Keolis’ American dream is turning into a nightmare. The subsidiary of the SNCF, which operates the network of suburban trains in the Boston area for eighteen months, no longer knows which way to turn to get out of a trap in which it has stuck itself. Repeated delays, faulty equipment, poor network cleanliness: Keolis is obliged to pay penalty after penalty to its customer, the State of Massachusetts.
Result: in 2015, for its first full year of operation, this contract cost the French company $ 29.3 million (€ 26 million), which represents nearly 9% of its operating income. Without Boston, the company would have increased its profit by more than 10% for this fiscal year; it had to be content with an increase of 6.6%, according to the annual results published Tuesday, March 22.
To understand how Keolis got there, we have to go back to the conditions of the call for tenders. From 2003 to 2014, it was another French company, Transdev – ex-Veolia Transdev – which operated the Boston network, linking the profit years. For Transdev, this was its biggest contract, with an annual turnover of 340 million dollars.
Colossal gap
The network is the sixth in the United States in terms of size. Above all, with fourteen lines over 1,000 kilometers of track taken by 130,000 travelers per day on average, it is the largest American network entrusted to a private operator. A true standard-bearer likely to make people envious.
When the contract was renewed, the Massachusetts Bay Commuter Railroad (MBCR), the consortium led by Transdev, found itself in competition with a joint SNCF-Keolis offer. At the time, the French public company was a dwarf in the United States, with a turnover of 160 million dollars. Boston represents a unique opportunity to change size in the country and to make it a showcase of its ability to expand internationally. Incidentally, depriving his rival of such a flagship, while the latter is in the starting blocks to come and hunt on his land in France, is not to displease him.
Ready to win this contract at any cost, Keolis is bidding less than $ 25 million per year, or 6% less than Transdev. A colossal gap.
“It was mission impossible to keep this contract: the difference with our offer was greater than our margins, says a source within the MBCR. Even today, we do not know how they imagined making money with such a price level. “
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