Eurostar has been forced to raise prices and cut services to focus on its most profitable routes as it struggles under the weight of high interest rates on commercial loans agreed during the pandemic and controls at post-Brexit borders.
The company’s outgoing chief executive, Jacques Damas, said Eurostar “cannot currently pursue a volume and growth strategy” due to the headwinds the business is facing.
“We have to concentrate. . . services on primary routes that make the maximum contribution per train and to charge higher prices to our customers,” he wrote in a letter to the House of Commons Transport Select Committee released on Tuesday.
Eurostar took on £500million in commercial debt to help it survive the pandemic, along with a £250million bailout from shareholders, including the French government. The British government, which does not own a stake in the company, did not participate in the rescue.
Eurostar was at risk of going bankrupt following a slump in revenue after passenger numbers plummeted due to the Covid-19 crisis.
Damas said the loans were backed by “demanding financial ratios” and the company was focused on “managing and reducing” its debt.
The company has been criticized in the UK for cutting some of its services, including trains from Kent and direct trains between London and Disneyland Paris.
But Damas told MPs in its letter to the select committee that the company had also been forced to prioritize due to a lack of space at stations to deal with the new border controls now in place after Brexit.
Peak capacity at London St Pancras is 30% lower than in 2019, at 1,500 passengers per hour, as it takes an average of 15 seconds longer per passenger to process people with UK passports.
“It is only the fact that Eurostar has limited capacity trains and has significantly reduced its timetable from 2019 levels that we do not see daily queues in central London similar to those encountered in the Channel ports,” he said.
Damascus admitted the problems had been exacerbated by a shortage of maintenance engineers at Eurostar, which has regularly led to train shortages.
As the economic outlook deteriorates, Eurostar faces questions about whether travel demand will hold up.
Airlines continued to record strong ticket sales this fall, but consumer purchasing power raises concerns in the face of a deep recession and cost of living crisis.
Eurostar also faced additional costs of £100m due to inflationary pressures, Damas said. He said track access charges on HS1, the UK’s high-speed rail line that connects London to the Channel Tunnel, were rising almost three times faster than in France.
He warned that unless these fees can be lowered, “at best, the business will find itself locked into the current situation indefinitely.” This means focusing on major routes where the group can charge higher prices.
HS1 did not respond to a request for comment at the time of publication.
Huw Merriman, the Tory MP who chairs the House of Commons transport select committee, said Eurostar was “a vital cog in our transport system” which needed support from ministers and rail regulators.
Damas will leave Eurostar at the end of the month and will be replaced by Gwendoline Cazenave, a former SNCF executive.