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INFORMED SOURCES May 2007

Pendolino lengthening no early resolution

The 106 extra Pendolino cars may be in the 1000 new vehicles, but DfT Rail's in no hurry to buy

Time for a new Informed Sources concept – the Ballybunion Vortex. This is inspired by an old joke, where a visitor to Ireland is lost and asks for directions to Ballybunion. ‘Faith, Sir', he is told, ‘if I were going to Ballybunion, I wouldn't start from here'.

That is a Ballybunion event. But if you put off the trip in the hope of better directions, you may well find that the journey has become even harder. A Ballybunion Vortex is building.

Take the case of the proposed lengthening of the Pendolino fleet. The event was DfT Rail's decision to defer buying the extra vehicles until terms for reinstating the Virgin West Coast franchise had been agreed.

By the time the franchise deal was done and procurement could start it was mid December 2006. But a fortnight earlier the Office of Rail Regulation had reported that it was minded to refer DfT Rail's complaint about Rolling Stock Company lease rentals to the Competition Commission. The event was about to become a vortex

and time was running out to order the extra cars. To minimise cost and disruption Alstom wanted to lengthen the trains as they came on depot for their H2 bogie overhaul starting in December 2008.

This required a decision by 31 January. And a deal seemed in reach, until Royal Bank of Scotland , which owns Angel Trains, which owns the Pendolino fleet, took fright at the likely Competition Commission referral and pulled the plug on financing the extra cars.

Alstom's offer expired. Refreshing bids from its sub-contractors would take time, and inflate costs. Only half the fleet, at best, could be lengthened during the H2 programme.

Alarmed by the potential reputational damage, DfT Rail and Angel began talking again. Then, on 23 February, Pendolino 390 033 derailed at Lambrigg. The vortex accelerated.

Repair

Earlier, optimistic, statements on the condition of 390 033 were made before Alstom and VWC had been able to assess the damaged vehicles. RAIB has kept them under tarpaulins. But preliminary studies of likely repair costs suggest that the most heavily damaged vehicles could be beyond economic repair.

While the aluminium extrusion construction used for Pendolino bodyshells produces a strong and light structure, it is a pain to repair compared with steel.

On the Pendolino cars, damaged areas will have to be cut back to the welds between extrusions and new sections welded in.

Heavy damage will probably involve removing all the interior equipment so that a bare shell can be put in a jig and measured. Local damage to the conduits, or ‘rafts' which carry the miles of wiring could require the raft to be replaced and the vehicle rewired.

A bodyshell is relatively cheap. The complex systems and equipment inside, its installation and testing makes up the bulk of the cost.

One preliminary estimate puts the cost of a complete strip, repair and rebuild at around £1.3 million per vehicle. This compares with Alstom's last quote of £1.67 million per vehicle for the 106 cars.

Of course, Network Rail's insurers will pay. But suppose one or two of 390 033's vehicles are declared as write-offs?

If the lengthening does not go ahead, the cost of a new coach ‘knife and forked' on the shop floor, as opposed to built on a production line, is put at between £2.5m and £3m. The lead time for, say, two or three sets of extrusions, equipment and bogie frames, would also be much longer.

Meanwhile, as this column goes to press, the vortex has accelerated yet again. According to Informed Sources, the talks resulted in Angel agreeing to fund the extra cars, subject to two caveats.

First, Angel wanted Section 54 protection for the lengthened Pendolino fleet. This would ensure another 10 years of use after the current lease expires in 2012.

Second, with an eye on the probable Competition Commission investigation, Angel wanted a letter of comfort from DfT Rail. This would say, in effect, that the Department was happy with the new lease rentals on the Pendolino fleet.

Unhappy

Unfortunately, DfT Rail was not happy, even though, according to Informed Sources, the lengthening deal gave a reduction in the rental for the new fleet of 53 11-car trains. Because DfT Rail knows a thing or two about Section 54 protection.

Under the Strategic Rail Authority ( SRA ), Stagecoach was proposing a 20 year franchise for South West Trains. Angel's bid for the associated Mk 1 stock replacement fleet of Siemens Desiros, assumed 20 year leases.

A 20 year lease attracts very competitive rental terms, which SRA was loath to forego when the 20 year franchise collapsed. A quick Section 54 meant that Angel's rentals on the Desiro fleet did not have to be adjusted upwards.

Remembering that deal, DfT Rail is said to be asking for ‘Desiro' rates on the enlarged Pendolino fleet. This may be a risk too far for the bankers, since even ‘Desiro' rates might be cut by the Competition Commission.

But, skipping lightly over the issues of inserting two cars owned by Delticdosh Leasing into Angel's fleet, who says the Pendolinos' bolshy owner has to fund the 106 extra vehicles? True, but it would no longer count as a follow-on deal under European Procurement rules.

Finding a new funder would mean issuing an OJEU Notice, going through pre-qualification and so on. Further delay could mean the lengthening programme running into the last year of the VWC franchise.

In that case we might not want to go to Ballybunion anyway. VWC doesn't need the extra capacity over the remaining years of the franchise and has concerns over the impact of lengthening on reliability.

Meanwhile, DfT Rail is promoting IEP for Euston-Birmingham-Wolverhampton from 2014 to enable the Pendolino fleet to be concentrated on long distance services. Alstom delivered its revised bid in mid-April, but I suspect that longer Pendolinos may be an idea whose time has come – and gone.