Cash-strapped Irish Rail needs €100m for vital safety works
Boss says fares 'too low' and warns company could be insolvent as shareholder funds dry up
Cash-strapped Irish Rail is close to insolvency, and safety will be compromised unless funding is secured to complete urgent upgrades of the network.
In a candid interview with the Irish Independent, chief executive David Franks said that €100m in additional money was needed or the semi-state transport company would be forced to run slower trains to ensure passenger safety.
He also said that fares were "too low", and that the company would be €159m in the red by the end of this year, and will have run out of shareholder funds, pushing it to the brink of going out of business.
This is in the context of pay demands from trade unions, but ironically 2017 is likely to be the company's busiest year on record with more than 45 million passenger journeys forecast.
"We need [an additional] €100m every year just to invest in the asset base," he said.
"We've made it very clear there will be a deterioration in the quality of service… and will end up shutting pieces of railway if we have to.
"If we're €100m underfunded, and can't afford to take any more losses, we'll have to spend less money. Spending less money means you're going into very serious degradation of assets and I'm concerned about some of our assets presently and I'd be very worried."
According to the European Union Agency for Railways, Irish Rail is among the safest in the bloc, but the company is struggling to maintain assets including track and signalling systems in light of repeated Government cuts.
In 2007, it received €190m of public service obligation (PSO) payments, designed to cover the cost of running unprofitable services. This has since fallen to €115m for 2017.
Repeated warnings have been made about the lack of money available for maintenance and upgrades. Last year, the National Transport Authority (NTA) published a Rail Review, which said there was a €100m shortfall in funding.
Trade unions are seeking a pay rise along the lines of those secured in other CIE companies including Dublin Bus and Bus Éireann, but these could not be afforded unless workers agreed to productivity measures, Mr Franks said. Fares were also too low.
"We've been to the Workplace Relations Commission where no agreement (with unions on the pay claim) was reached. We've referred it to the Labour Court in May. The court required us to go back and explain what would happen if they recommended an increase in pay which wasn't productivity funded.
"We've done that. It tells us we would be close to insolvency. By the end of this year, we will be carrying €159m of accumulated losses and our shareholder funds will have almost disappeared.
"We're at the point where we can't afford any more losses. The big issue we have is the fares are too low. They're artificially suppressed."
He said an annual increase linked to the cost of living would help provide some additional money, but it was a policy matter for the Government.
"We do have to compete with other public transport modes, but the NTA determine the level of fares we can charge, and do the same with everything else (Dublin Bus, Bus Éireann and Luas). There should be at least a cost of living increase. There have been years where they haven't gone up at all. If fares go up by the cost of living, at least you get to a situation where you have no surprises.
"The cumulative benefits of them going up each year are lost if there is no increase in a particular year. Suddenly you have to put fares up by a big chunk if there's a financial crisis, but there's always going to be an economic cycle."