Bus Eireann chief says threat of insolvency is very real

The threat of the State-owned Bus Éireann becoming insolvent within the next 18 months is very real, its new acting chief executive has told staff.

Ray Hernan also said it was clear the loss-making company had to change its business model.

However, he insisted that the Expressway service, the company’s commercial inter-city coach service which receives no State subsides, would “ continue to be part of Bus Éireann”.

The Expressway service faces strong competition from private bus operators and accounts for the bulk of the company’s financial losses.

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The Irish Times reported on Wednesday that external consultants commissioned by Bus Éireann had concluded that closing down "Expressway" may be the only viable option for the company.

A total of 516 staff could lose their jobs if the Expressway service was closed down.

The consultants, Grant Thornton, expressed doubt at whether a re-organisation plan for Expressway first mooted by the company last autumn would succeed in placing Bus Éireann on a firm financial footing.

In his letter Mr Hernan said the company was now forecasting losses for the year could be in the order of €8 million.

“We are facing losses which are not sustainable and we have reached a point where we must act decisively. The threat of insolvency within the next 18 months is very real, and it is very clear that we must now change our current business model.”

He said the current challenges faced by Expressway would only be resolved successfully by retaining this business as part of the overall total company structure and making it more competitive.

“To be clear, Expressway is and will continue to be part of Bus Éireann. A combination of operational efficiencies and a sharp focus on all cost drivers can achieve this.”

“Revenue generation will also remain a focus to enable us to re-invest in our fleet, facilities and in our own workforce.”

Mr Hernan said the company would be shortly announce initiatives which would form part of the plan for Bus Éireann.

“In addition, to improve efficiencies and cost effectiveness we will be writing to the unions seeking to negotiate on key issues which will allow us to compete more successfully on all future opportunities.”

Mr Hernan described the planned change management process as “challenging”.

He said his vision was to create a company that was capable of competing in an increasingly competitive marketplace, “by delivering a service which exceeds the expectations of our customers and meets the needs of our staff over the next 30 years and beyond”.

Meanwhile the National Transport Authority, which is responsible for issuing of licences for commercial bus operations, said if some Expressway services were discontinued at local level, it would intervene " and ensure that local demands for public transport are met".

“We will not leave any rural communities behind”, it said in a statement.

The National Transport Authority said it rejected any suggestion that the financial difficulties being experienced by Bus Éireann stemmed from the granting of commercial licences to private operators.

It said this accusation simply did not stand up to scrutiny.

“The notion that there is saturation on the inter-city corridors served by “Expressway” services, and that the National Transport Authority grants licences to operators at the drop of a hat, is well wide of the mark.”

“In fact since 2011, we have rejected as many almost as many applications for licences on these key routes, as we have granted.”

However on his appointment last year the Department of Transport told the Minister Shane Ross in a briefing document that " Bus Éireann will argue that an excessive number of licences have issued to the detriment of a sustainable business".