Friday 26 December 2014

Bus and rail users face years of fare increases

Published 14/11/2012 | 06:40

Changing landscape: what Dublin's bus network could look like in a few years

BUS and rail passengers will be hit with years of repeated fare hikes as the cash crisis deepens in state transport companies.

Job losses are also on the cards as Dublin Bus, Bus Eireann and Iarnrod Eireann desperately try to avoid going out of business, the Irish Independent has learned.

Routes with low passenger numbers face the prospect of being axed or having services severely reduced.

CIE is desperately trying to turn around a €40m loss last year to a break-even situation in 2013.

But its unpublished annual report for 2011 shows that its financial crisis became so acute that banks refused to lend any more money.

CIE was forced to seek state payments in advance and audi- tors PricewaterhouseCoopers have warned there is now a major doubt that it can survive as a going concern.

Government sources said the company would not be bailed out, and that funding would have to be found for any voluntary severance package.

As well as fare hikes and job losses, there are also fears about cuts in services. There will be no capital investment in new buses or trains, and only basic maintenance will be allowed.

CIE passenger numbers peaked in 2007 when 288.7 million journeys were made on public transport. But this fell to 232.7 million last year.

Mounting fuel bills, falling passenger numbers and cuts in state aid have worsened the crisis.

The CIE group’s annual report, due to be published later this week, reveals just how bad things have become.

It shows:

  • The company breached its borrowing limits earlier this year and it has to renegotiate its banking facilities in 2013.
  • The CIE board says annual fare increases are needed to address the crisis.
  • Costs have to be cut, including payroll, which could result in job losses.
  • Only basic maintenance will be carried out – and there will be no new buses, trains or other capital expenditure.
  • Only Bus Eireann recorded a surplus last year, of €500,000. Iarnrod Eireann lost €22m and Dublin Bus lost €18m.


Deficit



While the CIE deficit is now €6m compared with €53m in 2010 thanks to cost-cutting, auditors PWC also warned of question marks over the compa- ny’s ability to survive.

The accounts show a ”material uncertainty which may cast significant doubt about the group’s and compa- ny’s ability to continue as a going concern”.

The CIE board has admitted that further cost-cutting is need- ed as the “outlook remains extremely difficult” and that it was relying on Government support to stay in business.

“The board is confident that planned actions, together with the additional funding commit- ted by the Department of Trans- port; the additional revenue generated by fare increases; the ongoing support of the Govern- ment and the successful imple- mentation of cost-reduction measures, will ensure that the group can achieve financial sustainability,” it said in a statement.

The Government had pledged a €36m cash bailout for CIE with the aim of pre- venting further cuts in bus and rail services.

But the money was withheld, as CIE has been told to sell assets or borrow money to keep its services running.

Among the options being considered are the sale of the company’s fibre optic cable network along the rail system and the sale of its interest in offices on Dublin’s Spencer Dock – which could yield €25m.

CIE has already made signif- icant savings with operating costs slashed by €174m since 2008 and employee numbers falling by 1,450.

Its state grant, designed to meet the costs of running unprofitable routes – called the subvention – has fallen by €41.4m, down to €265m in 2011.

Fuel costs have increased by €22m, and the elimination of a fuel rebate added €24m to annual costs while revenues have dropped by €81m in the same period.

Transport Minister Leo Varadkar is hosting regular meetings with the group and closely monitoring the group’s finances. The Cabinet was briefed on the CIE annual report yesterday. It will be pub- lished later this week.



Redundancy



Last summer, Iarnrod Eireann introduced a voluntary redun- dancy scheme for its 4,100 workers which is aimed at reducing numbers by 450 by 2016.

Unions and management have agreed changes to pension arrangements, over- time, annual leave, sick leave and subsistence rates aimed at delivering another €12m in savings.

Dublin Bus employs 3,227 staff and Bus Eireann another 2,605. The company is seeking cuts in overtime, premium pay- ments and changes to work practices from its employees, and talks are continuing at the Labour Relations Commission.

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