Break-even point proves as elusive as ever for Eurotunnel

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The Independent Online

Eurotunnel renewed its attack on the British and French governments yesterday for failing to tackle the problem of asylum seekers.

The attack came as the Anglo-French group warned that it might not hit its target of breaking even this year after payment of interest following an increase in its underlying losses last year to £147m.

Charles Mackay, the chairman of the group, said: "It is still our goal but it will be difficult. Most analysts think we will not be able to cover our expenses until 2003."

Last year's increased loss was caused by a £25m decline in revenues from telecoms and the loss of £20m in freight revenues because of the disruption caused by asylum seekers trying to gain entry to Britain through the Channel Tunnel.

Attacking the failure of the two governments to give Eurotunnel the "necessary support" to tackle the problem of asylum seekers, Mr Mackay said: "Protecting the operations of a company, particularly one of such importance to both countries, from illegal mass incursions is clearly part of the governments' responsibility for maintaining law and order. It cannot be right that Eurotunnel was left to deal with this problem largely on its own."

Eurotunnel made an operating margin in 2001 of £322m on total turnover of £548m – 6 per cent down on the previous year. This compared with an operating margin of £345m in 2000 on total revenues of £579m. But after depreciation charges and provisions of £139m and interest charges of £330m its net loss increased to £132m compared with £124m in 2000.

Revenues from shuttle services were broadly unchanged at £310m while income from through-rail services were marginally higher at £211m. But income from "non-transport activities" – largely the money Eurotunnel raises by renting out capacity in the tunnel to telecoms companies – fell by more than half to £27m.

Apart from the lost freight revenues caused by the asylum crisis, Eurotunnel was also forced to spend £5m on reinforced security measures and extra staff costs.

Mr Mackay said that, despite the difficult year that Eurotunnel had endured and the continuing uncertain economic outlook, he expected an improvement in the company's financial performance in the current year.

Mr Mackay said: "Eurotunnel faced a quite extraordinary range of unforeseen external challenges in 2001: the collapse of the telecoms cable market, serious flooding on both sides of the Channel, foot-and-mouth and, most damaging of all, asylum seekers."