AGI – Eurostar, the operator of the trains that run under the Channel Tunnel, has secured a mega loan from 290 million euros and will thus be able to keep afloat waiting for the travel restrictions due to Covid-19 to be completely removed. The company, which it had been on the verge of bankruptcy, stressed that the funds provided by shareholders and banks will be able to secure its future.
The overseas airline, which operates only one daily London-Brussels-Amsterdam flight at the moment, had to find new money before end of May / beginning of June to avoid bankruptcy. This is because it has seen a significant decline in customers, more than any other European rail operator or competing airline.
Eurostar suffers from being perceived in the UK as a French state company, while in France it is often seen as a British company because it is based in London.
It was therefore unable to benefit from direct aid or State-guaranteed loans, unlike airlines. The loan found, amounting to 250 million pounds (290 million euros), will allow the company “to meet its financial obligations in the short and medium term”.
“The strong financial commitment of shareholders to banks is the key factor that will allow us, in the immediate future, to increase activity as improvements in the control of the Covid-19 pandemic are expected, “Eurostar CEO said, Jacques Damas. He CEO of SNCF Voyageurs Christophe Fanichet welcomed “this refinancing, which is an important step to ensure the sustainability of Eurostar e travel between the continent and Great Britain.
Now the company sees the light at the end of the tunnel: it will increase its offer to two daily round trips on the London-Paris route on May 27, and then add a third service from the end of June. It will gradually increase in frequency over the course of the summer, as travel restrictions should be relaxed “.
Before the pandemic, Eurostar offered between 15 and 18 daily journeys from Paris to London and ten to London to Brussels (three of which had just been extended to Amsterdam). Director General Jacques Damas now intends to intensify discussions with governments “for a controlled relaxation of travel restrictions and for safe and smooth cross-border control procedures”.
The deal includes £ 50m of equity from its shareholders, £ 150m of debt secured by those same shareholders and £ 50m of existing restructured credit lines. In addition to the SNCF, Eurostar is 40% owned by the Patina Rail consortium – of which 30% is held by the Caisse de dépôt et placement du Québec and 10% by the British fund Hermes Infrastructure – and 5% by the Belgian SNCB. These shareholders have already contributed 210 million euros.
At the same time, Eurostar has pledged to drastically reduce its costs, put its workforce on shorter hours and has already borrowed £ 400m (€ 450m), which has been used.
Another goal is the merger of Eurostar with Franco-Belgian company Thalys -company controlled 60% by the SNCF and 40% by the SNCB-, announced in autumn 2019 and hoped for the end of the second year Alain Krakovitch, the general manager of Voyages SNCF, the branch that supervises long-distance trains, including the TGV. Thalys also suffered from the pandemic and is seeking external funding for the first time in its history this year.
The Eurostar-Thalys merger should make it possible to “seek synergies”, to save by optimizing train rotation or by unifying information and distribution systems, Krakovitch recently explained to AFP, with the aim of “developing in Northern Europe”.
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