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South Western Railway could be nationalised after £137m loss

4 minute read
South Western Railway could be nationalised after £137m loss

Published by the Eagle Radio News Team at 7:25am 8th January 2020. (Updated at 11:22am 8th January 2020)

The rail firm which runs services in Surrey and  Hampshire could lose its franchise.

South Western Railway's accounts have revealed "significant doubt" that it could see the year out without going bust.

Filings to Companies House from December, published yesterday, showed that the train operator lost £136.9 million for the year ending March 31st 2019.

Directors said ongoing discussions with the Department for Transport could result in the "termination of the contract within the next 12 months" and "services being transferred to a publicly-owned operator."

A spokesman for the train operator, which is owned by FirstGroup and Hong-Kong based firm MTR, said its performance had been affected by timetable delays, strikes and infrastructure reliability.

Last month the company was also hit by one of the longest series of rail strikes in living memory with 27 days of industrial action.

The dispute with the Rail, Maritime and Transport (RMT) union over the role of guards remains deadlocked more than two years since it began.

South Western Railway trains
SWR took over the franchise contract in August 2017, with it due to expire in August 2024.

RMT general secretary Mick Cash says action need to be taken now to prevent chaos:

"Rather than allowing South Western Railway to collapse into chaos, RMT is demanding that the existing operator is stripped of the franchise with the public sector taking over as soon as possible.

"The alternative is Britain's biggest rail franchise crashing into the buffers with dire consequences for passengers and staff alike."

A spokesperson for SWR said the firm was in talks with the Department of Transport and remain positive:

"We continue to be in ongoing and constructive discussions with the DfT regarding potential commercial and contractual remedies for the franchise and what happens next, in order to ensure we reach the right outcome for the Government, our shareholders and our customers."

SWR said its owners had set aside funds to provide for the "maximum unavoidable loss".

In its accounts, directors said talks with the DfT could also result in the company being asked to submit proposals for a "short term management contract" to continue with the franchise.

They said they had a "reasonable expectation" that discussions with the DfT would have a "positive conclusion".

A DfT spokeswoman said: 

"We monitor the financial health of all our franchises closely and we expect them to meet their contractual obligations, but we have clear and robust processes in place to protect services for passengers and taxpayers."

On Monday a new managing director, Mark Hopwood, was installed pledging to restore reliability and improve services. 

In an open letter to passengers Mr Hopwood apologised  admitting the "service has not been good enough in recent months and years".

“It’s my mission to drive through change and make a positive impact for South Western Railway passengers. Frankly, our service has not been good enough in recent months and years. 

“I also know that the recent strikes have had a very significant impact on our passengers and staff and I am determined to find a resolution.”

“We will focus on changes that can make an immediate difference to the number of trains running on time.”

Mr Hopwood blamed the rail infrastructure for some of the issues affecting services:

“We can’t achieve all this alone.  Many of the problems we face are caused by the infrastructure, so I have agreed with Network Rail at the very highest levels that we will work hard together to address these issues.  

“My previous experience tells me that a strong, collaborative relationship is key. I know that passengers don’t want to hear parts of the industry blaming each other for issues they just want to see fixed. So my approach is that it might not be our fault, but it is still our problem.”