04 June 2004
Network Rail slipped into the red last year in spite of its chiefs claiming that the company was firmly on track and delivering results.
According to figures released by the organisation on June 2, Network Rail made an operating loss of £758m in 2003/04 compared with an £80m profit generated over the previous year. The organisation is attributing the majority of the loss — £544m — to a change in the phasing of its grant from the Strategic Rail Authority.
Chief executive John Armitt maintained that Network Rail was making 'good progress' on cost control.
'Whilst we have made a £758m operating loss in the past year, the company's debt levels are now some £1.3bn lower than forecast in October 2002, principally due to a rigorous approach to cash management,' he said.
Earlier in the week, Network Rail was trumpeting its success, saying rail performance had hit a four-year high but the figures show that delays were reduced by just 7% against a target of 10%. Despite this, chair Ian McAllister insisted that the reduction was one of the company's most important achievements.
The losses are not stopping Network Rail pressing ahead with a generous bonus scheme for its staff, rewarding executive directors with 24% of their basic salary.
McAllister said that given the achievements of the past year, employees should be rewarded with a bonus. 'The substantial improvements in Network Rail's performance are testament to the hard work of all our employees,' he said.
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