Eurotunnel cheered by overhaul

Efforts by Eurotunnel to take on low-cost airlines and overhaul the contracts it holds with hauliers showed early signs of paying off today.

The Channel Tunnel operator, which is in talks with lenders over ways to tackle its £6.1bn (€9bn) debt mountain, said half-year revenues from shuttle services improved 6% to £146m (€216.1m), while a business reorganisation also helped lift profits at an operating level by 19% to £74m (€109.5m).

Eurotunnel said the discussions with creditors had continued over the summer and that it hoped to provide an update on progress at the end of next month.

The improvement in revenues from the company’s fleet of 25 shuttle trains, which carry cars, coaches and trucks, came after Eurotunnel asked regular freight customers to provide daily forecasts of their usage – enabling the company to plan its capacity better.

Eurotunnel said it transported 703,363 trucks in first half of 2005, an increase of 9% compared with a year earlier. Disruptions to ferry operations at the Port of Calais helped during the first quarter, although Eurotunnel said it also saw an improvement in the amount of money generated per vehicle.

The company transported 951,561 cars in the first half, an increase of 1% although only taking into account under a month of a new tariff structure that matched the one-way fares available from low-cost airlines.

Chairman and chief executive Jacques Gounon said: “Eurotunnel has accelerated improvements in its operational performance.

"Increased revenue in our core shuttle business has been achieved within the framework of a new marketing strategy based on our key benefits of frequency, speed and reliability.”

Operating margins were up 7% during the period, which Eurotunnel said partly reflected a 3% fall in operating costs.

Among initiatives, the company has announced plans to cut its workforce by up to 800 between now and April. It currently has more than 3,000 people.

Finance charges resulted in net losses of £87m (€128.7m) for the period, although this was an 18% improvement on a year earlier.

Revenue from railway operators running services through the tunnel, such as Eurostar and freight groups EWS and SNCF, stayed flat at £117m (€173.1m), it added.

Eurotunnel faces a number of changes to its finances in the next couple of years which will worsen its predicament, including the repayment of capital on its loans from the beginning of 2007.