015(? when the UK sold their stake) should also be played into the equation. Otherwise the French will have their cake and eat it. (I also refer to my previous rhetorical question, would the French voluntarily pay any excess profits to the UK Government if passenger numbers unexpectedly increased?)

However the UK government also could have recieved dividends, but instead decided to sell their share.

 

[ainsworth74]

I don't think the French government has any intention of letting Eurostar colaspe. Either DB or the UK treasury would buy it out of administration and either would be embarrassing for the French government.

As both amusing and potentially attractive as the idea of DB buying out a collapsed Eurostar is (attractive in that it would, presumably, restore through ticketing to a range of destinations) I can't help but think that the appetite at DB for 'foreign adventures' is likely to be very low for the time being. I seem to recall they were starting to catch some heat at home for being seen to be failing to focus on their domestic priorities in terms of services (DB's long distance services are often woefully reliable) and but also financially (wasn't all that long ago they were trying to sell Arriva recall!).

 

[k-c-p]

I seem to recall they were starting to catch some heat at home for being seen to be failing to focus on their domestic priorities in terms of services (DB's long distance services are often woefully reliable) and but also financially (wasn't all that long ago they were trying to sell Arriva recall!).

Correct, the were looking into selling Arriva but the first offers they got were not valued adequate (does not help with the price when everybody know you have to sell to reduce your debts).

Additionally, DB is hard hit by Corona as well and bleeds money too. Long distance ridership is down to about 30% but about 80% of the services run. This makes social distancing pretty easy when you really must travel. I went to my parents last week end and took my usual Friday 4pm train, which usually has a decent load - there were about 5 people in my 2nd class coach. And on the return trip on Sunday evening I had the coach all to myself.

DB has asked the state for financial assistance. Both, DB and the government want to keep the high service level to ensure distance can be kept when travelling (DB has done this for most of 2020 as well).

 

[FQTV]

Eurostar is fundamentally a profitable operation. Topshop and Debenhams aren't.

Indeed, it was turning a profit before the pandemic and as other services elsewhere in Europe have demonstrated, such as Regiojet's Praha-Rijeka service, the demand is definitely there.

Indeed it was turning a pretty good profit according to its 2019 accounts so the potential is there.

5 years? Far too long. I’ll be using them as soon as restrictions are lifted and it’s safe to do so - I suspect many others will too.

Eurostar is a profitable company, it’s current issues are no fault of its own..

The Eurostar pre-pandemic business model was based not inconsequentially on (retail) selling a large number of £276 one way Business Premier tickets. The big question is whether that’s going to be possible in future.

As others have said, the tunnel and track access charges alone are higher than some of the lead in fares, which are sold as loss-leaders. That can only happen with plenty of the ‘276ers’.

The further question I suppose, therefore, is whether, in the absence of many £276s, there will be much demand for lead in fares of say £69 or £89 each way, instead of £29 and £39.

 

[Ianno87]

The Eurostar pre-pandemic business model was based not inconsequentially on (retail) selling a large number of £276 one way Business Premier tickets. The big question is whether that’s going to be possible in future.

As others have said, the tunnel and track access charges alone are higher than some of the lead in fares, which are sold as loss-leaders. That can only happen with plenty of the ‘276ers’.

The further question I suppose, therefore, is whether, in the absence of many £276s, there will be much demand for lead in fares of say £69 or £89 each way, instead of £29 and £39.

Eurostar's lowest fare has already risen up from the £29/39 level, presumably in anticipation of lower Business Premier income in the immediate future.

 

[plugwash]

I would assume that they figure that there is no point selling cheap tickets when the only people travelling are those who HAVE to travel.

 

[FQTV]

I would assume that they figure that there is no point selling cheap tickets when the only people travelling are those who HAVE to travel.

Exactly; if you have to travel, and comparatively very few are allowed into France, Belgium and The Netherlands at the moment, then you’d be rather ‘uncommercial’ if you didn’t charge them as much as possible to try and offset at least some of the operational losses.

It would arguably be not a great look to be offering ‘promotional’ level fares when travel is highly restricted, either.

That’s not to say that, when travel is permitted, I wouldn’t expect to see some extremely aggressive fares in the very short term - I wouldn’t be surprised to see £19 fares with fixed price upgrades to Standard Premier, and perhaps even no Business Premier at all on certain services (ie no BP on board service and all 2+1 seating classified as Standard Premier).

It’s the period beyond the first unlocking that’s going to be much trickier, I suspect, and that goes for airlines, too.

 

[Nicholas Lewis]

The Eurostar pre-pandemic business model was based not inconsequentially on (retail) selling a large number of £276 one way Business Premier tickets. The big question is whether that’s going to be possible in future.

As others have said, the tunnel and track access charges alone are higher than some of the lead in fares, which are sold as loss-leaders. That can only happen with plenty of the ‘276ers’.

The further question I suppose, therefore, is whether, in the absence of many £276s, there will be much demand for lead in fares of say £69 or £89 each way, instead of £29 and £39.

Presumably the Brussels run will also suffer from us exiting the EU as well on expenses business premier tickets

 

[FQTV]

Presumably the Brussels run will also suffer from us exiting the EU as well on expenses business premier tickets

In and of itself, I doubt that Brexit will have much downward effect; indeed (and albeit at contracted fares) there’s a reasonable chance that there’ll be a lot of Commission-related traffic on an ongoing basis, perhaps more than in the past, as well as that which will be generated by the need to now attend to matters which can no longer be dealt with within the UK.

That’s quite apart from other demand drivers centred on Brussels, such as NATO.

 

[Ianno87]

I would assume that they figure that there is no point selling cheap tickets when the only people travelling are those who HAVE to travel.

Exactly; if you have to travel, and comparatively very few are allowed into France, Belgium and The Netherlands at the moment, then you’d be rather ‘uncommercial’ if you didn’t charge them as much as possible to try and offset at least some of the operational losses.

It would arguably be not a great look to be offering ‘promotional’ level fares when travel is highly restricted, either.

That’s not to say that, when travel is permitted, I wouldn’t expect to see some extremely aggressive fares in the very short term - I wouldn’t be surprised to see £19 fares with fixed price upgrades to Standard Premier, and perhaps even no Business Premier at all on certain services (ie no BP on board service and all 2+1 seating classified as Standard Premier).

It’s the period beyond the first unlocking that’s going to be much trickier, I suspect, and that goes for airlines, too.

Not quite. I booked (or re-booked) tickets in July as the Travel Corridors became a thing, for travel in October 2020 when it was clear e* (at the time) intended to operate a normal-ish schedule for leisure travel. The higher base fare already applied at this point.

I think the higher base fare is here to stay.

 

[Gag Halfrunt]

In and of itself, I doubt that Brexit will have much downward effect

The absence of British MEPs and European Commission employees will presumably reduce the number of regular passengers.

 

[FQTV]

Not quite. I booked (or re-booked) tickets in July as the Travel Corridors became a thing, for travel in October 2020 when it was clear e* (at the time) intended to operate a normal-ish schedule for leisure travel. The higher base fare already applied at this point.

I think the higher base fare is here to stay.

It’s largely the same pressures that are and were driving those and currently available fares, and the fact that operators were doing everything possible to retain cash - that is to get those willing to bank cash with Eurostar to do so as much as possible.

The company, along with most others in the market, had no incentive to flog boat loads of bargain basement tickets for future-dated travel, that would potentially reduce their ability to sell much more expensive tickets when it came to it, or alternatively end up costing them more than the fare to deal with the administration of refunding the fares if the service was cancelled.

This is why the ‘unlock’ is going to be so difficult, but when operators are certain that they can run, there’ll be some very aggressive promotions in an attempt to kick start things. This will apply to air travel just as much. And then, after a period of frantic engine-cranking, there’ll finally be an indication of what tickover will look like, with the choke pushed back in.

The absence of British MEPs and European Commission employees will presumably reduce the number of regular passengers.

The European Union will remain the UK’s largest trading partner, and the amount of negotiation involved in that on a continuing basis will potentially require more to-ing and fro-ing than ever before, with the removal of trading ‘architecture’ that was previously a given, and not one that needed additional and potentially continuous negotiation.

A few MEPs here and there could be a drop in La Manche by comparison.

 

[Wolfie]

Presumably the Brussels run will also suffer from us exiting the EU as well on expenses business premier tickets

Civil servants haven't allowed to use business premier for years.

 

[Ianno87]

It’s largely the same pressures that are and were driving those and currently available fares, and the fact that operators were doing everything possible to retain cash - that is to get those willing to bank cash with Eurostar to do so as much as possible.

The company, along with most others in the market, had no incentive to flog boat loads of bargain basement tickets for future-dated travel, that would potentially reduce their ability to sell much more expensive tickets when it came to it, or alternatively end up costing them more than the fare to deal with the administration of refunding the fares if the service was cancelled.

This is why the ‘unlock’ is going to be so difficult, but when operators are certain that they can run, there’ll be some very aggressive promotions in an attempt to kick start things. This will apply to air travel just as much. And then, after a period of frantic engine-cranking, there’ll finally be an indication of what tickover will look like, with the choke pushed back in.

I suppose e*'s cheapest fares are targeted at the highly discretional "lets have a couple of nights in Paris!" on-a-whim market, which probably has disappeared for the time being.

 

[Nicholas Lewis]

I suppose e*'s cheapest fares are targeted at the highly discretional "lets have a couple of nights in Paris!" on-a-whim market, which probably has disappeared for the time being.

Not interested in Paris but was looking forward to doing an Amsterdam train so pleased to see they've kept the faith with that destination on there limited service.

 

[Ianno87]

Not interested in Paris but was looking forward to doing an Amsterdam train so pleased to see they've kept the faith with that destination on there limited service.

I agree - they clearly think they're onto a winner with Amsterdam given they continue to operate it as part of their "skeleton" timetable.

 

[StephenHunter]

It was pretty full up with stag and hen parties when I went a couple of years back.

 

[riceuten]

I think Eurostar (and airlines) will struggle for along as requirements like providing a Covid test result to travel are necessary. It's a level of faff people don't generally want to be dealing with for a holiday.

But would be happy to do so at an airport ?

 

[Amy65432]

I think Eurostar will survive

 

[Ianno87]

But would be happy to do so at an airport ?

No.

 

[AverageTD]

Eurostar's lowest fare has already risen up from the £29/39 level, presumably in anticipation of lower Business Premier income in the immediate future.

The prices have gone up due to the pandemic. I don't know if it's a temporary measure but I sure as hell hope it is. It makes sense though attempting to dissuade passengers at the moment in the name of safety. I hope that when things "return to normal" that the prices will drop pretty quickly for Joe Public.