Tube Lines says better performance justifies controversial rise in profits

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The Independent Online

Tube Lines, one of the two private-sector consortia which have taken over the London Underground, is set to court fresh controversy by revealing an increase in profits.

Tube Lines, one of the two private-sector consortia which have taken over the London Underground, is set to court fresh controversy by revealing an increase in profits.

The consortium, which is responsible for the Jubilee, Northern and Piccadilly lines, is thought to have achieved a significant improvement on the £45m profit it made in its first year of operations. Details of Tube Lines' latest profits for the financial year which ended in April are due to be released in July.

Terry Morgan, the chief executive of Tube Lines, did not disclose the specific profit figure but said the business was performing well and justified the money it is making from the Underground contract by pointing to improved performance.

Major upgrades to the Northern and Jubilee lines are running ahead of schedule and Tube Lines has also exceeded the targets set by London Underground for punctuality and train failures. The programme to modernise or refurbish the 100 stations which Tube Lines is responsible for is on track.

Mr Morgan said investment in the network was ahead of schedule at about £350m last year and would rise again in the current financial year to at least £380m. Tube Lines, whose two shareholders are the Spanish transport group Ferrovial and the US construction giant Bechtel, has pledged to spend £4.4bn in the first seven and a half years of its 30-year contract to modernise the Underground. The Spanish company has taken over the stakes in Tube Lines formerly owned by the UK contractors Amey and Jarvis.

A report in March from the Commons Public Accounts Committee criticised the manner in which the Tube contracts had been awarded through a public-private partnership, saying this had already cost taxpayers £1bn in fees and higher financing charges.

But Mr Morgan said the MPs' report had ignored all the benefits delivered by the PPP. Investment in the Underground is now three times higher than before Tube Lines took over in January 2003, while there has been a 30 per cent decline in the cost of track renewals and a 40 to 50 per cent increase in the amount of track being replaced. Escalators, meanwhile, are being replaced in 10 or 11 weeks - less than half the time it used to take.

Mr Morgan's counterpart at Metronet, the consortium selected to take over the rest of the Tube network, was fired last month. John Weight was removed because of Metronet's "unacceptable" performance levels and delays to its investment programme.

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