U.K.’s Railtrack To Pay Train Operators

November 13, 2000

Railtrack, the beleaguered company that operates Britain’s rail network, announced that it was setting aside £250 million ($360 million) to provide a fund for “re-railing” and for penalty payments to the U.K.’s train operators, who have sought to recoup some of their losses, sustained as a result of shutdowns for maintenance work following several accidents on the lines.

The recent floods in the U.K. has made it even more difficult for Railtrack to carry out badly needed work, principally installation of new track and equipment, to improve the U.K.’s aging rail network. It has imposed speed limits and shut some lines, which operators say could cost them as much as £300 million ($432 million) in lost revenues and penalty payments.

Some operating companies have threatened to withhold track access payments, which amount to £2.2 billion ($3.17 billion) a year, Railtrack’s principal income source, unless they receive compensation for the delays and cancellations they are currently experiencing.

U.S. insurer, The St. Paul Cos., is also seeking to amend contracts with the companies, which currently do not provide for subrogation against Railtrack to recover damage payments for business interruption caused by the delays.

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