[Anonymous]

[SergeantMajor]

Gorgeous George announced the long overdue sale of the Government’s 40% stake in Eurostar today.

This is a welcome news. Since becoming a private corporation in 2010, the rail operator has delivered consistent profits with £25million in 2011 and an operating profit of over £50m in 2012, and launched services to Provence with others planned, including Barcelona, in future.

Looks like there’s a new Seimens fleet on its way from 2015, as well as new services to Amsterdam. the current trains are showing their age, and the interiors are rather tatty.

Should raise several billions for the Treasury (us). Will be interesting whether France and Belgium decide to sell their stakes, too.

[MartinJ]

Thank you for the story. I fail to understand why exactly this news is “welcome” and why the sale has been “long overdue”. If the business is successful and delivers money to the government and a benefit to the public, why should it be sold?

[SergeantMajor]

The news is welcome because until Eurostar became a private corporation in 2010, its losses were massive, and it consistently missed its targets.

Since 2010, this new structure has allowed it wake up from its State-owned doldrums, and begin planning for the future, including launching an investment programme and cost-reduction programme in advance of its sell off.

Without the sell off plan, none of this would have happened.

The money being delivered to the UK government (last year 40% of a very modest £52m operating profit, which will be further reduced by tax) pales into insignificance when compared to the capital tied up in the assets which despite the modest recent profits is still enormously unproductive, particularly as this money could be used to pay off our overdraft, and so is effectively being borrowed.

I doubt the profit returned to the HM Treasury even covers the borrowing costs.

Finally, although it delivers some benefits to the public, it doesn’t take a genius to see that the company could do so much more than chug trains across the channel; with the advent of competition from Deutsche-Bahn not far off, a new commercial perspective is required and having private shareholders will be a spur to innovation and efficiency.

increased profits will increase the tax take – HM Treasury income would actually increase as profits are generated and taxed. And that doesn’t require State ownership, or tying up capital which would be better used to pay off debt or invest in new infrastructure.

http://www.thetimes.co.uk/tto/business/industries/transport/article3898945.ece

[transtraxman]

This is just another case of selling the family silver.
To have ALL of Eurostar´s shares in the hands of private investors is, admittedly, much better than having them iin governments´ hands. However, that is not going to happen.

The Belgian government´s position on this I do not know but it is obvious that the French government will not give up anything like a majority in such a “strategic asset”. Therefore British(and other) shareholders and customers will be at the mercy of the Fr.Gov. as is always the case. The GB gov. is not protecting the British consumer or investor by doing this.

[christopheL]

@MartinJ

Because it is the role of a government to subsidize businesses until they become profitable.
When profitability is here, it’s better to sell the business to private corporations so that the profits are no shared between the tax payer’s community (to many people to share with !!!)
I’m afraid France will not do the same as long as we have a communist government there. What a shame !

[SergeantMajor]

How long do you think the current French government will hang on, though?

The delightful thing about politics is that there is always change to look forward to.

[travelsforfun]

The turnaround in Eurostar was thanks primarily to the restructuring in 2010 – when it went from three separate national organisations to a single corporate entity.

Then, as now, the Eurostar is controlled by its majority (55%)shareholder, (state-owned) SNCF. With the introduction of cross-border competition in European rail travel, Eurostar is a key pillar of SNCF’s battle with DB for high speed rail supremacy – it’s a strategic asset for them and one they are unlikely to sell any time soon.

[Why French or German state companies can be successful when their British counterparts are not is a separate but interesting discussion in itself.]

[AMcWhirter]

Plus the fact that SNCF has most to gain. Eurostar uses SNCF’s booking and ticketing system, it feeds huge numbers of passengers onto SNCF’s domestic network at Lille and Paris.

How much does UK rail gain from Eurostar ? Just the 70 mile section between London and Folkestone.

[transtraxman]

Alex:
If that is the case then where do all the passengers go who disembark at St.Pancras?
What are the proportions: those who only stay in London and so use nothing but TfL, and those who use National Rail to some other destination?

[AMcWhirter]

Hello transtraxman

Good point and sorry to be misleading. What I was referring to was just the UK track component of the Eurostar system, ie the section between London and the Tunnel.

You are quite correct. Passengers joining or leaving Eurostar at St Pancras would be using UK transport of one sort or another.

Most Eurostar running covers SNCF territory, eg Calais-Paris and those seasonal services running Calais-Avignon and, this year, Calais-Aix

[canucklad]

In agreement with transtraxman
This is political dogma rather than sound business sense.
Not in favour of selling our share, guaranteed that it will either be SNCF or some mad investment group who will bean count the business to failure.
All the echoes of East Coast I’m afraid.

edited to add ….who are the primary decision makers in Euronext ?

[christopheL]

Guess who paid for the tracks which allows Eurostar to drive trains from London to Provence and to the Alps and makes Eurostar a key asset for state-owned SNCF ? The French taxpayers !!!
Lots of taxes but very efficient high speed tracks

[BigDog.]

transtraxman – 05/12/2013 13:40 GMT
+1

SergeantMajor – 05/12/2013 13:49 GMT
…How long do you think the current French government will hang on, though? The delightful thing about politics is that there is always change to look forward to..

Maybe a look at some other French Government assets may enlighten the poster – EDF(energy) 84.5% since 2008; SNCF initially 51% now 100%; Air France 19% diluted since merger with KLM; La Poste 100%; RATP (public transport) 100%

so the answer methinks is … no divestment any time soon.

[SergeantMajor]

Could be sooner than you think, as Hollande’s approval ratings plummet to new lows:

http://www.theguardian.com/world/2013/oct/29/francois-hollande-most-unpopular-president

[Author]

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