The Sunderland company that ran the troubled the Northern Rail network swung to a £222m loss in what it described as a “particularly difficult year”.
The accounts for Arriva Rail North - which cover the 12 months to March 31, 2019 - pre-date the loss of the company’s franchise to run local rail services across the North.
Ministers stepped in to strip Northern Rail of its franchise in January after more than 18 months of poor performance.
But the company’s accounts lay bare the level of the problems within the franchise, though they argue that many of the problems faced by Northern Rail - including delays to infrastructure upgrades, industrial action and issues in the wider economy - were “outside of the direct control of the company”.
The massive loss, which comes after a £10m profit a year earlier, was due in large part due to a £180m onerous contract provision which reflects the costs the company expects to be hit with due to the early termination of the franchise. Profit for the year excluding the provision charges and impairments was £28.7m.
Meanwhile, Arriva’s parent company has confirmed that a planned Stock Market flotation set to begin this year is likely to be postponed.
Commenting on the accounts, a spokesperson for Arriva said: “2018 was a difficult year, with the Northern franchise facing several challenges outside the direct control of Northern.
“These included the ongoing, late delivery of major infrastructure upgrades, prolonged strike action and lower than expected economic growth. These factors had a significant effect on the revenue expected in our original franchise business plan agreed with government back in 2015.”
Arriva, which is based in Sunderland but runs bus and rail services around the UK and Europe, won the franchise for Northern Rail in 2015, beginning services the year after.
But problems beset the franchise, including worsening punctuality, frequent industrial action by staff and delays in replacing the much-hated Pacer trains that operated on many lines.
Changes to timetables in May 2018 led to chaos in many parts of the North and in January Transport Secretary Grant Shapps stepped in to return the service to public operation.
In the accounts, Arriva Rail North insisted that there was “clear emerging evidence” that services were improving from the start of 2019, though it admitted its Public Performance Measure - a key indicator for rail companies - had fallen from 88.2% to 80.7% due the earlier problems.
Directors said that the company will be able to pay its liabilities, including pensions, and believe they will achieve a solvent wind-down of the company.
Turnover for the firm actually rose during the year, with passenger income increasing from £298.5m to £303.8m, while franchise payments went up from £284.7m to £370.3m.
Arriva’s German owner Deutsche Bahn had previously said that it was planning to list Arriva, initially making a minority stake available, and then reducing its holding over time.
But yesterday a spokesman for Deutsche Bahn said: “We remain committed to selling DB Arriva for strategic reasons. However, a transaction in 2020 is no longer likely. For a good market environment, we should wait for results of current developments.”
