Eurotunnel warning as losses soar to £82m
Debt-laden Channel Tunnel operator Eurotunnel today admitted its financial position was “worrying” after half-year losses ballooned to £82m (€124m).
The deficit was sharply higher than the £17m (€25.7m) at the same stage last year and Eurotunnel said its survival hinged on talks with its financial and industrial partners.
The group said it was continuing to be squeezed by low-cost airlines, while it was also losing market share in the cross-Channel passenger market.
Eurotunnel shares, which have halved in value since February, fell a further 9% today.
A joint statement from chairman Jacques Maillot and chief executive Jean-Louis Raymond said: “As our shareholders feared, Eurotunnel’s financial situation is worrying.”
The company announced earlier this month that cost-cutting and changes to its pricing policy would underpin its revival strategy.
This turnaround plan should improve the company’s operational situation from 2005 as it battles to reduce a £6.4bn (€9.7bn) debt pile, Eurotunnel said.
But Mr Maillot and Mr Raymond, who took control after the previous management was ousted in a shareholder revolt, warned: “These measures alone will not be enough. It is essential that Eurotunnel engages in a global dialogue as soon as possible with all its partners – whether public or private, financial or industrial – if it is to achieve recovery.”
As well as managing the infrastructure of the Channel Tunnel, the company operates its own truck and passenger shuttle services between Folkestone and Calais and earns revenues from rail freight services such as EWS and SNCF.
Income from its combined businesses fell 3% during the first six months of 2004, which Eurotunnel said reflected a difficult trading environment.
The number of cars and coaches using the tunnel fell by 14% and an increase in truck traffic could not prevent revenues from shuttle services slipping 6% to £137m (€207m).
Eurotunnel said its share of the market for cars travelling across the Channel shrunk by 2% – half the loss of its position in the coach market.
At the same time, operating costs rose 8% at constant exchange rates due to factors such as higher expenditure on marketing and the maintenance of infrastructure and rolling stock.
