Bombardier ‘had little chance’ on Thameslink because of contract terms

From: Daily Telegraph

Bombardier had virtually no chance of winning the controversial £1.5bn contract for Thameslink trains because of its relatively higher financing costs, senior Government sources have disclosed.

The Canadian train maker, which on Tuesday axed 1,400 jobs at its Derby plant, was at a competitive disadvantage worth hundreds of millions of pounds because of the way the previous Labour government structured the contract.

The tender called for bidders to build, maintain and, crucially, finance 1,200 new carriages over 30 years for the London commuter service.

Bombardier Class 377 EMU in service with Southern

The financing element gave Siemens of Germany a big advantage over the three other bidders because of its higher credit rating – one vastly superior to Bombardier’s, which is below investment grade.

Siemens’ debt is rated A+ by credit rating agency Standard & Poor’s – six notches above Bombardier’s BB+. The other two bidders, Alstom and Hitachi, are respectively rated BBB and BBB+.

Investment bankers familiar with deals similar to Thameslink trains said that each notch of difference equated to at least 0.25 of a percentage point on any debt-funded deal.

That would leave Bombardier having to pay extra interest of at least 1.5pc a year to finance the deal. Over a 30-year contract that could amount to £700m.

“The way the contract was structured, it wasn’t just about building the trains but financing them,” said the source. “On that basis it was very hard to compete with Siemens.”

A summary of the tender, dated April 2008, states: “The Department [for Transport] intends that the chosen bidder will be required to arrange the finance necessary for the acquisition and ownership of the rolling stock.”

That effectively turned the winning bidder into a rolling stock leasing company, where cost of finance is crucial.

Bombardier, which remains reserve bidder on the Thameslink contract, is yet to be told by the Government why it lost the bid. A company spokesman declined to comment.

So it seems that once again Labour have screwed up and the Conservatives are taking the blame.  There is no denial that the Labour Government set up the contracting process and it has been left for the Conservatives to deal with the mess.  How many more deals will go up in smoke due to this incompetence?  Only time will tell.

T.W.A.Ts (Travelling Without A Ticket)

“Sorry Mate, I didn’t have enough time to buy my ticket.”
“The Ticket Office was closed”.
“There was a big queue at the ticket office and my train was in the platform”.

If I had £1 for every time I have heard the above, I would be lounging on a beach in Jamaica, not standing on a station platform.

Don’t get me wrong, there are people who have a genuine reason for not having a ticket but there are some who, after getting away without paying once, will travel time after time without spending anything on a ticket.

At some point however, either on train or at a station ticket barrier, they will be challenged.  Whilst in the past the ticket examiner may have turned a blind eye, recently Train Operating Companies(TOCS) have realised the costs of lost revenue from fare evasion.  As a result more automatic ticket barriers are appearing at stations and the TOCs are now taking each offence of travelling without a ticket very seriously.

Many people travel without a ticket in the belief that they are doing no harm and if they are caught they will simply be asked to pay for a full price ticket, this is now not the case at all.  Train operators are taking railway fare evasion incredibly seriously and have increased the number of people taken to court charged with fare evasion.

The biggest shock most people receive when told they are being taken to court is that they are actually being charged with FRAUD and that this can lead to not only a fine and/or custodial sentence but will also lead to a permanent criminal record.

A Criminal conviction will cause significant impact on the person’s future.  Consequences can include loss of employment/inability to get a job, being unable to gain personal credit and loss of personal relationships.  The other major implication of having a criminal conviction is that it will stop you entering certain countries(e.g Australia & The USA) completely. This ban on entry is indefinite.

What Should I Do As A Passenger?

Obviously the first and most sensible thing to do is ALWAYS BUY A VALID TICKET BEFORE YOU TRAVEL. If you make a genuine mistake and realise you have done so once you are on the train, find a conductor/guard as soon as possible, explain your mistake and ask to pay for a ticket.

DO NOT wait until you arrive at your destination unless there is no conductor/guard on the train. The onus is on YOU to prove that you have attempted to buy a ticket, not on the Train Operating Company to prove that you do not have a valid one, so you must make every effort to obtain the correct ticket for travel.

If you have forgotten to do this for any reason and have been caught, SEEK LEGAL ADVICE!!! Early discussions and explanations with the Train Operating Company MAY avoid a prosecution. If however you are caught by the British Transport Police (BTP), prosecution is a lot harder to avoid.

Conclusion

If you Travel Without A Ticket, YOU ARE A  T.W.A.T