Great Western Coffee Shop

An interesting read relating to many discussions on this forum.

"Trouble on the FirstGroup line has fuelled demands for a review of the entire British rail system"

https://www.theguardian.com/business/2018/sep/07/train-pain-how-great-western-railway-has-shunted-a-rail-review-woes-have-called-the-entire-rail-system-into-question

An excellent summary of the "Building a Greater West" omnishambles.

It is patently clear that the DfT are continuing to reward failure with contract extensions so as to keep FirstGroup in the rail franchise business.

I expect other sweeteners and secret deals will be, or have been, given to FirstGroup to keep them at the helm of TransPennine and SWR. Could all be for nought though if FirstGroup goes 'nipples elevated' or has to dump unprofitable businesses to survive.

Private Equity firms are circling like predators. There's still some life in the FirstGroup flesh and bones, but it is slowing down. Any sign of weakness and they will pounce. Stripping off the meaty bits and leaving the rest for the scavengers. The UK Rail division would likely not be very tasty and its remains will have to be cleared up by HMG - operator of last resort.

FirstGroup is currently loss making and is highly leveraged with debt well in excess of equity. Short term that can be managed, but if it doesn't return to profit soon, or its bankers start getting jittery, then liquidity could disappear very quickly. Break up, sale or collapse are all distinctly possible. November's half yearly results will make for interesting reading.

https://www.bloomberg.com/news/articles/2018-09-06/firstgroup-is-said-to-draw-private-equity-interest-including-cvc

I suspect DfT's motives are:

1. The GWR operations are such a shambles at the moment (due to many factors outside the control of any bidder*) that any sane bidder would think twice before bidding.

2. Given the current shambles an operator who knows the franchise is likely to be better placed to do the least worst job.

3. The number of potential bidders for any franchise has already reduced significantly and they are having problems getting 3 prequalified bidders for any franchise.  They cannot afford to loose another one or they might have to make public sector operators the norm which would be politically embarassing.   

*as well as some they would be able to control if the franchise is long enough

Because of 1) sweeteners (as you call them) are necessary even for a franchise extension. 

If DfT are going to insist on things that create problems (such as DOO on SWR) then they are going to require DfT to carry that risk.   

The SWR franchise is fast heading down the Southern Rail route with First/MTR caught right in the middle of the war between Dft and the RMT which neither can afford to lose.

GWR’s woes haven’t caught as much attention from the press because things have been much worse elsewhere but the problems are there.

I expect this time next year the UK rail landscape will look very different to what it does today. Things can’t keep on going the way they are now with Dft making it up as it goes along which it has been doing for years. Even Teresa May realises things have got to change.

If I could defend the Dft it would be to say they have a nigh on impossible job on trying to make the rail franchise system work. Why? Because it doesn’t work and never will.

The new NR CEO who started in post in the last 10 day will be making an announcement very soon (within the next week or so) about the further devolution within Network Rail.


This apparently is going to be very deep devolution far far greater autonomy given to Routes. The Route Managing Directors on the commencement of the new CEO report directly to him.


The pace of change will be measured and progressed at a pace the suites each Route.

The aim of the devolution is to allow NR Routes to develop better are stronger working relationships with the TOC; what shape that will take I suspect will depend on each Route.

It has been said the changes coming to NR's structure are the largest in over 5 years.

Can I check that please?  "Largest in over 5 years" ??   Seriously ?? Now if it was "largest in over 50 year" that WOULD mean something.

If the changes are going to make substantial changes that are part of sorting out Network Rail (whatever that means!) then good.

The largest change in 50 years was made when the Nationalised Railway was privatised with the formation of Railtrack in 1994 and the plethora of operating, maintaining, supplying etc companies were formed.

For an organisation that is just about 18 years old, this is will be one of largest and perhaps the most significant changes in is structure and how it does business since the decision to in-house maintenance.  It is also seen as a vital since NR was formally made a Government owned company midway through the current control period (CP5).


What I hope as a Railwayman with 4 decades of working experience in the UK National Railways is this will be an evolutionary process and not revolutionary.   Whilst revolutions can have their place currently I don't see that bring benefits to the traveling public in the immediate to medium term.  Many talk about going back to vertically integrated railway (BR was vertically integrated) this may be the answer in some Routes, it would better to let that evolve than be forced by politics

   

Slightly different pictures in the paper version in the Guardian and an interesting article only let down by them using a picture of a Cross Country train and labelling it one of GWR's new trains.

Good to see the recent appalling service getting some press though if encourages GWR to at least acknowledge the problems.

It won’t, the rail industry is in denial hence it laughably awarding GWR with the accolade of Rail Business of the Year.

Was going to post Guardian picture gaff but you beat me to it.