The UK’s largest train operator, despite a strike-ridden service and rising fares, has given a record dividend to its three overseas shareholders.
Govia Thameslink paid its Australian, Spanish, and French owners – including Keolis (an arm of the French SNCF state-owned company) – a £62million payout, part-funded by a British government bailout for the railways in the wake of the pandemic.
Transport Secretary Mark Harper, who is also the company’s chairman, endorsed the distribution of the cash last year.
In October 2022, the Gatwick Express operator will be purchased by Australian bus operator Kinetic Group as well as Spanish infrastructure investor Globalvia.
Govia Thameslink received over £2 billion from taxpayers in support of the Covid crisis. The operator is a partnership between Go-Ahead Group and Keolis . They own respectively 65 and 35 percent.
Go-Ahead remained listed on the London Stock Exchange up until October 2022 when it was purchased by Australian bus operator Kinetic Group, and Spanish infrastructure investor Globalvia.
Govia Thameslink announced this weekend that the £62million payout was a result of profits made both before and during the pandemic. Govia’s spokesman explained that the dividends were a result of the accumulation of reserves during nearly eight years of operations… between 2014-2022. The company paid a first dividend of £16.9million last year.
Chris Grayling, then the transport secretary, fined Govia Thameslink 15 million pounds sterling and banned it from making a profit for a year in 2018. This was after a botched rollout of a timetable led to hundreds trains being cancelled each day. The government then set a cap on its profits until September 2021.
Companies such as JD Sports, a DIY chain and retailer Homebase will be upset by the decision of the train operator to pay a dividend to shareholders worth tens or even hundreds of millions of pounds. These companies were criticized for paying out dividends to shareholders during the pandemic but not returning any state aid.
Kinetic and Globalvia, not retail investors or pension funds in the UK plc, will also benefit from the Go-Ahead share of the £62million payout. However, it is not clear whether the dividend factored in to the acquisition price of Go-Ahead when the deal was completed in October 2022.
Many commuters will return to work tomorrow after a long Christmas and New Years break. Rail fares will rise 4.9 percent at the beginning of March. The annual season ticket price between Brighton to London, for instance, would then be around £6,000. In March 2023, fares rose by 5.9 percent.
The biggest wave of strikes in a generation has also affected passengers, as the Rail, Maritime and Transport Workers union and the drivers’ union Aslef staged walkouts over pay and conditions. Aslef, under the leadership of Mick Lynch, is still in dispute despite agreements being made by the RMT with train companies. This week, the RMT will be launching a separate strike on the London Underground.
According to the Office of Rail and Road, the industry regulator, only seven out of ten Govia trains that ran on the Thameslink line arrived on time in the period July-September. This is in line with industry average.
Govia’s spokesman said: “We pride ourselves on the service [of the company]… that carries nearly a fifth (850.000) of all rail trips in the UK. Nine out of 10 trains were on time during the year up to March 2023. We installed barcode scanners at almost every station. We hired nearly 200 apprentices. Weekend passenger journeys returned to pre-pandemic levels. “Govia’s profit is less than 2% of revenue.”