France's Alstom proposes using double-decker trains in the Channel Tunnel.
Fresh Take:
Get ready to zip through the Channel Tunnel like never before! Alstom is in the thick of negotiations to introduce high-speed double-decker trains, slashing costs and boosting capacity. Henri Poupart-Lafarge, chief exec at Alstom, shared the exciting news, sharing that their Avelia Horizon train would conquer the undersea tunnel.
The double-decker train offers heaps of advantages. It boasts lightning-fast speeds, as well as the most affordable seat cost and the highest capacity, making it ideal for cranking up traffic on routes from London to mainland Europe.
Alstom's new trains can rocket at over 300km/h, and they've already scored deals to deliver these game-changers to SNCF, albeit the timeline slips back to 2026. Getting the nod from Eurostar and satisfying Channel Tunnel safety standards are additional hurdles these trailblazers must overcome.
Last week, the UK and Swiss governments championed the idea of direct services between London and Switzerland, heightening competition for Eurostar's 30-year monopoly on the UK-mainland Europe link.
Poupart-Lafarge stayed tight-lipped about the specifics of commercial talks, but he hinted that such an order could drag on for years. It's no secret that Alstom's trains have been engineered to slice through the major European lines, even the one under the Channel.
Rival rail providers like Sir Richard Branson's Virgin Group and the Italian state-owned railway are also gearing up to challenge Eurostar. Securing trains certified to run through the Channel Tunnel remains the key challenge for the tentative contenders, according to industry experts.
Alstom has already racked up €850mn in contracts with Proxima, a private French operator, for their double-decker trains. Europe's rail modernization and increasing traffic look promising for Alstom's future, as evidenced by recent bountiful orders in Germany.
Europe's burgeoning rail demand saw Alstom's orders swell to €19.8bn in the year ending March 2023. However, the company's shares took a dive nearly 17% Wednesday, as its forecasts left investors grasping at straws.
To tackle its debt woes, Alstom launched a €1bn capital raise in May, offloaded a US signaling business, and sold a German rail factory to KNDS, with plans to transform the site into a tank-building factory.
Despite facing some challenges, Poupart-Lafarge asserted that debt struggles were water under the bridge and that the company would not divest any more assets. Alstom, however, will forego the dividend for the 2024-25 fiscal year until it attains a neutral cash position.
Analysts at JPMorgan scratched their heads over Alstom's financial guidance for the current fiscal year, suggesting it looked a bit light, and its targets for organic growth, free cash flow, and operating margin fell below experts' expectations.
- In the competitive landscape of European rail industry, Alstom's business is thriving with a burgeoning demand, securing €850 million contracts for their double-decker trains and €19.8 billion in orders in a year, showcasing the potential for growth in the automotive and transportation sector.
- Alstom's financial future is not without obstacles, as the company combats debt woes by undertaking measures such as a €1 billion capital raise, offloading a US signaling business, and selling a German rail factory to KNDS, while temporarily foregoing dividends to maintain a neutral cash position.
- The entry of potential rivals like Sir Richard Branson's Virgin Group and the Italian state-owned railway into Europe's rail industry presents a challenge for Alstom, as the industry focuses on investing in trains certified to run through the Channel Tunnel, a prominent finance and safety concern for all contenders in the business of transportation.
