Traffic slump hammers Eurotunnel

THE disaster that is Eurotunnel got worse today, after the chronically loss making Channel Tunnel operator revealed a slump in the number of cars, trucks and coaches using its shuttles in and out of Folkestone.

Ahead of a root-and-branch review expected next week from the new French management parachuted in to run the company after a shareholder coup in the spring, Eurotunnel revealed it is losing market share to cross-Channel ferry services.

But although the new management has been in charge for six months, it laid the blame squarely at the door of the previous regime headed by ousted British chief executive Richard Shirrefs.

Quarterly figures for the key holiday months of July to September revealed that the number of cars using its services slumped by 5% to 606,000 against a fall in the cross-Channel market of 1%.

Marketwide figures show that the number of coaches crossing the Channel fell 4%, but the number using the tunnel dived 13%.

The figures for truck usage of the tunnel fared no better. The total cross-Channel market is reckoned to have leapt 8% during the summer, but Eurotunnel reported a 4% slump to 302,000.

All that added up to a 4% dive in revenues for the quarter to £140m, revenues that are routinely gobbled up by interest payments on the company's £6bn debt mountain.

Chief executive Jean-Louis Raymond was ready with a litany of excuses. 'The results are obviously not satisfactory,' he said.

'These figures demonstrate that Eurotunnel's previous strategy was not adjusted to market trends in terms of capacity and pricing.'

He said the number of hauliers wanting to cross the Channel had grown during the past few months but that they are the wrong sort of truckers.

'The market has been boosted with the arrival of new hauliers from the eastern European countries that have recently joined the European Union, [but] the speed of service offered by Eurotunnel is of less importance to these new longdistance hauliers than to our more traditional customers,' said Raymond.

On the passenger front, he said Eurotunnel was more sensitive to a downturn in numbers than the ferries with a significant reduction in day trips and short breaks.

He also said Eurotunnel had been hurt by SpeedFerries which opened for business with aggressive summer season pricing.

Eurotunnel's attempts to hit back with its own discounting only served to lower revenues, Raymond admitted.

Eurotunnel shares, close to their recent low, slipped 1 1/2p to 20 1/4p.