Iarnr≤d ╔ireann's board has asked management to explore the possibility of securing European Union or Exchequer funding for its unprofitable freight businesses.

The company said it operates in a commercial competitive environment without operational subvention.

"We don't have the economies of scale that other European countries have, particularly on the Continent, in terms of the long distances that can be covered there," said a spokesman.

Meanwhile, a strategic business plan currently being considered by Iarnr≤d ╔ireann recommends it exit certain sections of the freight business in order to return the division to profitability. Iarnr≤d ╔ireann Freight forecasts a deficit of £6.7 million (€8.5 million) for 2001.

Under the proposals, the division would return to profit in 2003, delivering a surplus of £5 million in 2006. This would see the company withdraw from all unprofitable bulk, palletised and container load business, such as the transportation of cement and fertilisers. The company could then concentrate on developing its profitable businesses, such as ammonia, beet and keg distribution, the spokesman said.

The company said it would also target new business suited to rail. It is understood the company has had negotiations over the transportation of waste.

"If we continue with the business as it is over the coming years, we would have to invest in new wagons and it would also require infrastructure investment in yards which would require significant funding for essentially a continued deficit situation," said the spokesman.

Under the plan, around 225 of the company's 570 freight staff would be offered redeployment. The spokesman said there would be no compulsory redundancies.