March 16, 2020 / 12:36 PM / 18 days ago

As passengers stay home, UK rail operators ask for bailout

LONDON (Reuters) - Companies running rail services in Britain have asked the government for a financial bailout as Britons increasingly work from home to avoid spreading coronavirus, sending passenger numbers plunging, a source told Reuters.

Passenger numbers have fallen by about 18% on some lines, according to anecdotal early evidence from the rail industry, as the formal data is not yet available, putting the viability of some rail contracts at risk.

Many Britons are working from home instead of commuting. State-owned Transport for London (TfL) said on Monday that passenger numbers on London’s Underground network fell 19% in the week starting March 2 in response to coronavirus.

Britain’s privatized rail network is split into areas with the government contracting out services. Some of the contracts rely on passenger numbers growing to meet their financial commitments and could face failure as a result of coronavirus.

Companies running train services include Arriva UK Trains, part of Germany’s Deutsche Bahn, UK transport operator FirstGroup (FGP.L) and Govia, a joint-venture between Go-Ahead (GOG.L) and France’s Keolis.

The source familiar with the situation said the industry as a whole was in early talks with the government.

Asked about a bailout for the rail industry, the UK’s Department for Transport did not comment specifically, but said it was engaging with the industry.

“We recognize how difficult the current situation is for the transport sector and, across government, we are engaging with the sector’s leadership to support workers, businesses and passengers,” a DfT spokeswoman said in an emailed statement.

Britain’s rail industry group, the Rail Delivery Group, said that train companies were regularly in discussions with the government, without giving details.

Even before the impact of coronavirus, many rail contracts were already looking problematic, after operators had been over-optimistic about future passenger numbers and after infrastructure upgrades took longer than expected.

Britain in January nationalized the Northern Rail contract and has said that it was considering whether to nationalize FirstGroup’s South Western Railway as it was not financially sustainable in the long term.

Shares in FirstGroup plummeted 46% in morning trading, hitting an all time low, since listing in 1995, while Go-Ahead was down 27%, its lowest level since 2003.

Reporting by Sarah Young, Editing by Paul Sandle, Kate Holton

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