* Transdev drops 77 mln euro claim on SNCM to facilitate sale
* Company hopes to return to profit this year
* An IPO is no longer on the cards, expansion curtailed
* Considers launching on-demand taxi service in Paris (Adds quotes, detail on IPO, expansion)
By Geert De Clercq
PARIS, April 9 French transport firm Transdev expects to return to profit this year and is willing to abandon claims against its troubled Mediterranean ferry unit SNCM in order to facilitate a sale.
The company ruled out an initial public offering and will focus on reducing debt as it exits more countries and tries to restore profitability with new services such as on-demand taxis.
Transdev's 2013 net loss narrowed to 130 million euros ($179 million) from a restated 391 million loss in 2012. The loss was mainly due to 107 million euros worth of writedowns related to SNCM, which runs ferries between Corsica and mainland France.
At a presentation of 2013 earnings, Transdev CEO Jean-Marc Janaillac said a partial sale of Veolia's 50 percent stake in Transdev to its joint-venture partner CDC remained conditional on the sale of Transdev's 66 percent stake in SNCM, as CDC does not want to take it over.
Norway's Siem Shipping said earlier this month it was in talks with Transdev about a possible acquisition of SNCM, but Janaillac declined to comment.
He added that Transdev was willing to sell SNCM for a symbolic sum and to abandon its 77 million euro claim against the ferry operator in order to facilitate a takeover.
Janaillac - like Veolia and CDC before him - said Transdev would not put any more money into SNCM and said its long-term business plan was not credible.
"We do not believe in SNCM's strategic plan, as it is based on forecasts that are too optimistic about traffic growth," Janaillac said.
RACE FOR SIZE
Created in 2009 from the merger of Veolia Transport and CDC unit Transdev, Transdev was set to become a "global leader in public passenger transport" and scheduled to list on the bourse.
But the financial crisis put paid to the IPO plans and by end-2011 Veolia - by then run by new CEO Antoine Frerot - decided to exit the transport business to focus on its water, waste and energy business.
With sales of around 8 billion euros around the time of the merger, a series of divestments have shrunk the company's revenue, which fell to 6.6 billion at the end of 2013 from 7.6 billion at the end of 2012.
"Big is not necessarily beautiful," said Janaillac, who became Transdev CEO at the end of 2012.
He said at the time of the merger, there had been a race for size among French transport companies, but at the expense of profitability. "From a certain size onwards, the cost of size outweighs its benefits," he said.
Last year, the company sold its activities in central Europe. It has just finalised the sale of activities in Belgium and will finalise the sale of those in Sweden and Finland this year. The sale of its German activities has been postponed.
Janaillac said Transdev will focus on its mature markets in France and the Netherlands, where it earns 39 and 19 percent of revenue respectively, and on developed markets such as the United States and Australia, as well as Latin America and Asia.
The firm is bidding for several tram, train, metro and bus contracts around the world, but Janaillac said the focus would be on profitability, not on getting the contract.
Transdev, which runs on-demand taxi services in Britain, the United States and the Netherlands under brands such as greentomatocars and Connexxion, plans to set up in Paris once the government creates a legal framework for these services.
He said Paris had three chaufeur-driven private cars per 10,000 inhabitants, against nine in London and 12 in New York.
It also plans to expand in regional bus services when authorities open the market to wider competition.
($1 = 0.7249 Euros) (Editing by Mark Potter)