On Track for Recovery: Eurostar Secures £250 Million Covid-19 Rescue Package

On Track for Recovery: Eurostar Secures £250 Million Covid-19 Rescue Package​

The Story

After suffering greatly due to border closures and travel restrictions imposed during the Covid-19 pandemic, Eurostar has managed to secure “a £250 million rescue package from banks and investors” (BBC). The package is intended to help the company to get back on its feet after trimming back its usually 55-strong daily services to only two trains per day over recent months, which significantly impacted Eurostar’s revenue. The company is hoping to use this rescue package to gradually introduce more services to both Paris and Amsterdam in the coming summer months, if restrictions ease (BBC).

Eurostar previously warned in November, and again in January, that it was “fighting for survival” (BBC), after seeing a 95% reduction in demand for services following the March 2020 restrictions. At the moment, neither France nor the Netherlands is on the UK’s green list for travel, and travellers from the UK must have an “essential reason” (BBC) to visit France. This is making travel difficult – but Eurostar hopes to reintroduce one more train service per day from 27 May 2021.

What It Means For Businesses And Law Firms

Companies whose ‘raison d’être’ is international travel, like Eurostar, have faced issues during the pandemic because countries tend to protect themselves when their economies are struggling. This means the question of who bears the burden of rescue packages can be hotly debated.

The UK Government does not hold a shareholding in Eurostar since selling its stake in 2015, and “resisted calls to join [Eurostar’s] bailout” (The Guardian). Although the company is 55%-owned by French national rail company SNCF, and 40%-owned by the Patina Rail consortium, it is headquartered in the UK, and received furlough aid. Despite this, Eurostar “had called on the UK government to contribute to [its] bailout, complaining that the crisis facing aviation had received all the attention” (Sky News).

According to Connexion France, tension surrounding how the package should be financed may have arisen because the “UK is reluctant to give help to a French-owned company, while France thinks the UK should act first because Eurostar is based in the UK […] subject to UK company law, and most of its 1,000 or so employees work in the UK” (Connexion France). However, it seems this rescue package was reached without help from the UK Government.

Law firms will likely have advised on the restructuring of the loans, and issuance of new loans and equity. In particular, firms with transport-focused expertise may have seen increasing work advising on similar bailouts, for example in the aviation sector. They will also be advising transport companies currently facing tough business decisions, having been hit hard by pandemic travel restrictions – particularly companies like Eurostar where cross-border, rather than purely domestic travel, is part of their business.

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