Chairmans Statement
FOR THE YEAR ENDED 31ST DECEMBER 2010
- Serving the community in a changing world
- CIÉ Group savings and improvements over the past decade
- Operating performance during the recession
- Capital Investment Programmes
- Group Operating Results
- Iarnród Éireann
- Bus Átha Cliath
- Bus Éireann
- Group Property
- CIE Tours International
- Commuter Advertising Network (CAN)
- Acknowledgements
As with all organisations in the Irish economy at present, the CIÉ Group of Companies is faced with the challenge of providing its services while dealing with an extremely challenging financial environment.
Such a challenge remains difficult – however, it would have been insurmountable had the Group not prudently managed the business during the Celtic Tiger era, instituting changes that generated significant savings at a time when services were expanding, and leaving it better prepared for the downturn.
CIÉ Group savings and improvements over the past decade
With the benefits of investment, expanded services are being delivered with greater efficiency, and cost control has been prioritised.
During the period of growth, the CIÉ Group delivered:
- Major renewal of bus and rail fleet.
- Investment in infrastructure, customer facilities and maintenance operations, to improve the overall travel experience.
- New services and new routes, in our cities and nationwide, to meet the changing needs of the communities we serve.
- An unrivalled record in on time and on budget delivery of the Exchequer funded capital programme totalling €4.1 billion.
We have also seen strong performance of internal controls during the year and we continue to review and enhance the control environment. Our auditors have reported that no internal control matters were identified during the course of their audit that would have a material impact on their audit opinion. They noted improvements in the control environment during the year.
Public transport demand is closely correlated with Gross Domestic Product, and in response to demand reduction associated with the recession, there has been a specific focus on reducing costs while ensuring we maintain a strong public transport service.
Annual costs (2010 prices) across the Group are €243 million lower now than would have been the case had the Group not taken a range of measures since 2001, with staff numbers of over 1,900 in Iarnród Éireann exiting during that time with a further reduction in excess of 600 in Bus Éireann and Bus Átha Cliath since mid 2008 as technology developed, efficiencies were delivered and services grew.
Operating performance during the recessionIarnród Éireann
Looking at the operating companies individually during the past number of years, in Iarnród Éireann, the company has seen:
- Staff numbers reduce by over 31% from 2001 to 2010, from over 6,170 to 4,254
- Costs at 2010 prices reduced by almost 26%.
- An increase in passenger service train miles by over 77%.
- Total operating costs per train mile reduced by 58%.
Since 2008:
- Subvention to Iarnród Éireann has been reduced by €26.1 million, or almost 13.5%, with revenue reduced by €31.3 million due to a slowdown in economic activity.
- The company has responded by generating operating cost savings of €53 million in the same period, while continuing to operate expanded and enhanced services.
- New services have been introduced with the opening of Limerick to Galway direct services, the Cork-Midleton commuter line, and the Dunboyne (M3) to Dublin commuter service, as well as new stations such as Clongriffin and Phoenix Park.
- Improved frequency on routes including Westport-Dublin and Waterford-Dublin, and improved journey times, specifically focused on key peak InterCity services.
Bus Átha Cliath generated profits of €24 million between 2002 and 2007, which were reinvested in the business to further develop the company’s services to customers. The recession-led reduction in demand has necessitated a cost reduction programme which has seen:
- An operating cost saving of €34.7 million or 11.3% over the past two years, with a reduction of €16.7 million in payroll.
- Staff numbers reduced by over 400 since mid-2008 to end 2010, with an additional reduction of 200 in the first quarter of 2011.
- More direct routes: Bus routes will be streamlined with fewer diversions off Quality Bus Corridors (QBCs). Buses will operate on the most direct routes from the suburbs to the city centre.
- Regular frequent services: An increase in the number of routes with an average waiting time of just 5 minutes between services.
- Even departure timetables: More routes will have timetables with consistent intervals between departures throughout the day.
- More frequent buses: A simpler network with some routes combined, will make for more frequent buses.
- Increased cross city connections: More options for customers to travel across the city without having to change buses.
- Improved punctuality: More direct services operating on QBCs with better bus priority to ensure reliable, punctual journey times.
- Simpler network: A simpler network combining some routes will make it easier to understand the Bus Átha Cliath routes, to the benefit of customers.
Bus Éireann also reinvested profits in the business of €20 million during the period of high growth, but has seen passenger numbers fall as economic activity contracted. To address this, and reductions in subvention, a cost reduction programme has been implemented, which has included:
- Operating cost savings of €16.9 million since 2008.
- Reduction in staff numbers of close to 200 since mid-2008.
- Energy saving initiatives.
- Network review of scheduled services.
- A reorganisation of school bus services which reduced the number of buses used while at the same time introducing additional services.
- A negotiated cost reduction programme with staff.
- Maximisation of revenue with targeted marketing campaign.
As well as managing services and finances, the CIÉ Group of Companies has also had an unrivalled record in delivery of capital programmes on budget under Transport 21, which will equip our transport networks into the future.
Investment has included:
- The introduction of low floor buses to all Bus Éireann city services since 2000.
- The introduction of wheelchair accessible coaches on inter-urban and commuter services since 2007.
- The introduction of low floor buses to the Bus Átha Cliath fleet since 2000 giving improved accessibility. Currently 88% of the Bus Átha Cliath fleet is low floor wheelchair accessible.
- New bus station facilities for customers, and maintenance facilities to ensure reliability of services.
- A transformed InterCity, commuter and DART rail carriage fleet, with InterCity now the newest long-distance fleet in Europe.
- Expanded infrastructure capacity for future growth, including station capacity, resignalling and four-tracking, platform lengthening and the development of Docklands Station.
- New lines, such as Midleton, Dunboyne and the first phase of the Western Rail Corridor; and new stations with more to come.
It is crucial for the country’s future economic growth that we continue to invest in public transport. Iarnród Éireann is currently seeking a Railway Order for DART Underground. Notwithstanding the straightened circumstances faced by the Exchequer, there is no doubt that this project remains the most crucial programme in expanding the capacity of public transport and effecting change from the private car to more sustainable modes. Taken together with associated projects, DART Underground allows for a trebling of capacity on the Greater Dublin Area network to over 100 million passenger journeys annually.
Other key projects include:
- Phased investment in the InterCity network to enhance speeds on rail lines.
- Increased capacity of the network, including resignalling and the elimination of level crossings.
- Electrification of rail lines around the Dublin area, to bring the DART to Maynooth, Drogheda and Hazelhatch.
- The examination of a DART rail link to the airport, to deliver a low cost high capacity connection to the Dublin and national rail network.
- Continued roll-out of Automatic Vehicle Location systems for urban and national bus services.
- Ongoing development of bus priority measures in all urban areas, to ensure reliable and efficient delivery of bus services.
- Utilisation of developing technology to enhance customer service, efficiency and environment.
This country will emerge from recession, and public transport must be equipped to play a central role in the future growth of our economy, development of our society and strengthening of our communities. The CIÉ Group of Companies will in a changing world continue to ensure that we commit ourselves to that task in the best traditions of public service.
That tradition of public service was exemplified by bus and rail staff during the extreme weather conditions experienced in January and November/December 2010, when public transport workers ensured that our services continued to operate, in very difficult conditions. We commend them for their dedication and hard work, and appreciate the customer feedback received during that time.
The operating result for the CIÉ Group for 2010 before exceptional items is a deficit of €22.5 million (2009, €36.9 million) with a further decline of 5.9% in passenger numbers compared to 2009 levels.
Exceptional costs made up of voluntary severance costs across the Group of €31.1 million were incurred during the year. After exceptional items are taken into account, the net result for the CIÉ Group is a deficit of €53.6 million (2009, €77.7million).
A brief summary of the operating results for the Group show:
Iarnród Éireann returned an operating deficit of €36 million in 2010. Passenger journeys fell by 0.6 million from 38.8 million in 2009 to 38.2 million in 2010, a 1.5% reduction in passenger volume over the year.
Bus Átha Cliath returned a deficit of €22.1 million for the year. Total passenger journeys amounted to 119 million in 2010 compared to 128.3 million in 2009, a reduction of 9.3 million (7.2%).
Bus Éireann returned a deficit of €2.2 million in 2010. Bus Éireann passenger numbers for the year was down by 11.8% with passenger journeys of 37.2 million recorded in 2010 against 42.2 million in 2009.
Savings Generated
Iarnród Éireann continued its cost reduction programmes to offset the effect of the economic downturn. Operational costs savings of €12.8 million in 2010 were achieved on 2009 expenditure levels. These savings were achieved through rigorous control of costs and staff numbers, with contributions from across all aspects of the company's business while maintaining practically all services to customers and expanding in some areas.
Customer Self-service
InterCity ticket sales via the website www.irishrail.ie continued to grow with over €30 million in passenger revenue earned via the website in 2010.
In the DART and Commuter area, the further deployment of automatic ticket vending machines and the introduction of the Rail Smartcard reduced Iarnród Éireann’s dependency on manned booking offices.
Operations
Iarnród Éireann, by way of extraordinary effort, ensured all rail services remained operational during the severe weather conditions of January and December 2010. Other modes of transport suffered intense disruption and this resulted in a modal shift to rail with positive financial implications for the company. The company also strengthened its use of social media during this time, to assist customers in planning travel.
Freight
A modest surplus of €0.8 million was recorded in freight operations in 2010. This completes a successful programme to return the freight division to profitability and was aided by new business, particularly the expansion of activity from Ballina from a number of freight customers.
Rosslare Europort
Rosslare Europort enjoyed another profitable year recording a surplus of €1.6 million for 2010 although the business suffered from the continuing general downturn in the economy with revenue down 7.6% on 2009 levels.
Bus Átha Cliath recognises the important role technological advancement plays in ensuring a modern bus service. Customers’ expectations have evolved to expect easy and prompt access to current service information. Bus Átha Cliath is progressing the implementation of its Automatic Vehicle Location and Control (AVLC) programme which will facilitate the provision of Real Time Passenger Information (RTPI) for customers through a variety of mediums including; mobile phones, the Bus Átha Cliath website www.dublinbus.ie and on street displays provided by the National Transport Authority (NTA) and Dublin City Council.
Coupled with this in August 2010 Bus Átha Cliath launched an online Route Planner service on its website www.dublinbus.ie. The Route Planner facility incorporates the Global Positioning System (GPS) locations of all Bus Átha Cliath bus stops as well as all the Bus Átha Cliath routes serving each stop. The Route Planner allows the customer to enter a ‘from’ and ‘to’ point using bus stop addresses or bus stop numbers.
The continuing downturn in the economy resulting in increased unemployment and a fall in retail sales has had a severe impact on passenger numbers in 2010. Through the escalation of its ongoing cost reduction plans during 2010 significant cost savings were made in payroll and operating costs, while still providing a comprehensive integrated transport network of services.
Maintaining Services
During the extreme weather conditions that hit the country in January and December 2010 which resulted in very difficult operating conditions, Bus Éireann with the assistance of the Departments of Transport and Education, the Gardai, the National Roads Authority and local authorities maintained the vast majority of its services and operated special services on Christmas Day for passengers delayed coming into the country due to the air travel disruption. Also during early 2010 when volcanic ash closed many airports Bus Éireann’s Eurolines service provided a crucial transport link between Ireland, the UK and continental Europe.
Developments in Technology
During the year Bus Éireann introduced a nationwide real time passenger information system becoming one of the first public transport operators in Europe to implement such an extensive system providing customers with up-to-the-second information on arrivals and departures at stops across the company’s network.
Group Property are presently working on major projects in Dublin (Spencer Dock, Connolly Station, Tara Street and Abbey Street) and Eyre Square Galway as well as providing professional services to various Iarnród Éireann infrastructural projects.
CIE Tours International achieved growth in passenger numbers and revenues during 2010, reversing the downward trends experienced during 2008 and 2009. Revenues of €38 million were generated, up €5.6 million or 17% on the prior year. The company provided coach touring and independent vacation packages to 36,000 people in 2010, an increase of almost 4,000 people or 12% on 2009 levels. This has been an impressive performance despite the disruption caused to international travel by the volcanic ash cloud in the spring of 2010.
The main market that the company sells in is the North American Market which accounted for 76% of passenger numbers and 89% of revenues in 2010. The remainder of the passengers came from across Europe, in particular the Scandinavian countries and also Australia and New Zealand.
Commuter Advertising Network (CAN)
Considering the dramatic contraction in the outdoor advertising market, Commuter Advertising Network (CAN), responsible for managing CIE’s outdoor advertising portfolio including bus and rail sites has reported a solid result for the year.
In December 2010 the Board of CIÉ awarded a private company a three year licence agreement to manage its outdoor business in return for a guaranteed fee and a percentage share of net revenues. In partnership, both companies are now positioned to compete successfully in the market place and maximize profits for the Group.
On behalf of the Board, I would like to express my thanks to the former Ministers for Transport, Mr. Noel Dempsey T.D. and Mr. Pat Carey T.D., for their support, as well as to officials of the Department of Transport and the National Transport Authority for their assistance. I look forward to working with the new Government and the new Minister for Transport, Tourism and Sport, Mr. Leo Varadkar T.D., in relation to the future of public transport in Ireland.
I am also grateful to the former Government and particularly the former Taoiseach and the former Minister for Finance, for the major investment programmes which were undertaken under the National Development Plan 2007-2013 and for the commitment given under the Transport 21 Plan announced in November 2005, which was so vital to the improvement of public transport in Ireland.
The Board also gratefully acknowledges the support from the EU Structural Fund co-financing.
I would like to extend a thank you to the staff of the CIÉ Group of Companies for their sustained efforts throughout the year, especially the Chief Executives of Bus Átha Cliath and Bus Éireann, Mr. Joe Meagher and Mr. Tim Hayes, who retired during 2010 after many years of valuable service to the Group.
In conclusion, I would also like to thank the Board members and the directors of all of the Board‘s subsidiary companies for their constant help and support to me personally and for giving their time to serve on the Boards and on the many vital committees and advisory groups within the CIÉ Group.
Dr. J.J. Lynch
Chairman