‘Significant doubt’ over CIÉ future

CIÉ’s financial position has deteriorated so sharply that the group’s auditors have warned about its ability to continue to trade as a going concern.

In its latest annual report, CIÉ revealed a net operating loss of €6.1m in 2011, despite a government subvention of almost €280m last year.

It brings the group’s net current liabilities to over €394m, including bank borrowings of €77.8m. Its cash levels shrunk by €11m to just €3.6m at the end of last year.

CIÉ also acknowledged it is expected to exceed its existing borrowing facilities in 2013.

PriceWaterhouseCoopers, the company’s auditors, said CIÉ would require extra borrowing and funding from the Government to allow it to survive further projected losses over the next few years before its expected return to profitability in 2015.

Vivienne Jupp, CIÉ chairwoman, said its board was confident CIÉ would have sufficient resources to continue its operations for the foreseeable future due to a series of planned actions.

However, she warned commuters will face annual fare increases, while CIÉ was also due to sell off its non-core assets and implement changed work practices and changes to entitlements and benefits for staff.

CIÉ is in talks with its bankers about the renewal of existing bank facilities which are due to lapse in January.

The CIÉ annual report acknowledged that there is “significant doubt” about the group’s trading future.

Ms Jupp said the group was facing some of the most significant financial challenges in its history. She blamed CIÉ’s perilous financial state on a reduced government subvention, falling passenger numbers, and increased fuel costs. The report shows exchequer funding for public service obligation routes had fallen by €41.4m since 2008.

Passenger journeys have fallen by 17.5% over the same period, resulting in a €81.2m decline in revenue, while fuel costs have risen by €22m over the past three years.

The state subvention has been further reduced this year to €242m.

Transport Minister Leo Varadkar recently confirmed that an additional €36m bailout promised to CIÉ during the summer was conditional on the group making greater efforts to achieve savings within its rail and bus operations.

Mr Varadkar also criticised CIÉ’s lack of progress on the sale of some of its assets, changes to staff terms and conditions, and securing new lines of credit.

Revenue across the group fell by €3.4m to €707.9m, while the subvention decreased by almost 3% to €279.7m.

Bus Éireann is the group’s only profitable division recording a net operating gain of €500,000 last year.

Passenger numbers on routes in provincial cities fell by 1.4%, and by 2.5% on all other services.

Iarnród Éireann recorded an operating loss of €21.9m in 2011, an improvement on the €36m losses reported the previous year.

However, the number of rail passengers fell by 2% to 37.4m, despite increased numbers on Dart and commuter routes.

Although CIÉ reduced its operating costs by €174m since 2008 and staff has fallen by 1,450, Ms Jupp said such efforts “must continue and be redoubled”.