The halting opening of the rapid rail link between Tel Aviv and Jerusalem, which led to an overall decline in passenger numbers on Israel Railways, falling activity in the goods division, and a revised valuation of the company's assets, were the causes of a huge loss posted by Israel Railways in the third quarter.
The third quarter loss was NIS 273 million, which compares with a loss of NIS 16.5 million in the corresponding quarter of 2017. In its third quarter financial report, released on Thursday, Israel Railways stated: "In the light of all these factors, the company has decided to embark upon a streamlining process in order to meet its new annual profit targets."
Israel Railways third quarter revenue totaled NIS 608 million, which compares with NIS 609 million in the third quarter of last year. The company posted an operating loss of NIS 42 million, and it made a provision of NIS 209 million for a downward revaluation of its assets.
Israel Railways explains that one of the main reasons for its losses is "an insufficient rise in passenger numbers, as a result of the diversion of rolling stock from high-demand lines to the high-speed Jerusalem line, which is undergoing running-in and is limited to 400 passengers per train, resulting in a loss in revenue from an incentive subsidy."
In other words, in order to operate the high-speed line to Jerusalem, which was opened under pressure from Minister of Transport Yisrael Katz before it was complete, rolling stock was taken from other lines. There were 15.7 million passenger journeys on Israel Railways in the third quarter of 2018, which compares with 16 million in the corresponding quarter of 2017 - a decline of 2%.
As reported by "Globes" , the severe shortage of railway carriages is mainly a result of faulty long-term planning. Orders for the necessary equipment were late and only partial. As a result, Israel Railways is now having to deal with overcrowding, delays, and cancellation of popular routes. Its punctuality rate fell to 90.7% in the third quarter. For the first nine months of 2018, the punctuality rate was 92.2%.
Besides from the dramatic decline in the standard of service to passengers, Israel Railways is losing much potential revenue. There have been several breakdowns on the Jerusalem high-speed line since it opened two months ago, most which could probably have been averted had the line been opened a few months later. For the time being it is operating only between Jerusalem and Ben Gurion Airport, and the airport and Modi'in stations are out of action at weekends because of electrification work.
Published by Globes, Israel business news - en.globes.co.il - on December 2, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018