Eurostar could go bust without rescue package
Business leaders, including head of Abu-Dhabi-owned ExCeL Centre in London, urge UK government to step in
Eurostar could go bust within months without a rescue package, British business leaders, including the head of Abu Dhabi-owned ExCeL Centre, warned the UK government.
Jeremy Rees, chief executive of ExCeL, was among 28 MPs and business heads expressing concern over the future of the high-speed, cross-channel service as the pandemic has reduced passenger numbers drastically.
In a letter sent to UK Finance Minister Rishi Sunak, the group said Eurostar “could run out of funds” in the coming months and has “fallen through the cracks” because unlike some airlines or domestic railways it is not eligible for government-backed loans.
“With international passenger numbers likely to remain low into the spring, our green gateway to Europe is in peril,” said the letter co-ordinated by business campaign group London First.
“If this viable business is allowed to fall between the cracks of support – neither an airline, nor a domestic railway – our recovery could be damaged. London and the UK would lose out both economically and reputationally.”
The travel industry has been hit hard by the Covid-19 crisis with restrictions grounding planes at the start of the pandemic last year. Travel restrictions continue to be tightened this year with the UK closing all of its air corridors and travellers entering the country ordered to show a negative Covid-19 test and undertake a 10-day quarantine.
Meanwhile, France now requires UK arrivals to observe a seven-day quarantine after which a Covid-19 test must be taken.
This has had a knock-on effect on Eurostar, putting the company, which is controlled by French state railway SNCF, 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, the value of this link extends beyond that”, the letter said, pointing to the number of students that use the train line and the environmental benefits the mode of transport offers.
The business leaders said the company, which links London with Paris, Brussels and Amsterdam, needs “swift action to safeguard its future".
While some airlines have accessed loans to help them survive the crisis as the virus stunts international travel, Eurostar has not qualified for emergency agreements to rescue domestic British rail operators or bail out the London Underground. It has, however, received furlough money from Britain to ensure its staff are paid.
Eurostar said it has received money from its shareholders, which include the funds Caisse de Depot et Placement du Quebec and Hermes Infrastructure, with a 40 per cent stake, and Belgium, which holds 5 per cent.
Eurostar chief executive Jacques Damas wrote to Mr Sunak in November after the Treasury announced grants to airports equal to their business-rate bills, up to a maximum of £8 million ($11m).
The company said the move put it at a direct disadvantage against airline competitors.
The UK Department for Transport said at the time that it recognised the financial challenges facing Eurostar and had been in contact with the company regularly since the start of the outbreak.
Britain sold its own 40 per cent holding in Eurostar in 2015, making the question of government funding more complicated.
Christophe Fanichet, head of SNCF Voyageurs, said last week that Eurostar has suffered from being regarded as French in the UK and British in France, Agence France-Presse reported.
The London First letter said Eurostar is “not asking for special treatment” but urged the government to ensure the company has “equal access to financial support as companies in similar positions” because it has become a vital international link after Brexit.
“Maintaining this international high-speed rail connection into the heart of London has never been more important. Having left the European Union, we need to actively set out our stall as an attractive destination for people to live, work and play,” the letter read.
Updated: January 18, 2021 06:57 PM