Eurotunnel debt grows five-fold

26th July 2004, Comments 0 comments

PARIS, July 26 (AFP) - Eurotunnel, which operates the Channel tunnel, reported on Monday a five-fold increase in first-half losses, but the new management blamed its predecessors while acknowledging that a review of sales strategy was not enough to deal with the company's crisis.

PARIS, July 26 (AFP) - Eurotunnel, which operates the Channel tunnel, reported on Monday a five-fold increase in first-half losses, but the new management blamed its predecessors while acknowledging that a review of sales strategy was not enough to deal with the company's crisis.

The company, which is being squeezed by a debt mountain, said that operations were suffering particularly from competition from low-cost airlines.

The price of shares in the company fell by 8.82 percent to EUR 0.31. The main market, as measured by the CAC 40 index, was showing a gain of 0.29 percent to 3,577.77 points.

The company said that first-half net losses had risen five times to EUR 119 million (USD 144.0 million) from EUR 22.0 million in the first half of last year.

In the first six months of the year sales fell by 3.0 percent to EUR 390 million from a reviewed figure of EUR 400 million for the same period of last year.

Operating profit fell by 12.0 percent to EUR 108 million from EUR 123 million.

A new management team elected by shareholders in a revolt against the previous management on April 7 said that it was not responsible for the losses.

The new chairman, Jacques Maillot, and managing director Jean-Louis Raymond, declared: "These results are not ours."

In a statement, they added, however that "as shareholders had feared, Eurotunnel's financial situation is worrying".

They said that measures announced by the new team to change commercial and pricing policy and to reduce costs "should enable us to improve the operating situation of the company from 2005".

But "these measures will not be enough".

They said: "It is now vital for the turnaround of Eurotunnel that overall talks begin as soon as possible with all of the public (state), private, financial and industrial partners."

Finance director Herve Huas said in a telephone conference: "The results are altogether disappointing. This is not at all a surprise."

He said that the results next year should be better.

Regarding negotiations with banks over debt of EUR 9.0 billion, he said that "active dialogue" was under way with "a certain number of creditors".

Talks with some industrial partners such as the French state railway company SNCF are also under way.

The company said that the trend for performance of passenger shuttle services through the tunnel would continue if there were no substantial changes in the second half in extremely competitive conditions.

The volume of cars carried in the first half had fallen by 14 percent and continued to suffer from competition from low-cost airlines.

The company's share of the passenger market had fallen by two percentage points to 48 percent.

The volume of lorries carried by the freight service had risen by two percent.

The overall market had increased by four percent.

The tunnel carries lorries, passenger cars, and foot passengers beneath the sea between northern France and southern England.© AFP

Subject: French news

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