Eurostar in advanced talks with UK and French governments over bailout

Eurostar ‘is in advanced talks’ with UK and French governments over bailout as biggest shareholder warns of collapse within weeks after passenger numbers plunge by 95%

  • Eurostar revealed that it is ‘fighting for its survival’ amid pandemic turmoil
  • The UK and French governments are being urged to strike a joint bailout deal 
  • SNCF, France’s state railway company and majority shareholder said deal must be arranged next month
  • The cross-Channel service was running just four journeys a day at one point

Eurostar is in ‘advanced discussions’ for a rescue package with the UK and French governments in an attempt to head off a potential collapse, it emerged today.

The head of the French state rail company, the cross-Channel service’s largest shareholder, said it needed a cash injection within weeks.

It was revealed in November that the company is ‘fighting for survival’ after suffering a 95 per cent reduction in passenger numbers during the coronavirus pandemic.

At one point just one daily train was running in each direction between London and Paris, and between London and Amsterdam via Brussels.

Eurostar is in ‘advanced discussions’ for a rescue package with the UK and French governments in an attempt to head off a potential collapse, it emerged today

Jean-Pierre Farandou, chief executive of French rail group SNCF, told the Financial Times: ‘We are getting closer to the moment when Eurostar will have real cash flow problems … by next month, we have to conclude these discussions.’

He said the UK and French governments were involved in ‘very advanced discussions’ about possible state-backed loans to pull the rail operator through the coronavirus pandemic.

Currently travel outside of the UK is only for ‘essential purposes’, with holidays to the continent banned until May 17, leading to the huge reduction in passengers.

SNCF has a 55 per cent stake in Eurostar, and has itself received billions in French government support.

Jean-Pierre Farandou, chief executive of French rail group SNCF, said: ‘We are getting closer to the moment when Eurostar will have real cash flow problems … by next month, we have to conclude these discussions.’

The firm has with other shareholders, including London-based Hermes Infrastructure, Canadian fund manager CDPQ and Belgium’s state rail operator, already pumped £170m into Eurostar during the pandemic. 

But the company has said this money was ‘finite’ and a significant solution is needed.

Mr Farandou added: ‘We hope that it will be weeks [not months] because the financial situation is going to be very difficult at the end of May, start of June.’

It is understood that Eurostar has discussed the possibility of £60m of loans backed by UK Export Finance, which helps UK companies accessing finance and insurance.

The UK government has until now been insisting that Eurostar is not a British company, saying the 55 per cent ownership by the French state means they should lead on a support package. 

It is understood that Eurostar has discussed the possibility of £60m of loans backed by UK Export Finance, which helps UK companies accessing finance and insurance

In February, Transport Secretary Grant Shapps told MPs that the Government is ‘very keen for Eurostar to survive’ but insisted ‘it’s not our company’.

The cross-Channel rail operator revealed in November that it is ‘fighting for its survival’ after suffering a 95 per cent reduction in passenger numbers during the coronavirus pandemic.

It is running just one daily train in each direction between London and Paris, and between London and Amsterdam via Brussels.

Eurostar is 55 per cent owned by French state rail company SNCF.

Giving evidence to the Commons Transport Select Committee, Mr Shapps said the UK will be ‘as helpful as possible’, stating that schemes such as UK Export Finance – which partially guarantees loans – could be utilised.

But he continued: ‘We don’t own the shares, so, to state the obvious, it is the shareholders’ problem to resolve.

‘We’ll be as helpful as possible but it’s not for us to take over their issue.

‘You’ve got 55 per cent ownership by the French state. It’s not just any old shareholder.’

A Department for Transport spokesperson said: ‘We recognise the significant financial challenges facing Eurostar as a result of Covid-19 and the unprecedented circumstances currently faced by the international travel industry.

‘The Government has been engaging extensively with Eurostar on a regular basis since the beginning of the outbreak.

‘We will continue to work closely with them as we support the safe restart and recovery of international travel.’

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