EUROSTAR NEAR FINANCIAL COLLAPSE: FRENCH MINISTER SEEKS UK BAILOUT CASH


23/01/2021




Robert HARNEIS -TDO- (France)- France is in talks with Britain seeking cash to support Eurostar, the high speed rail link under the English Channel. The French government is insisting that the UK should contribute to the bailout.

The problem for Eurostar and France is that the UK government has no shares in the company which is French. In net terms only a maximum of 10% of the shares are held by British banks and institutions. In addition the French government holds 55% of the equity through state owned SNCF railways.

The then British Prime Minister David Cameron, sold the UK government’s 40% stake to an Anglo-Canadian consortium for £757million in March 2015. Last weekend, a spokesman for Eurostar said: “Without additional funding from the Government, there is a real risk to the survival of Eurostar as the current situation is very serious.”

French Transport Minister Jean-Baptiste Djebbari has revealed he is in discussions with UK counterpart Grant Shapps.

France has already put €190 million into the struggling company, which has seen passenger numbers crash by 95 percent since last March following the beginning of the coronavirus pandemic, which has severely disrupted travel across the Channel.

Several reports had suggested that with lockdowns enforced throughout the continent, Eurostar would soon run out of cash.

Transport Minister Djebbari told a parliamentary hearing in Paris: “We are working with the UK on mechanisms for aid that are proportionally pro rata to the implications of each in Eurostar. "The Government will back Eurostar to maintain this strategic link between our two countries.” Adding that the French state will be "at Eurostar's side in order to maintain this strategic link between our two countries". The French Transport Minister said support will be provided "based on our involvement in Eurostar, so that we can financially sustain its business model".

SNCF chief executive Jean-Pierre Farandou told France Inter radio this week that "the situation is very critical for Eurostar".

In London, House of Commons Transport Select Committee chairman and Tory MP Huw Merriman appealed for the UK and French Governments to make a joint effort to support Eurostar. He warned: "We simply cannot afford to lose Eurostar to this pandemic… The company contributes £800million each year to the UK economy.”

However the real net contribution to the UK economy is likely to be much less. In addition if the company is allowed to go into bankruptcy there is no reason why the rail company and its rolling stock should be prevented from continuing to operate in administration. It is not hard to conclude that the French government and President are more concerned about the loss for SNCF than the ‘strategic link’ with London.

A concern of the British government with little to lose is that any package may need to be renewed because there is no way of calculating how long the virtual traffic standstill will continue. The government has already funded UK employees of the company laid off during the pandemic.

London can be expected to drive a hard bargain particularly since President Macron has regularly accused his British opposite numbers of lies and deception over Brexit. It will be no surprise if the UK government, appreciating the irony of the situation, urges Paris to seek financial support from the EU.

Eurostar is the Channel Tunnel company Getlink’s biggest customer.


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