GNER profits surge despite delays

GNER: Rising profits, and more delays

Profits at rail operator GNER have surged by 74%, at a time when almost one third of its trains were running late, figures have revealed.

The operator, which runs services on the London-to-Edinburgh route, achieved profits of $9.45m (£6.62m) between April and June, compared with $5.47m a year before.

During the three months, the number of GNER trains running behind schedule hit 31.7%, compared with a 15.5% delay figure the year before, data from the Strategic Rail Authority show.

GNER chiefs have blamed much of the company's loss of performance on infrastructure disruption caused by the after-effects of last October's Hatfield crash, which involved one of their trains.

Two-year moratorium

The company has also criticised government delays, culminating last month in a two-year moratorium in awarding a 20-year contract for GNER's east coast route, for hindering efforts to pump more cash into operations.

GNER, which is suing the government for a reported £2m compensation for bidding costs, was originally due to see its contract expire in 2003.

"We had plans drawn up involving huge investment, three parkway stations, which have had to be put on hold because of the delay," a spokesman for Sea Containers, the shipping giant which owns GNER, told BBC News Online.

The spokesman defended the firm's aim as a "commercial operation" to increase profits even when service punctuality had declined, and pointed to a string of industry awards as evidence of GNER's commitment to providing a high-quality service.

Loss-making routes

GNER's profits surge was revealed in a statement from Sea Containers, which blamed the downturn in world trade and the outbreak of foot-and-mouth disease in the UK, for a 49% fall in overall pre-tax earnings to $7.49m over the three months to end-June.

Looking ahead, Sea Containers president James Sherwood warned that freight rates on Europe-to-Asia routes had plummeted by one half since last year.

"Most carriers on that route are believed to be operating at a loss," he said

An unnamed shipping giant, which had been forecasting an 8% increase in volumes this year on the route, has seen traffic decline by 5%, Mr Sherwood said, adding that no end was yet in sight to the decline in world trade.

Orient Express sale

But he forecast that earnings at the Bermuda-based firm this year would be underpinned by asset sales.

The company is attempting to dispose of its 63% share in Orient-Express Hotels, the leisure business which operates 37 hotels, as well as luxury trains in Europe, Peru, Australia and the Far East, and cruises out of Burma.

The spin-off, which has been approved by shareholders, is being challenged by bondholders in a US court, which has handed Sea Containers an initial victory.

"Sea Containers is likely to have a satisfactory earnings year in 2001 due largely to gains on asset sales," Mr Sherwood said.

"The problem is that insufficient profits are coming from containers and fast ferries because of factors beyond our control. We must wait for world trade to revive and the foot-and-mouth epidemic to pass."

The statement proved sufficient to win backing from investors, who sent Sea Containers shares up 17.6% to 40p on Friday, their highest closing level since September.