Rail operator Abellio ScotRail posts losses of £64.5m

Train operator Abellio ScotRail has blamed the early impact of the pandemic on widening losses in its latest annual accounts.

The Dutch-owned company, which runs the Scotland rail franchise, posted a pre-tax loss of £64.5m in the 12 months to 31 March 2020.

In the previous 15-month accounting period, its losses were just over £11m.

The operator said the national lockdown in March last year had a "significant" impact on its financial performance.

In December 2019, Abellio was stripped of the contract to run ScotRail services by the Scottish government amid criticism of performance levels.

The Scottish government announced last month that the franchise would be taken over by a public sector body from the end of March next year.

In a statement lodged with Companies House, Abellio ScotRail said: "As a result of government intervention telling people not to travel, there was a significant reduction in passengers travelling with Abellio ScotRail (up to 95% reduction on the prior year)."

Turnover for the year, at £917m, was about £72m down on the previous accounting period, with passenger income falling from £445.3m in 2019 to £360.4m.

Its franchise subsidy from Transport Scotland rose over the same period from £482.8m to £526.3m.

Since March last year, ScotRail has been receiving emergency funding to help it cope with the impact of coronavirus, under an agreement with the Scottish government.

In its statement, ScotRail said that while the Emergency Measures Agreement insulated the company "as far as reasonable" from the severe financial impacts of the pandemic, "the expected cashflows across the remainder of the franchise term have been significantly impacted".

There has always been fierce competition to win the ScotRail franchise, as it is the biggest single contract handed out by the Scottish government.

But the latest winner, Abellio ScotRail, has seen a dismal return from its efforts to run more than 2,000 trains every day.

Instead of turning a profit, it has posted a pre-tax loss of more than £64m - the second on the bounce, and far worse than the previous accounting period, which saw an £11m loss over 15 months.

Abellio ScotRail blames Covid-19 for plummeting passenger numbers. But that can't be the full story, as the lockdown only took hold in the last fortnight of this accounting year.

So what's gone wrong? The highly experienced firm - owned by the well-regarded Dutch state railway - was stripped of the contract to run the ScotRail service in December 2019.

Officially, it was because the Scottish government didn't accept its plans for the future. But it didn't help that the firm had taken a pasting from critics over performance levels, even as it increased passenger numbers and brought in a fleet of new trains.

But if this firm can't make a profit - or meet the Scottish government's targets - perhaps it's the system that's bust.

There is lots of evidence that the franchise model has hit the buffers - not least the spectacular failure of some rail services in southern England.

The UK government even commissioned an expert review into how to change the system for running the railways.

But the finished report - the "long-awaited" Williams Review - has been sat on for more than six months, unpublished.

The Scottish government has now said a public operator will take over the franchise at the end of March next year. On this evidence, it will need bags of luck if it's to outperform Abellio Scotrail.

That, of course, is what commuters will demand. But with passenger numbers expected to stay low for some time to come, it will be hard to judge if things have really improved.