Sacre bleu! Eurotunnel in the black

Miracles never cease: the Channel Tunnel operator has actually made a profit, for the first time ever.

Last Updated: 06 Nov 2012

Groupe Eurotunnel, the latest incarnation of the company set up to run the England-France rail link, said it made a net profit of €1m in 2007 – the first time since its original formation in 1986 that the tunnel has actually finished a year in the black. Chairman Jacques Gounon says the company is ahead of plan and may even pay out a dividend next year – like proper companies do to their shareholders…

The highlight of last year was (yet another) capital restructuring, which saw its enormous €9bn debt mountain reduced to about €4bn and delivered an exceptional (i.e. one-off) €3bn profit. Since the company probably would have gone bankrupt otherwise, shareholders didn’t exactly have much choice but to agree to the deal – even though it meant they lost all the generous perks, like unlimited free travel (this must have been annoying, since there can’t possibly have been any other upside to owning the shares).

In fact, Eurotunnel seems to have lurched from one disaster to another ever since its conception. Construction costs were much higher than expected, while passenger numbers when it finally opened were much lower than expected, thanks to increasing competition from low-cost airlines. As a result it couldn’t generate enough revenue to pay off the huge debts it had incurred, resulting in massive job losses and a number of painful restructuring processes.

However, there are signs that Eurotunnel is finally on the right track. With the opening of the new high-speed rail link from St Pancras, journey times to Paris are now under two hours (assuming no leaves on the line etc), and passenger numbers are finally starting to creep up – helping revenues to rise 15% in the first quarter of this year. It’s also been trying to get some stability in the boardroom by bringing in big institutions like Goldman Sachs to buy sizeable stakes.

And of course there's its most effective advocate: the UK aviation industry. Fans of Le Tunnel may rightly point out that crossing the channel by train rather than plane is much better for your carbon footprint. But with air fares rising and the airports in chaos, train travel is already looking more attractive by the day. Who needs a marketing strategy when you’ve got Terminal Five...?

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