Eurotunnel has succeeded where others failed. On February 13, the French government issued its first open access freight operator’s licence to Europorte 2, a Eurotunnel subsidiary. This was an indication that the French government is prepared to back Galaxie Project, details of which were revealed on February 9 when Eurotunnel announced a record net loss of £1·33bn, after taking an ’impairment charge’ of £1·3bn to reflect a more realistic assessment of its future earnings capacity.

In effect, Galaxie is Eurotunnel’s fourth financial restructuring, intended to reduce debt and interest payments so that the group can trade profitably. Faced with a substantial drop in income from rail traffic after the Minimum Usage Charge expires in November 2006, Eurotunnel is seeking assistance in devising a formula that will allow charges for each rail passenger or tonne of freight to be slashed by as much as 75%, increasing volume substantially.

The charges are enshrined in the 1987 Railway Usage Contract, which both banks and railways have refused to renegotiate - hence the appeal to the governments. Quite what will emerge is uncertain, but the argument is that a substantial increase in passengers and freight will bring external benefits. More rail traffic means fewer planes, cars and lorries, and a better return on what Eurotunnel Chief Executive Richard Shirrefs calls ’ú15bn of under-utilised public investment’ in ’infrastructure surrounding the Tunnel.’ Satisfying all parties will not be easy, but on February 18 London & Continental Railways - which is funding construction of the Channel Tunnel Rail Link - was discussing with the Department for Transport a takeover by Eurotunnel of CTRL Section 1, now earning access fees from Eurostar.

Meanwhile, Eurotunnel is pushing ahead with initiatives to boost rail freight. The first is to open by mid-2005 what is now called Folkestone International Rail Freight Services Terminal (RG 10.03 p616). Its purpose is to allow continental wagons and intermodal loads that are too wide or too high for the UK loading gauge to enter Britain, and maybe get to London on CTRL eventually, bringing Eurotunnel more revenue. FIRFST will be open to all operators and initially will accept four trains a day.

The second initiative should see Europorte 2 leasing locomotives and providing drivers to haul trains provided by other operators between Basel and Folkestone, calling at Metz and Dourges. Europorte 2 expects to operate five trains a week each way initially, building up to 30 a week by 2008.