CIÉ group warns it is ‘balance sheet insolvent’ due to Covid-19

The State-owned CIÉ group of transport companies has warned that it is "balance sheet insolvent".

The group, which has been hard hit by the impact of Covid-19 restrictions, has signalled that it could report commercial losses of more than €50 million for last year when its accounts are published in the summer.

The chairwoman of the group, Fiona Ross, separately told an Oireachtas committee on Tuesday that the deficits in its two pension schemes were now estimated at €975 million and that this was the most significant challenge it was facing. The deficits are believed to be among the largest, if not the largest, in any schemes in the country.

Managerial and white-collar staff at the CIÉ companies – Iarnród Éireann, Dublin Bus and Bus Éireann – who are members of the so-called 1951 pension scheme are voting in the coming weeks on reforms recommended by the Labour Court.

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A submission made by the CIÉ group to the Labour Court as part of that process last October set out a stark financial picture that is understood not to have changed significantly in the interim.

‘Bleak outlook’

“The pandemic has resulted in a seriously deteriorating financial position for the group. The group is balance-sheet insolvent. This is despite additional Covid- related Government funding for public service obligation services run by the CIÉ Group worth in excess of €360 million so far this year. Commercial losses for the group this year will exceed €50 million with a bleak outlook for 2021.

"There is a concern as to whether the operating companies can continue as going concerns in 2021 if current commercial and passenger trends continue. So far, compulsory redundancies in Ireland have been avoided."

CIÉ Group chief executive officer Lorcan O’Connor this week welcomed agreement on reforms to a separate pension scheme for frontline staff in the transport companies and hoped the Labour Court recommendations on the 1951 scheme would be backed in the forthcoming ballot of members.

The 1951 scheme, which has about 2,200 active members and 2,250 pensions, has an estimated deficit of about €550 million.

Pension deficit

However, he told The Irish Times that if the proposals were not supported the board would have to consider other options given the scale of the pension deficit.

He said the pandemic had had a huge impact on public transport and that the Government was supporting the entire system through the provision of hundreds of millions of euro in backing. He said the CIÉ companies as the largest transport providers were the largest beneficiaries.

Mr O’Connor suggested he could not in conscience go back to the Government if the pension reform proposals – which he described as modest in comparison with those introduced elsewhere – were not backed.

The group in its submission to the Labour Court said it could not increase its cost base further to deal with the pension scheme deficit.

The group warned in its submission to the Labour Court that alternatives to a consensus approach to dealing with the pension difficulty could involve the closure or at the very least the winding up of the 1951 scheme.