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GTR ‘challenges’ blamed for parent company’s whopping 35% profit dip

The transport company behind Govia Thameslink Railway (GTR) has revealed a whopping 35% drop in rail operating profit in its half-year profit, as it also apologised for “months of severe disruption and inconvenience” that have come about due to challenges in the major TSGN franchise – including Southern’s ongoing dispute with unions that has now stretched on for almost a year.

The company, Go-Ahead, which runs the Southern service through its parent company GTR, said in the report detailing its finances for the latter half of 2016 that profit expectations for the full year had now dropped due to the “challenges” that have plagued GTR.

It also oversees the London Midlands and Southeastern franchises, both of which had enjoyed increasing levels of customer satisfaction as well as high financial performances – thus shedding a light on how hard the company has been hit by the dispute that Southern is currently engrossed in.

David Brown, group chief executive at Go-Ahead said: “Both of our bus divisions and two of our three rail businesses performed well, but there are clearly ongoing issues at GTR which we are working hard to resolve.

“In rail, the GTR franchise has been challenging from the outset. It is the largest and most complex franchise ever tendered in the UK, designed to facilitate change arising as a consequence of the Thameslink Programme infrastructure works.

“In GTR, operational and industrial relations issues have continued to place pressure on our customers, our colleagues and our profitability during a period of significant investment in rail infrastructure and rolling stock and modernisation of working practices.”

Brown apologised to passengers who have faced months of “severe disruption and inconvenience”, adding that Go-Ahead remains in discussions with trade unions “with the aim of reaching a full resolution of these ongoing issues so that we can deliver services our customers can rely on”.

We have made significant investment in GTR, the full benefit of which cannot yet be felt by passengers while service disruption continues. Since the franchise began in September 2014, over 400 new train carriages have been introduced by GTR, more than the rest of the UK rail network combined,” he added.

Brown also said that Go-Ahead had invested a considerable amount of money into a driver recruitment and training programme, taking on an additional 100 on-board supervisors for its services.

“In addition to the inherent challenges of operating this complex franchise, we have faced lengthy and significant industrial relations issues related to the modernisation of working practices required by the contract,” he argued.

“Our customers have suffered months of disrupted travel, impacting work and family lives and we are sorry that such inconvenience and hardship has been caused. Discussions with trade unions are ongoing as we strive to reach a full resolution of these issues.”

For over 11 months, Southern has been embroiled in a bitter dispute with unions RMT and Aslef regarding the move to driver-only operated trains, a move that would remove guards on trains and, as the unions argue, will compromise customer and staff safety on their services.

Separately, Brown also commented that he expected to learn the outcome of the West Midlands franchise competition by the end of the year, as Go-Ahead pushes to move into another franchise in the UK.

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Jerry Alderson   28/02/2017 at 13:29

It's a pity that RTM didn't include a simple table at the start of the start to avoid people wading through it: Go-ahead (65% owners of Govia [Keolis owns 35%]): Bus division = profitable London Midland = profitable Southeastern = profitable GTR = loss-making (and likely to be indefintiely). People should note the final line above before criticising GTR for making 'profits' out of failure.

Barry Buttigieg   01/03/2017 at 06:36

i guess this government of ours will make sure southern's shareholders don't suffer unlike us train users

Gabriel Oaks   01/03/2017 at 12:53

The requirement for drivers to close doors is a contractual obligation by the DfT which forms part of GTR's management contract. It wouldn't surprise me if GTR threw in the towel leaving the DfT (DOR) to operate the service.

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