Eurostar avoids bankruptcy after securing £250m rescue package

Capital injection will help train operator recover from Covid hit and increase services between London and Paris

A traveller walks with a suitcase past an information board at the Eurostar terminal at St Pancras International in London. Eurostar warned in January that it could go bust within months without a rescue package. Reuters
A traveller walks with a suitcase past an information board at the Eurostar terminal at St Pancras International in London. Eurostar warned in January that it could go bust within months without a rescue package. Reuters

Eurostar secured a £250 million ($355.11m) rescue package after falling demand for its service during the Covid-19 pandemic left it at risk of bankruptcy.

The company said on Tuesday that the capital injection provided by its shareholders, including French rail operator SNCF, Patina Rail and the Belgian state train operator SNCB, and associated bank loans, would "secure Eurostar’s future”.

Under the deal, Eurostar, whose passenger services link London with Paris, Brussels and Amsterdam, will receive £50m in shareholder equity, £150m in investor-guaranteed loans, and £50m of existing loans will be restructured. The UK did not contribute to the rescue deal.

Jacques Damas, chief executive of Eurostar, said the Eurostar team was “encouraged” by the strong support from its shareholders and banks.

“The refinancing agreement is the key factor enabling us to increase our services as the situation with the pandemic starts to improve,” Mr Damas said in a statement on Tuesday.

“Their co-ordinated actions and decisions are crucial to the restoring of demand and the financial recovery of our business.”

Eurostar warned in January that it could go bust within months without a rescue package, with British business leaders, including the head of the Abu Dhabi-owned ExCeL Centre, urging the UK government to step in.

At the time, Eurostar, which is controlled by French state railway SNCF due to its 55 per cent share, was at risk of bankruptcy following a 95 per cent drop in passenger numbers since March.

Eurostar employs 1,200 people in the UK with a further 1,500 jobs provided by its supply chain, however over the past 12 months the company said it suffered “a more severe decline in demand” than any other European train operator or competitor airline.

Even now, only a single Eurostar train is running daily between London and Paris and London and Brussels.

“With this package of support, Eurostar will be able to continue to operate this vital link and meet its financial obligations in the short to mid-term,” Eurostar said.

Passengers arrive from Paris at Eurostar terminal in London. Eurostar said it suffered ;a more severe decline in demand' than any other European train operator or competitor airline. Reuters
Passengers arrive from Paris at Eurostar terminal in London. Eurostar said it suffered ;a more severe decline in demand' than any other European train operator or competitor airline. Reuters

Unlike national flag carriers, which have been bailed out by their governments, Eurostar has struggled to secure a state rescue package.

Britain, which sold a 40 per cent holding in London-based Eurostar in 2015, resisted any involvement in the bailout. As well as SNCF, other owners include Belgian railroad SNCB and private investors Caisse de Depot et Placement du Quebec and Hermes Infrastructure.

Mr Damas earlier appealed for access to Bank of England-backed loans made available to some airlines, saying the company’s survival was in doubt.

The company said it will now focus on restoring demand on its core routes between London and Paris, Brussels and Amsterdam while “maintaining rigorous cost control” to help it repay its loans.

The train operator will increase the number of trains on its London-Paris route to two daily services from May 27 and to three trains a day from the end of June, after Britain’s target date of June 21 to ease all Covid-19 restrictions.

The frequency will then gradually increase through the rest of summer. Pre-pandemic, daily trains ran every half-hour in each direction.

Updated: May 19, 2021 09:41 AM

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