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News > International
Railtrack sees higher costs
January 15, 2001: 7:15 a.m. ET

Cost of repairing dangerous rail track rises to $887 million
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LONDON (CNNfn) - Rail infrastructure company Railtrack doubled to £600 million ($887.1 million) the financial bite it faces following a fatal crash last year.

The company, which operates Britain's rail tracks and stations, said it will ask the rail regulator to bring forward a payment of £1 billion in public funds owed to it in 2006.

Railtrack said it would be financially stretched if it didn't receive the funding.

  graphic RAILTRACK OPERATES...  
   
  • 20,000 miles of track
  • 2,500 stations
  • 40,000 bridges, tunnels and viaducts
  • 9,000 level crossings
  • 1,200 signal boxes
  •    
    Railtrack said if it does not receive the grant it will have to increase borrowings by $2 billion between now and March 2003, taking net debt to £8 billion by March 31 of that year, which "represents an unrealistic financial challenge."

    The injection of government funds is crucial to the company maintaining its 'A' credit standing with rating agency Standard & Poor's. If its rating falls Railtrack may find it difficult to raise money to fund operations.

    The Rail Regulator, Tom Winsor, said Monday he was sympathetic to Railtrack's plight and would consider an interim review of its finances, though a full review was not due for five years.

    In November, the rail operator estimated charges would come in at about £250 million.

    A regulatory review of Railtrack's operations began last year after a train derailed in the town of Hatfield north of London, leading to the deaths of four people.

    The company plans to repair 430 miles of track and has initiated reduced timetables for train operators but this has led to further delays and cancellation of services.

    Disgruntled travelers have left the network in their droves. Some have taken to the air: U.K. airport operator BAA (BAA) said Monday that Railtrack's troubles contributed to a 14.3 percent rise in domestic passenger traffic through its airports in December.

    graphicRailtrack said the exceptional charges would include £400 million in compensation to train operating companies, £180 million for repair work and a special £20 million charge to cover the cost of recent autumn flooding in Britain.

    "The above items in combination will result in a significant loss for the year," Railtrack said.

    Transport analyst Michael Stoddart, of ING Barings Charterhouse, said the bottom-line loss could total up to £300 million or more. Before Monday's announcement, he was expecting net profits of around £77 million.

    "It's seriously grim," Stoddart said.

    Shares of Railtrack (RTK) fell 3.2 percent to 961 pence in midday London trade.

    --from staff and wire reports graphic

      RELATED STORIES

    Railtrack pretax profit falls 31% - Nov. 13, 2000

    Railtrack CEO offers to quit following fatal crash - Oct. 18, 2000

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.