Jobs to go at GNER as hard times hit owner

The owner of East Coast rail operator GNER said yesterday there may be job losses in the business.

The owner of East Coast rail operator GNER said yesterday there may be job losses in the business. On the day Sea Containers filed for Chapter 11 bankruptcy protection, the Bermudan business admitted there would be cuts to GNER, but only what were forecast when the Department for Transport awarded its £1.3bn franchise last year.

Sea Containers is believed to owe around £330m to creditors around the world, and is now seeking official protection from them. The company said yesterday once this was achieved, it then hoped to sell the remainder of its non-core assets - including a banana plantation and the company operating the Corinth canal in Greece - and focus on operating GNER and joint venture freight business GE SeaCo.

But this plan still has to be accepted by its creditors, including several major financial institutions.

Sea Containers said yesterday its former chief executive Chris Garnett had warned of up to 300 job losses from its 3,000 strong GNER workforce soon after the company won its new franchise in March 2005, but these cuts had not yet hit.

Adrian Flook, company spokesman, said GNER, having suffered a dramatic drop in business following the 7/7 London bomb attacks, amid other problems, had been focusing on simply operating its core business.

He said: "Within the franchise, it was very clearly stated there would have to be a reduction in head count - that was stated by Chris Garnett at the time. What we've done so far is have discussions with the Government on how we can reduce our cost base and increase revenues - finding what they will allow.

"There have been delays in implementing what was promised early in the franchise. But just because Sea Containers is having problems, does not mean we're asking GNER to work harder."

The RMT union was not convinced by Sea Containers claims, and called for the Government to intervene and take the East Coast franchise back into public ownership.

Bob Crow, general secretary of the RMT, said: "We will resist redundancies with every means at our disposal. If anyone is to be sacked it should be Sea Containers, not GNER staff, and for the sake of our members' jobs and the future of the services they provide, the Government should bring the franchise back in-house before any more damage is done."

Murray Hughes, consultant editor of industry magazine Railway Gazette, said the East Coast franchise agreement was at the heart of GNER's problems.

He said: "They signed up to something that was over ambitious to put it mildly. You could say that the DfT, in requiring these payments, is simply storing up trouble for the future. There is no point in signing up to something so ambitious that it just won't materialise."

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