Eurotunnel racks up big losses

Eurotunnel operates shuttle services and manages the tunnel

Eurotunnel, the operator of the Channel Tunnel, has posted a 2003 net loss of £1.33bn after huge asset write downs.

Eurotunnel said the market for cross Channel freight remained depressed with no sign of improvement, and that price competition was fierce. It said it had made proposals to the UK and French Governments seeking to address structural problems faced by the cross-Channel rail industry.

It wants to see cuts in the train firms' freight rates to boost traffic.

"The cross-Channel rail industry currently suffers from under-utilisation of expensive infrastructure, financial losses and conflicting contractual relationships," Eurotunnel said.

"In particular the high level of access charges paid by rail companies for the use of the Channel Tunnel is holding back traffic growth."

Big changes needed

Eurotunnel said it had carried out a year-long study into the economics of the Channel Tunnel.

As a result, Eurotunnel said it was proposing to significantly reduce access rates for train operators to encourage them to cut their costs.

Rail users and motorists who now take the cross-channel link for granted may wonder why there are still financial problems 10 years on Can Eurotunnel find the winning financial formula?

"This should enable Eurostar to increase its traffic to existing destinations and would assist the introduction of new destinations such as Amsterdam," said Eurotunnel.

Eurotunnel believes lower fees would eventually lead to higher earnings. It hopes to recoup the money lost through cuts in prices charged to the train operators by revitalising the passenger and rail freight markets.

Eurotunnel pointed out that its current financial structure means it is unable to reduce these charges unilaterally.

Instead it needs co-operation from the train companies.

Eurotunnel said it made a net loss of £34m before asset write downs.

It has written off £1.3bn to lay stronger foundations for cuts in its fees and other restructuring measures.