The company states in its Annual Report and Financial Statements submitted to Companies House on December 19 and published on January 3, that the franchise has continued to record losses since the end of the previous financial year. The operator’s auditor Deloitte warns there is “significant doubt” over the company’s ability to continue as a going concern.

“Current forecasts indicate that losses will exceed the amount of the onerous contract provision within 12 months from the date of approval of these accounts,” the statement reads.

As a result, SWR says it is in discussion with the Department for Transport (DfT) over potential “commercial and contractual remedies” in light of the uncertainties impacting the franchise, including infrastructure reliability, timetabling delays and industrial action. The outcome of these discussions remains uncertain, but according to SWR directors could lead to the following potential outcomes:

  • requests for the company to submit proposals for a short-term management contract for the continued operation of the franchise, or
  • termination of the contract within the next 12 months and the transfer of services to a publicly-owned operator.


SWR operates commuter services out of London Waterloo as well as long-distance services to the west of England, serving around 600,000 passengers per day. The operator cites “challenging” operating conditions during the year for the weak performance.

Poor weather and historic infrastructure issues which predate the start of the franchise in August 2017 dogged performance although the operator says work conducted alongside Network Rail to resolve these issues is starting to show results. SWR reported a public-performance measure (PPM) - the number of trains arriving at a destination within the individual train operating company’s benchmark - of 82.3% compared with 84.3% the previous year. The company achieved a 78% customer satisfaction against a target of 80%.

The franchise was also impacted by industrial action, which has continued in the current financial year. The operator also experienced a 28-day walkout in December, Britain’s largest ever rail strike.

In addition, the company says it was hindered by the decision to defer the December 2018 timetable changes to May 2019, preventing the franchise from introducing the additional services and passenger benefits outlined in its franchise commitment

The continuing uncertainty had led the franchise to set aside £145.9m - the maximum unavoidable loss under the terms of franchise - in respect of these potential future losses.

SWR is dependent on funding from parent companies First and MTR, which have reaffirmed their commitments to the company, with £122m available and which SWR expects to utilise in the next 12 months.

Nevertheless, SWR’s directors are optimistic about turning the situation around. The directors say they believe that support from the parent companies and the current status of discussions with the DfT which indicate a positive outcome, will result in the company continuing to operate for the foreseeable future.

Previous performance

The £137m loss occurred against an increase in turnover to £1.108bn and an 6% increase in passengers. SWR recorded a profit of £7m in its previous annual results up to March 31 2018.

SWR plans to introduce 18 refurbished trains on the London - Portsmouth route during the next financial year. The operator is also set to introduce a new fleet of 90 trains manufactured by Bombardier this year. These trains as well as the introduction of class 442 trains and seating reconfiguration on the class 444/450 fleets is set to boost peak time capacity by 46% on London routes.

These fleet improvements are part of the franchise’s £1.2bn transformation, which also includes improved station and passenger facilities, and is targeting an acceleration in annual patronage and revenue. SWR is set to continue this rollout and it will do so with a new boss - Mark Hopwood joined the franchise as managing director from Great Western Railway on January 6. He has pledged to restore reliability to the service.