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Eurostar emergency funding – French and/or British?

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A row has broken out over emergency support for Eurostar, the cross-border open-access operator that runs high-speed services between London St Pancras International and France, Belgium and the Netherlands.

Eurostar International Ltd is jointly owned by SNCF (55%), Caisse de dépôt et placement du Québec (CDPQ) (30%), Hermes Infrastructure (10%) and Belgium’s SNCB (5%). HM Treasury sold the British 40% stake to CDPQ and Hermes in March 2015. SNCF, France’s national, state-owned railway company, is therefore the majority shareholder.

Jean-Pierre Farandou, SNCF.

In an article in the Financial Times on Thursday 18 March 2021, SNCF president Jean-Pierre Farandou said that its high-speed Channel Tunnel rail subsidiary Eurostar “needs state aid within the month to get through (COVID-19) crisis”.

Mr Farandou further commented that the “financial situation is going to be very difficult at the end of May 2021,” stressing that “Eurostar is strategic, it’s geopolitical”.

On 4 March, a previous Financial Times article, which interviewed Eurostar chief executive Jacques Damas, stated that “Eurostar is losing in the region of £500 million (€585million) a year”.

SNCF and Eurostar are known to be talking with both the British and French governments about a bailout – presumably aiming for something close to the £500 million that it claims Eurostar is losing.

There is nothing wrong with this approach, readers may think.  Many railway companies around the world, with passenger numbers at al all-time low, are seeking and receiving state aid.

What is different in this case is that SNCF has the money to support Eurostar from its own funds. However, it is instead spending €600 million (£513 million) on launching a new open-access high-speed service, this time in Spain. Ouigo España will use duplex (twin-deck) TGV trains, as used on its French network, on the route Madrid – Zaragoza – Tarragona – Barcelona. Originally planned to commence in March 2021, the launch has been delayed until 21 May.

This raises the question of state-owned companies using state money to finance operations in other countries. Requesting aid from the British and French governments has freed up the cash for SNCF to compete with Spanish state-owned operator Renfe in its own country.

If the UK and French treasuries don’t play ball, will SNCF let Eurostar go bust while it spend the much-needed funds in launching Ouigo España?

The French government is very much involved as Eurostar is, effectively, a French state-controlled company. HM Treasury has an interest as, though no longer a shareholder, 70% of Eurostar’s workforce is based in the UK and pays UK taxes.

Nick Brooks, Allrail.

Allrail – the Alliance of Rail New Entrants – is the European non-profit association of independent passenger rail companies, both rail operators and ticket vendors. It represents a number of open-access operators around Europe.

Nick Brooks, Allrail secretary general, said: “The EU and UK must prevent state aid to market dominant companies that are investing elsewhere unless there are conditions.

“SNCF wants up to EUR 585 million for Eurostar while spending EUR 600 million on Ouigo.”

Manuel Cortes, TSSA.

Trade union TSSA is alco concerned – it represents many of the UK-based Eurostar employees. TSSA general secretary Manuel Cortes commented: “The catastrophe facing Eurostar is real and it’s clear that support is needed to prevent the collapse of the UK’s only green, high speed rail link with Europe.

“With significant numbers of UK jobs, and our climate credentials, on the line, the UK should step forward with support, just as it has done for airlines.

“We support the UK Government taking a stake in Eurostar again to secure the future of this vital rail line.”

And that is the crux of the argument.  Should the UK Government financially assist a French state-controlled company to protect British jobs? And, if it does, should it take back the stake in the company that it relinquished in 2015?

Whatever it does, it needs to do it quickly.

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