Railtrack to hit back at Government

RAILTRACK will launch a fightback early next week against the Government, with half-year results showing it was getting back on to a sound footing before the Byers bombshell dropped.

September half-year pre-tax profits of £175m will be flat on last year's, but well up on last year's second-half loss of £709m, sources said. Railtrack will also say it was well on the way to meet its target of saving £1bn through cost-cuts.

This contrasts starkly with the deterioration of the railway since October, when Transport Secretary Stephen Byers put it into administration. It will also play into the hands of those mounting a raft of legal actions, alleging that Byers exercised his authority improperly.

Delays due to Railtrack are up by 45% since the administration order. Train companies claim vital track repairs are taking much longer to complete, while Railtrack faces penalties of £400m to pay for these delays.

Railtrack chief executive Steve Marshall gave a taste of things to come when he warned the group could remain in administration for the next two years. 'It's all very well to precipitate the administration of the company, but what is going to happen next?' he asked.

Administrator Ernst & Young said the Government's plan to find a buyer within six months was always 'very tight and realistically was probably going to be longer'.

But it added to the uncertainty by saying that potential buyers for the network such as WestLB and Babcock & Brown will not be able to run a rule over Railtrack's books until the new year.

E&Y is later this week expected to name a new management team for Railtrack plc, the collapsed operating subsidiary of Railtrack Group. John Prideaux, a former boss of British Rail's intercity trains, is expected to replace John Robinson as chairman, while Marshall's role will go to Railtrack's technical director, John Middleton.