Northern avoids losses of over £600m thanks to…

Northern avoids losses of over £600m thanks to Government help

Losses would have totalled more than £600m at train operator Northern had it not received Government support during its latest financial year.

The company, which is owned by the Department for Transport, would have fallen to a pre-tax loss of £623m without the Service Agreement subsidy of £632.6m, newly-filed documents have revealed.

The subsidy is slightly higher than the company's losses to ensure it makes a 1% margin in line with the agreement, which is invested back into the business.

Northern's latest accounts, for the year to the end of March 2022, also show its total revenue increased from £894.2m to £941.5m, with passenger revenue rising from £75.4m to £250.2m.

In Northern's previous financial year, the company received £782m from the Government through the Service Agreement subsidy.

Taking the subsidy into account, Northern's pre-tax profits fell from £37.2m to £9.4m over the year.

A new Service Agreement was granted by the Government in February this year that runs until March 1, 2025, with an option for an additional two years.

A statement signed off by the board said: "As with the rest of the rail industry, Covid has continued to impact the overall service provision by [Northern].

"Resource led timetables have been implemented across the year using customer insight to best match service levels to demand.

"We're continuing to see a positive recovery in demand on leisure services, although we still have capacity on many routes and services. Weekends have seen the biggest recovery.

"The commuter market remains sluggish, at less than a third of what we might have seen before the pandemic, something we're addressing through targeted revenue management and marketing.

"The commercial teams meet every week to look at this in detail to reduce the risk of crowding where they can.

"Thanks to the hard work of all our teams, we're making progress on recovery, although we still have a long way to go."

Northern added: "While the headline grabbing elements of the pandemic may have passed, the implications of nearly two years of disruption have not."

During the year, Northern increased its headcount by almost 3% to 6,960. It said 112 of the new roles were for traincrew.

The accounts come after Northern's managing director, Nick Donovan, appeared in front of the Commons’ Transport Select Committee.

He said that staff sickness and absence is responsible for around 70% of the cancellations caused by internal factors.

He said: "We’re putting a focus on that. That’s not an immediate fix. Our sickness levels are running at about double of normal rates at the moment, and in fact some depots are up at 14% or so.

"We’re working through that. I can’t give a precise forecast on when that will be dealt with."

Mr Donovan said there has been a recent improvement in cancellation rates.

He added that "really good work" between local management teams and representatives from drivers’ union Aslef meant rostering arrangements were agreed before new timetables were recently introduced

It was the "first time in the last decade" that has happened, he said.

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