Five rail firms face ruin

Five train companies will have to ask for more cash from the next government to run services, according to a report out yesterday. The study, conducted by a former transport analyst with the City accountants Coopers and Lybrand for Save Our Railways, the pressure group, claimed that many private operators bid so aggressively for train services they will be unable to meet the ambitious targets they have set themselves.

Another four franchises are likely to run into financial difficulties, making losses even if they increase revenues by 16 per cent over seven years. The loss-making franchises - Cardiff Railways, West Anglia and Great Northern and South Wales and West, Thameslink and Thames Trains - are likely to require pounds 500m in extra subsidy to keep trains running.

"There has been concern in the rail industry for some time about the way that some of the later franchises were let to bidders who were taking a gamble," said Keith Bill, national secretary of Save our Railways.

The City's initial concerns about privatisation have meant many early bids were "given away". South West Trains, which introduced an emergency timetable after cutting driver numbers, is predicted to make pounds 480m if it grows at 3 per cent a year. Also likely to make bumper profits are Great Western, which runs InterCity services from London to the West Country and could make pounds 462m, and the French-based company CGEA, in line for more than pounds 600m from its two commuter services. Campaigners point out that Opraf, the government body which let out franchises, realised some would make money and others would run into difficulties.

The report points out that the former franchising director, Roger Salmon, told Modern Railways, a trade magazine: " I reasonably predict we are going to have a franchisee that makes a lot of money and another franchisee who might go bust."

Train companies said growth forecasts were too low. "In two years we have increased our takings by 50 per cent," said a spokesman for Thames Trains. "So we expect to grow far faster than this report estimates."

The analysis should jolt Labour's rail policy into life. The speed of the sell-off caught the party off-guard and forced its transport team into a series of embarrassing U-turns - which culminated in a decision not to take any bankrupt train service into public hands.

On track for profit or loss

THE WINNERS

Service Owner Possible profit

South West Trains Stagecoach pounds 479m

Great Western Great Western pounds 462m

Connex

South Central CGEA pounds 451m

Great

North Eastern Sea Containers pounds 289m

InterCity

West Coast Virgin pounds 278m

THE LOSERS

Service Owner Possible losses

Thames Trains Victory Railways pounds 34.6m

South Wales

& West Prism pounds 34.3m

WAGN Prism pounds 27.8m

Thameslink Govia pounds 18.3m

Cardiff Railways Prism pounds 7.9m

All figures based on a growth rate of 3 per cent a year