Light rail and trams

17.01.18

Nottingham tram operator records losses of £48m following network expansion

The operator of Nottingham’s tram network has recorded huge losses that grew from £15m to £48.5m in the year to 31 March 2017.

In accounts released today by Tramlink Nottingham, it was found that the company recorded the loss despite turnover increasing from £44.5m to £60.6m over the same period.

Tramlink is a private finance initiative (PFI), meaning it is run by private companies, with the investment paid back over a certain period of time.

The number of passengers using the network has also ballooned from 11.5 million people to around 15.34 million between 2016 and 2017.

In a statement, Tramlink said that it was “delighted” with the positive response from the travelling public who had been instrumental in the rise in passenger numbers.

It also explained that the rise in turnover was the result of a full year of operations being achieved since the extended tram network opened in August 2015.

“The nature of PFI concessions is well-known and it is recognised that during the early years of any concession the project carries a high level of commercial debt reflecting the front-end cost of construction of the new infrastructure,” a spokesman explained.

“During the most recent financial period the company reduced its net debt by £4.8m and is forecast to continue to meet all of its contractual requirements including debt service over the remaining duration of the concession through to 2034.”

The accounts also show that despite gross profit increasing from £7.2m to £13.3m between 2016 and 2017, an “exceptional impairment charge” led to the company taking a £28.2m hit.

The £48.5m loss is made up of operating losses totalling £17.26m and £31.36m worth of interest payments.

Tramlink won the 22-year contract to run the service from Nottingham City Council in 2011, taking on a commitment to build new extensions to the city’s tram network.

The company is made up of partners including Vinci, Alstom and Keolis.

A spokesman for Nottingham City Council also stated it was “very pleased” with Tramlink’s performance, as passenger numbers had grown whilst turnover had also increased since the system expansion.

“We have robust arrangements in place which mean that over the course of contract, liabilities rest with Tramlink and they receive payments from us for running services to a set of performance-related targets," they added. 

"Tramlink have been clear about their financial plans and we are confident in their ability to continue to deliver a successful tram service for the city.”

Comments

Vikki   17/01/2018 at 18:22

Is anyone really surprised?

Mjb@Crpservices.Force9.Co.Uk   17/01/2018 at 20:59

Well, perhaps we shouldn't be surprised because of the high initial capital cost. But the tram networks that have been introduced into our cities (Manchester, Sheffield, Edinburgh, Birmingham, South London) have been hugely successful in raising the standard of public transport in those places and in reducing car journeys. These benefits come at a price which we should be prepared to pay. Let's get trams into other cities like Liverpool, Leeds and Portsmouth/Southampton too.

Andrew Jarman   18/01/2018 at 09:10

Trams are a deadend. If you are going to install overhead wires why not run trolleybuses which require no tracks, autoswitching frogs on the wires, have batteries so can divert around obstructions and are just as cheap to run over their lifetime.

Manchester Mike   18/01/2018 at 14:31

@Andrew Jarman As much as I like trolleybuses, they seem to be becoming extinct. Trams move more passengers more comfortably, and riders prefer them to buses of any kind. Furthermore electric buses are becoming more practical, so the prospect of new trolleybus systems is extremely poor.

Lutz   18/01/2018 at 19:03

From the 2015 article, it states that the patronage is much high: "A total of 22 new Alstom-built Citadis trams will run on the increased 28-station network, estimated to serve around 23 million passengers a year." So even at 15.34 mn, the patronage is a long way short of expectations and original projects. That brings into question the basis of the original estimates and explains why we are not seeing new tram systems elsewhere in the UK such as in Liverpool. Lessons not yet learnt.

Jordan Thomas   19/01/2018 at 11:42

Before all the naysayers get too excited, this is still a (fairly) recent addition to Nottingham, having not existed for generations. You can't just expect people to jump out of their cars and jump onto the trams. I'd expect it would be the generation who are growing up now who would use them more than people who grew up before them. Trams (in most places) are a modal shift, rather than an extension of what came before.

Andrew Batty   19/01/2018 at 12:13

Trolleybuses? Are you serious? Barmy Leeds City Council spent £10m on a proposal for trolleybuses that ever level headed person could see was doomed from page one, chapter one, paragraph one. A public inquiry threw it out. A senior govt minister told me 'we could see the argument for electric buses, but why - in the 21st century - would they be attached to wires?

Colin   19/01/2018 at 12:18

Just remember that every person who drives to work is paying for the tram upgrade in the form of a parking levy so the investment should be excluded from this discussion. If the operating costs exceed the income by such a significant figure this is another matter entirely. In fact it brings into question the business plan for transport in the city

Andrew Gwilt   20/01/2018 at 12:58

Could the NET tram network extend to Toton where the new HS2 station is to be built outside of Nottingham and would serve not just Nottingham but also would serve Derby, the East Midlands region and nearby East Midlands International Airport. Along with P&R.

Peter Jarvis   20/01/2018 at 17:00

There are electric buses in Milton Keynes that have been running for a couple of years. There is also a bus that says 'Sorry I am not electric - I am here while the others charge their batteries' or some such. So while this is an interesting experiment, evidently there are wrinkles to be ironed!

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