Llangollen Railway

"We took insolvency advice and were told that putting the money in the trust would protect it. We were really pleased because protecting our customers was really important to us"
And
"We are taking legal advice but we fear the administrators may, legally, be on safe ground."
Something isn't right there.

 

I also suspect that the timing will be important - if the money was put in trust when insolvency was in prospect (which is how the quote reads), that could look very different to what would have happened if it had gone into trust when paid.

 

There is a small GWR prairie and a pannier tank still at Llangollen. The prairie is nearing the end of its restoration and the pannier is being overhauled. Work has also started on the overhaul of Std 2-6-4 tank 80072.

 

If the newspaper report is correct then the beneficiaries will be the creditors. Which is hard, but one persons loss will be another persons gain.

 

The past doesn't always dictate the future. There can be a whole host of reasons why ex BR locos aren't based on any railway, and these reasons can easily and quickly change.

 

also what’s the difference between a “resident” and a medium/long term visitor? The EVR was mentioned above but they have 80080 and 9466 on medium term hire. No reason why Llangollen couldn’t have the same at some point. Even a “home” loco would expect hire fees these days at something approaching a commercial rate. The key point is that it is affordable under the business model.

Regards

Matt

 

Whilst enthusiasts may be obsessed with ex main line locos plenty of lines operate successfully without them although the length of railway can be an issue but in an educational sense things like seeing water being put into a saddle tank can be part of the wider public appeal. Similarly a steady rotation of hired in power at such as Ecclesbourne may attract repeat visits and publicity which a small owned fleet would not.

From a financial perspective it may actually be desirable for the operational railway not to own expensive assets such as locos as this prevents Boards borrowing unwisely against them and ensures that if the worst happens there isn't a sudden bankruptcy disposal.

Similarly from a loco owners perspective there is a greater probability of earning sufficient steaming fees where a line only has a hired fleet based on need rather than the hired loco only being used as spare to cover for the line's own loco not being available.

 

There are pros and cons. My sense is that hiring in is cheaper for the host railway than owning (and maintaining) your own locos (*); however, it increases the business risk that a line may have to limit its operations due to a shortage of motive power. There are also some balance sheet differences: if you hire a loco, it is likely to be a revenue expense directly against your profit and loss. If you own it, you may well capitalise the overhaul and then depreciate it over the lifetime of the overhauled component.

I think a mixed model is probably optimal, ideally one in which agreements with loco owners are long term, i.e. for several tickets in duration. That allows both parties to properly assimilate the risks / costs of occasional, but costly, repairs such as a new firebox or set of cylinders etc.

(*) The fact that most independent loco-owning groups run a near-constant fundraising operation is a clear indication to me that the money received from hire fees is insufficient to pay the long-term maintenance costs of the loco; ergo, loco hire costs are on average lower than the true cost of ownership and railway operators are therefore beings subsidised by loco owners. They are of course providing infrastructure and operational capacity in return for that subsidy ...

Tom

 

There's a 'result of meeting of creditors' document at Companies House. To me as a layman it's not anything spectacular, it accepts the provisional report and pays the administrators.
https://find-and-update.company-information.service.gov.uk/company/02716476/filing-history

Patrick

 

Llangollen already have a long term hire engine - 3802 - so they already understand. The point is - and it is equally applicable to other railways - that long term hire does not necessarily equate to long term stability. Locos can and do move around. Owning engines, or having them owned by committed supporters (e.g. much of the SVR fleet) provides additional stability for the provision of a line's principle attraction.

Lastly, although industrial engines can be successfully used by most heritage railways, it is not what they were designed for and maintenance might be more of a problem. Also, industrial-only lines usually show a big jump in passenger numbers when main-line engines are introduced.

 

(Just quoted the last comment to tie back).
The thing is though, that insolvency law hasn't changed in the period. So the insolvency advisors at the time would know what the effects of insolvency would be.

They can't have got correct[1] advice and find out the administrators have a solid legal case.

[1]this is not to say the advice was wrong, but some combination of the questions asked, the facts discussed, the circumstances, the advice given, the understanding of the advice and the report don't add up.

 

Wedding insurance exists for situations like this. Though how many actually get it.

 

This is what I remember happened at ELR for a while. Its fleet at one point was a lot of main lined locomotives. So being down a couple of Rileys Black Fives and a Jubilee played havoc with the fleet availability.

 

Correct, the scale and cost of repairs is only going on one direction, that goes for locos, infrastructure, PW and carriages of course. Very few if any railway pays enough in hire fees for locos to keep going. Engines need both secondary income and volunteer labor.

Locos have fixed costs whether they turn a wheel or not, annual inspections, ten year boiler lift, replacement of tubes, lagging, brake cylinder bands etc.. Not to mention you need a programme of repainting all the hard to reach areas lest the rust worm take hold, dragboxes, tanks, bunkers, under the cab etc.. The boiler, smokebox, tanks and bunkers are decaying all the time, especially if parked outside. So the more you can earn between boiler lifts, the less the fixed costs and constant decay hurt. It is also true that if a boiler plate has got down to say 10mm thickness and the boiler inspector says change it, if you had run a lot more miles that ten year and got down to 9mm, you'd have had a lot more income for the same financial outlay of changing the boiler plate, and without the boiler reaching a dangerous condition.

We are starting to see engines laid up because they cannot afford their repairs. Sooner or later, (and sooner for most engines), the cost of a new firebox is going to break the bank, at say £650K for a Manor in todays prices, more if you need a new barrel and front tube plate as well. Engines like Foxcote have been running a long time in preservation now, others less so, 80072 for example. Many of the more heavily used engines are throwing good money after bad patching up boilers when BR wouldn't have bothered, they'd have called it a day and had new. Current owners are forced to go down the heavy repair/patching route because they cannot afford new.

I'm not saying its an impossible challenge. But the days of Llangollen having 5 locos sat around to run a one engine in steam railway are very likely over, and that's a good thing, because it was not sustainable. Very nice as it was to have a 44806, 45337, 3802, 7822, 80072 (though it was away a very great deal in its ticket), 5199, 6430, Jessie plus visitors, no engine earnt enough, not even close! The large engines are all currently faced with a substantial amount of work to do on their bottom end, having not had the money at the time the boilers were done. Doing the bottom end work mid ticket is a lot of work I can tell you(!), and it limits your earning potential.

The other point people seem to constantly miss is that sharing locos between lines keeps the interest up.