New SNCF CEO to start term with savings plan due to strike

The strike against the pension reform is not yet over but it is already time for SNCF accounts. Thursday January 16, as the movement entered its forty-third day and that French cities knew their sixth day of national demonstrations, the first board of directors of the new SNCF, resulting from the 2018 rail reform, reviewed the losses due to the conflict.

“The strike, which began on December 5, translates into 600 million euros in shortfall in 2019, an average loss of 22 million per day, explained this Thursday Jean-Pierre Farandou, the CEO of SNCF. If it hadn’t been for the strike, we would have had a very happy new year 2019. But there it will hurt, it will damage us. “ According to Farandou, the 600 million should reduce profit by about the same amount and perhaps lead the group to display accounts in red for 2019. And that is without counting the new year. In 2020, to date, the strike has enlarged the hole by an additional 250 million euros. “In total, we will not be very far from the billion euros in losses”, estimated the boss of the railwaymen.

Consequence: the new CEO (appointed 1^st November 2019 to replace Guillaume Pepy) will begin his mandate with the implementation of a savings plan which will be added to the productivity improvement program – called performance plan – already planned. “The 600 million euros of last year, they are lost, tried Mr Farandou. But we will try to make up for some of the 300 to 350 million losses that the strike should cause this year. “

Bringing travelers back to SNCF

Mr. Farandou’s employees have started working on the elements of this plan, the aim being to make specific proposals to the next SNCF group’s board of directors in late February or early March. “I will not touch the production job”, however promised the CEO of SNCF. Translation: there is no question of weakening everything that contributes to the supply of trains and the quality of service. The savings program is also coupled with a commercial recovery plan consisting in bringing back to SNCF the travelers who abandoned the train during the conflict with low prices.

The strike will therefore have greatly complicated the financial equation of SNCF which, even without the conflict, was already not simple. Admittedly, the State takes over 35 billion euros in debt from SNCF Réseau, the subsidiary managing the rail infrastructure, including 25 billion as of this year, offering it a breath of fresh air, but this is in return for financial consolidation consisting in ensuring from 2022 the functioning of the rail system without additional debt.

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