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 Chairmans Statement
FOR THE YEAR ENDED 31ST DECEMBER 2009
A decade of transformation
Notwithstanding the difficulties all organisations face in the current national economic environment, it is worth taking stock of the developments in the CIÉ Group following a transformative decade for public transport in Ireland. Across the bus and rail services of the Group, service and fleet improvements were delivered on a sustained basis. We have been greatly assisted in this process by current and capital funding from the Exchequer. It represented a change in focus from our policy-makers: from the discredited view that Exchequer support for public transport services is somehow a waste or a financial loss, to the progressive approach common amongst the great public transport systems in Europe, that funding public transport is a crucial element to sustaining our economy and our society. In Iarnród Éireann, the railway is, in many respects, unrecognisable from the start of the decade, as our management team have successfully overseen a massive investment programme, improvements in efficiency and productivity, and crucially, service expansion to meet the needs of the customers and communities we serve. Our infrastructure investment programme has encompassed safety-critical renewal of existing infrastructure, and development of new infrastructure, and has been complemented by a record programme of fleet investment and station improvements. This programme of investment, totalling over €2.7 billion, has been delivered by our project teams cumulatively €40 million under budget, and Iarnród Éireann has consistently been the strongest performer in terms of on budget delivery amongst major recipients of Exchequer capital funding. Investment examined under Government Value-for-Money and Policy Review Initiative identifies that programme objectives were met, and safety and value-for-money goals delivered. Furthermore, passenger journey increases were achieved while reducing staffing, with passengers per staff member increasing by 55% in the period from 2002 to 2008. From 2000, Bus Éireann expanded its network of services in line with customer demand, increased passenger numbers and was profitable. During that time, Bus Éireann had the second highest growth in Europe in journeys made and grew passenger numbers by over 15 %. Through the NDP, Transport 21 and its own resources, there was a significant investment in the company’s fleet with nearly 300 accessible vehicles added, which resulted in an expansion of existing services and the addition of new routes. External consultants’ reports during that time found that Bus Éireann was operating efficiently compared to European peers and was a providing a value for money service throughout the country. External independent surveys also showed a high level of customer satisfaction with Bus Éireann carrying over 90 million passenger journeys per annum. Throughout the past decade Bus Átha Cliath has introduced a number of innovations to maintain its position as Dublin’s largest public transport provider whilst meeting the changing needs of public transport users. Bus Átha Cliath has introduced new bus services, developed new routes and committed itself to dealing with congestion. There is now an agreed programme of bus priority measures in place between Bus Átha Cliath, the Quality Bus Network (QBN) Office and Local Authorities to improve bus speeds on all of the key corridors. These policies support the conclusions made by the Deloitte led Cost and Efficiency Review of Bus Átha Cliath, which found that Bus Átha Cliath is generally as efficient as comparable organisations in similar sized cities. The benefits of this will now be maximized through the company’s Network Direct programme, which will deliver more reliable, faster, and more direct services. The company has ensured that it serves the entire community by ensuring since 2000 that all new buses would be low floor wheelchair accessible currently 88% of the fleet is now low floor wheelchair accessible and is on target to be fully accessible by 2012. Service initiatives have also included the development of smartcard technology across the fleet, the forthcoming introduction of Real Time Passenger Information, and measures to reduce emissions on all services. As noted in last year’s Annual Report the economic recession had a negative impact on the demand for all of CIÉ’s services. Unfortunately in 2009 the recession deepened and widened such that all areas of the general economy were adversely affected. In 2008 real GNP fell by 2.8% but in 2009 that decline accelerated and a fall of 11.3% in the output of the economy is now evident. With economic activity declining the demand for public transport services has reduced as real wages have been cut, unemployment has increased and consumer expenditure has dampened. With Government finances under pressure the subvention to CIÉ has also been reduced. As a consequence in 2009 CIÉ has had to operate within a more stringent set of financial conditions. Throughout 2009 CIÉ continued a process of maximising operating efficiencies whilst trying to maintain service levels. All of the routes across the business were stress tested in order to secure a balance between customer needs and subvention targets. Efficiencies were introduced inter alia through a pay pause, less overtime, a freeze on recruitment, continuation of the voluntary severance scheme, staff reductions, and reductions in material costs. The operating result for the CIÉ Group for 2009 before exceptional items is a deficit of €36.9 million. The main feature of the year was a decline in passenger numbers of almost 11% on 2008 levels, directly related to the general economic climate.
The end of the fuel rebate, the increased cost of fuel and higher excise duty contributed to the deficit for 2009. Exceptional costs of €40.8 million were incurred during the year, predominantly through voluntary severance costs. After exceptional items are taken into account, the net result for the CIÉ Group is a deficit of €77.7 million. Iarnród Éireann returned an operating deficit of €4.0 million. Passenger journeys fell by 5.9 million from 44.7 million in 2008 to 38.8 million in 2009, a 13% reduction in passenger volume over the year. Bus Átha Cliath returned a deficit of €7.0 million. Total passenger journeys amounted to 128.3 million in 2009 compared to 143.5 million in 2008, a reduction of 15.2 million (10.6%). Bus Éireann returned a deficit of €4.3 million. Bus Éireann passenger numbers for the year was down by 11% across the range of city, local services and expressway services. Public Transport Regulation Act The Public Transport Regulation Act became law in December 2009. The primary focus of the Act is to transform the national bus licensing regime and to replace the current system that has been in existence since 1932. All bus operators will for the first time be licensed to operate services under the same rules. Responsibility for the administration and issuance of bus licenses has been transferred from the Department of Transport to the Dublin Transport Authority (DTA) which will now have a national remit. To reflect this expanded remit the DTA has been renamed as the National Transport Authority (NTA). The funding of Public Service Obligation (PSO) services is now governed by Public Service Contracts between the NTA and each of the CIE subsidiaries, Iarnród Éireann, Bus Átha Cliath and Bus Éireann. The current contracts, which were agreed in December, 2009, are for five years in the case of bus services and ten years in the case of rail services. Iarnród Éireann reduced staff by 346 during the year through a programme of voluntary severance and efficiencies, while further savings were achieved in fuel and energy. Diesel trains on InterCity and commuter routes cut their fuel use by 6% through more efficient schedules and automatic train engine shutdowns. While passenger numbers have fallen by 13% in 2009 this comes in the context of an increase from 34.5 million in 2002 to 44.7 million in 2008. Passenger journeys were also impacted by the Malahide Viaduct collapse. Despite the downturn and falling revenues Iarnród Éireann maintained the full range of services and with some timetable adjustments made in December a highly efficient use of rolling stock and resources was put in place. Voluntary severance payments of €28.0 million were made in 2009 to enable early retirements. - Malahide Viaduct The collapse of one of the piers of the Malahide viaduct on 21st August, 2009, represented the most serious accident on the network in many years. The collapse was caused by tidal scouring of the supporting causeway and the results of the internal investigation have been provided to the Rail Accident Investigation Unit (RAIU) which will publish its report in 2010. The repair works were carried out safely and swiftly and trains were running over the viaduct again by 16th November, 2009. Key to the rapid restoration was the “real time” safety certification by the Railway Safety Commission (RSC). The accident presented customers and the company with a major challenge during the period of disruption. The management team in Iarnród Éireann together with Bus Átha Cliath and Bus Éireann put an effective alternative bus substitution in place to cater for the disrupted rail passengers. The company much appreciates the patience, understanding and co-operation of customers during the disruption. Iarnród Éireann’s freight division also arranged for a replacement road service for the transport of ore from Tara Mines to Dublin Port during this time. - Freight A new point to point trainload freight traffic contract between Ballina and Dublin Port was secured during the year. Additional revenue of €0.7m per annum will be earned and this new flow helps improve the financial viability of the freight business for Iarnród Éireann. - Rosslare Europort Rosslare Europort enjoyed another profitable year although the business suffered from the general downturn in the economy and traffic volumes were down on 2008 levels. - Passenger Train Punctuality 2009 The full year results for passenger train punctuality show a marked improvement primarily as a result of the full introduction of the new InterCity Railcars (ICRs). While the individual monthly results for the later periods of the year were affected by adverse weather conditions and on lnterCity, by temporary speed restrictions, the overall results for the year ending 31st December 2009 shows on-target achievement on most routes. In common with the rest of the Group Bus Átha Cliath was affected by the economic downturn which resulted in a significant reduction in passenger numbers directly attributable to the sharp increase in the number of unemployed and a reduction in leisure activity. Bus Átha Cliath implemented a major cost reduction plan including the curtailment and rationalisation of services to counteract the downturn in the economy. A fuel efficiency programme was also implemented. Trials were conducted using hybrid electric vehicles in order to increase fuel efficiency and reduce carbon emissions. - Bus Gate Since its introduction in July the new College Green “Bus Gate” has had an enormous positive impact on bus services, and has significantly reduced the average time taken to travel from O’Connell Street to Dame Street. Bus Átha Cliath has given Dublin City Council a significant amount of data on the benefits of the priority. The company has shown that bus journey times through Dublin city centre were cut in half once the bus gate was introduced and thousands of customers each day are now benefiting as a result of the “Bus Gate”. - Quality Bus Corridors The most recent survey conducted by the Dublin Transportation Office has shown that bus journey times in the morning peak were better than the journey times for cars on 12 of the 16 corridors monitored. The survey also showed that customer numbers increased by 45% since the introduction of the Quality Bus Corridors. The Deloitte Cost and Efficiency Review carried out for the Department of Transport was published in 2009 and found that Bus Éireann’s integrated network is as efficient as European peers; that passenger numbers had risen by 15% from 2001 to 2007 and that subvention, PSO, funding as a percentage of total revenue, is low compared to European counterparts. Deloitte also found that administration and back office expenses are in line with benchmarks and that scheduling of services and driver duties is efficient. The Group Property Department achieved sales of non operational property yielding €0.9 million and net rental income amounting to €10.1million in 2009. Group Property are presently working on major projects in Dublin (Spencer Dock, Connolly Station, Barrow Street, Tara Street and Abbey Street) and Eyre Square Galway as well as providing professional services to various Iarnród Éireann infrastructural projects. CIE Tours International continued to generate profit in 2009, despite the extremely difficult trading conditions in the tourism industry worldwide. During the year the company provided coach touring vacations to 32,500 passengers, a reduction of 22% on 2008 levels. Total revenues amounted to €32.4 million. The main difficulty experienced by the company during 2009 was the rapid decline in consumer confidence in the US market, in addition to a weak US dollar. However, the company managed to reduce overhead costs sufficiently in order to remain profitable. Commuter Advertising Network (CAN) This division is responsible for managing CIE’s outdoor advertising business including bus and rail advertising sites. The division had a difficult year in 2009 as advertising spends were curtailed. On behalf of the Board, I would like to express my thanks to the Minister for Transport, Mr. Noel Dempsey T.D. for his support during the year, as well as to officials of the Department of Transport for their assistance. I am also grateful to the Government, and particularly the Taoiseach and the Minister for Finance, for the major investment programmes currently being undertaken under the National Development Plan 2007-2013 and for the commitment given under the Transport 21 Plan announced in November 2005, which are and will be, so vital to the improvement of public transport in Ireland. The Board also gratefully acknowledges the EU Structural Fund co-financing which has been received. I would like to extend a thank you to the staff of the CIÉ Group of companies for their sustained efforts throughout the year. Mr. Paul Cullen and Ms. Mary Johnston retired from the Board on 30th November, 2009 having served almost 13 years and 4 years respectively on the Board. I would like to thank them for their contribution to CIÉ during their tenure as Board members. It was good to welcome back to the Board Mr. Bill McCamley and Mr. John Moloney following elections held under the Worker Participation (State Enterprises) Acts, 1977 and 1988. Also elected were Mr. Mick Cullen and Mr. Willie McDermott who were appointed to the Board on 1st December 2009. I would also like to welcome Mr. Dermot Killen, who was appointed on the 19th May, 2009. In conclusion, I would also like to thank the remaining 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 of their time to serve on the Boards and on the many vital committees and advisory groups within the CIÉ Group.
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