THE Minister for Transport, Energy and Communications, Mr Lowry, has told CIE to cut its costs after the State transport company reported a sharp increase in losses.
A big rise in personal injury claims and higher than expected depreciation costs pushed operating losses up by 42 per cent last year to £111 million.
The news prompted Mr Lowry to call for immediate action to improve the company's financial position. In a strongly worded comment, Mr Lowry said the "unacceptable" results were the reason he had removed the former chairman last year and made sweeping changes to the board. I was criticised for it at the time but now people will understand why it was necessary for me to take such action," the Minister said.
The company, which received Government grants of £102.5 million in 1995, said it had been forced to make provisions of £21 million to cover the impact of personal injury claims and depreciation. After Government grants, CIE reported total losses of £31 million compared with a profit of £9 million in 1994.
The new board and management at CIE is seeking to cut overheads by 10 per cent through spending reviews at its three subsidiaries. Earlier lis month, CIE asked staff at its Bus Eireann subsidiary to accept drastic changes in work practices and a virtual end to overtime as part of a viability plan designed to streamline the business.
The Minister urged management and unions to make "speedy progress" towards agreeing a cost savings package. "The core of the problem at CIE is costs," he said.
Presenting its annual results, CIE chairman, Mr Brian Joyce, called on the Government to allow the company to operate on a more commercial basis. Mr Joyce urged the Government to negotiate public service contracts with local authorities and other bodies to meet the cost of providing certain loss making rail and bus services.
Despite the poor results, the chairman stressed the company was not considering any fare increases.
CIE's revenues from its road and rail services rose by £14.1 million last year to £328.6 million. In addition, the group received Government grants of £102.5 million - almost £3 million less than in the previous year - towards its social costs and for the maintenance of the railways, bringing its total revenues to £431.1 million.
Depreciation costs on its newer trains had, however, been underestimated, forcing the group to increase its provision by £12.5 million more than it had expected. A further £8.9 million above budget was also provided to meet rising personal injury claims.
CIE's three subsidiaries all made losses in 1995. After State grants, Iarnrod Eireann made losses of £15.9 million, Bus Eireann lost £6.4 million, while Bus Atha Cliath recorded a deficit of £7 million.
Mr Joyce said the company had a responsibility to be more competitive and cost driven.
CIE chief executive, Mr Michael McDonnell said the company's entire operations needed to be evaluated, particularly its social functions, which he insisted must be put on a commercial footing.
"We are working to segregate what is commercial from what is social within the company operations," he said. At a rough estimate, Mr McDonnell said he believed social costs incurred by the group are more than £100 million annually.
CIE is seeking to cut its over heads by up to £30 million. The company has said it needs to cut costs at Bus Eireann by £6 million a year in order to finance a £25 million fleet renewal programme. Up to 129 jobs will be lost through early retirement and redeployment under the plan.
Within the CIE group, Mr McDonnell said yesterday he believed there was scope for some reduction in the workforce, but stressed the company would not introduce compulsory redundancies.
