We will keep Expressway - but cuts are coming: Bus Éireann
The new boss of Bus Éireann has assured staff it plans to hold onto its Expressway service despite facing the threat of going bust within 18 months.
Acting chief executive Ray Hernan sent a letter to his 2,600 employees yesterday after a consultants' report commissioned by the company warned it may soon have no option but to axe the inter-city service.
But Mr Hernan, a former Brown Thomas, Arnotts and Ryanair manager who is planning a drastic cost-cutting plan, said no decision has been taken to drop the troubled commercial business.
He pointed the finger at intense competition on commercial routes as a key factor in the need for the company to hold and win business.
The letter may be an attempt to take the heat off the Government, Transport Minister Shane Ross (inset) and the National Transport Authority (NTA) after it emerged that top executives might get exit deals of over €500,000 while Expressway's 30-plus routes and 516 jobs are at stake.
Mr Hernan said the company is facing losses which are not sustainable.
"We have reached a point where we must act decisively," he said. "The threat of insolvency within the next 18 months is very real, and it is very clear we must now change our current business model."
He said the company's revised forecast for losses at the end of last year are in the order of €8m and this could not continue.
"Urgently we need to address our financial and solvency issues. However, more importantly we need to be competitive," he said. The current challenges faced by Expressway will only be resolved successfully by retaining the business as part of the overall total company structure and making it more competitive, he said.
"To be clear, Expressway is and will continue to be part of Bus Éireann," he said. "A combination of operational efficiencies and a sharp focus on all cost drivers can achieve this."
Mr Hernan hinted that cuts to workers' terms and conditions will be outlined soon in meetings with unions to address the "very precarious financial position which now threatens our future".
The letter came after details of the Grant Thornton report, advising that the Expressway service be scrapped, were published in yesterday's Irish Independent. Expressway was once profitable but it has faced intense pressure from competition on inter-city routes.
However, the director of the National Transport Authority, Tim Gaston, denied its decision to grant commercial licences to bus operators is to blame for the company's difficulties.
Bus Éireann commercial services, such as Expressway, account for only 19pc of all the company's passengers, he said.
He said that if some Expressway services were discontinued, National Transport Authority would step in.
Willie Noone of Siptu said it was "ludicrous" that management could get pay-offs of over €500,000 in circumstances where workers were laid off, routes cut and garages closed.
He noted the cost of redundancy packages could top €85m. "To put that in context, Bus Éireann lost €7m last year," he said.
Fine Gael came under fire from unions who accused it of using the "opportunity of a crisis". The party was accused of having an aim of privatising the bus service.
The National Bus and Rail Union (Nbru) and Siptu vowed to fight the "outrageous proposals" and called on TDs whose constituents depend on the services to support them.
Dermot O'Leary of the NBRU said the transport network has taken generations of Bus Éireann staff to build.
He said policy makers must all take part in talks. "It is high time for those politicians who purport to represent rural Ireland to step up to the mark and work towards protecting this vital piece of irreplaceable infrastructure," he said.
Meanwhile, Mr Ross would not say whether he believes Bus Éireann should axe its Expressway services.
A spokeswoman for the minister, who is the semi-state company's shareholder, said it would not be appropriate for him to say while it draws up a cost-cutting plan. She said the minister had not seen the Grant Thornton report but had been briefed on it.