Higher-than-expected operating costs for Caledonian Sleeper trains have blown a £47million hole in the balance sheet of operator Serco, prompting a warning from the company it may seek an early exit from the 15-year franchise.
Reporting 2017 results yesterday, the outsourcing giant said a net charge of £30.6million was driven by a “sharp increase in the estimated costs related to the delayed introduction and operation of the new sleeper service”.
One-off gains offset the financial impact of running night trains between London Euston and Edinburgh, Glasgow, Fort William, Inverness and Aberdeen.
Serco’s results statement added: “We will be examining every option for reducing operating costs.
“The position under the contract is expected to improve over time as the terms of the franchise agreement provide a mechanism that requires Transport Scotland to bear 50% of contract losses from April 1, 2020.
“In addition, from April 1, 2022, we have the right to seek adjustments to the financial terms of the franchise agreement that would result either in a small positive profit margin for Serco from that date, or allow us to exit the contract.”
Serco took over Caledonian Sleeper services, previously part of ScotRail, on March 31, 2015.
Serco’s bottom line pre-tax profits tumbled to £19.1million in 2017, from £29.6million the year before. But underlying trading profits were “at the top end” of its expectations, at £69.8million.