Eurostar Survival Concern Grows as U.K. Firms Lobby for Rescue

(Bloomberg) -- U.K. business leaders called for a government rescue of Eurostar International Ltd. as border closures aimed at halting new strains of Covid-19 threaten to push the Channel Tunnel rail operator toward collapse.

Eurostar, whose passenger expresses link London with Paris, Brussels and Amsterdam, needs “swift action to safeguard its future,” the London First lobby group said in a letter to Chancellor of the Exchequer Rishi Sunak obtained by Bloomberg and signed by more than 25 executives and academics.

The train operator, which is 55% owned by French state railroad SNCF, said in an email that there’s a “real risk” to its survival without government funding. Britain should grant it access to Bank of England-backed loans that have been made available to some airlines as the virus stunts international travel, the company said.

Eurostar has seen traffic plunge 95% during the pandemic and was set to run out of cash in coming months even before the border lockdown that begins Monday, according to the London First letter. The company says it has received money from its shareholders, which also include the funds Caisse de Depot et Placement du Quebec and Hermes Infrastructure, with a 40% stake, and Belgium, which holds 5%, but has had only furlough money from Britain.

Eurostar Chief Executive Officer Jacques Damas wrote to Sunak in November after the Treasury announced grants to airports equivalent to their business-rate bills, up to a maximum of 8 million pounds ($11 million). The company said the move put it at a direct disadvantage against airline competitors.

The U.K. Department for Transport said at the time it recognized the financial challenges facing Eurostar and had been engaging with it regularly since the start of the outbreak. No one at the ministry was available to comment further outside normal business hours.

Stake Sold

Britain sold its own 40% holding in Eurostar in 2015, making the question of government funding more complicated.

The company, which has its headquarters in London and employs 1,200 people in the U.K., also hasn’t qualified for emergency agreements to rescue domestic British rail operators or bail out the London subway.

Christophe Fanichet, head of SNCF Voyageurs, said last week that Eurostar has suffered from being viewed as French in the U.K. and as British in France, Agence France-Presse reported.

The London First letter said Eurostar has become an especially vital international link following Brexit and benefits the environment by providing a fast alternative to air travel.