Transport for London (TfL) has warned it is currently facing a £500m loss of income due to the coronavirus outbreak and is asking for financial aid from government.
There has been a reduction in passenger numbers in the last week of around 19% on the Tube and 10% on buses compared to the same week the previous year, it said.
Simon Kilonback, TfL’s chief finance officer, said: ‘Our best forecast, based on government scenarios, is that the financial impact of the coronavirus could be up to £500m. We manage our finances prudently, and have reduced our deficit hugely in recent years.
'This means that we can manage the impacts on our passenger numbers and finances that are currently envisaged. But, given the nature of the situation, we will be looking to the Government to provide appropriate financial support.
‘We continue to follow and communicate Public Health England advice, including that there is no specific risk on public transport. We’ve also stepped up our cleaning regime from the already very high standards to give our customers and staff further reassurance.’
The key drivers of the reduction in passengers appear to be:
- a significant reduction in visitors to London, visible through the traffic on the Tube connecting the airports and central London;
- firms asking staff to work from home as part of their resilience planning; and
- continued underlying softness of demand, especially off-peak - this is likely to relate to consumers remaining cautious about their expenditure given the subdued economy and now the impact of Covid-19.
In a statement, TfL said: ‘TfL’s financial policies require it to keep a minimum cash balance of £1.2bn to provide liquidity to absorb sudden financial shocks. Above this, TfL aims to hold a further £600m for other strategic risks, for example sudden reductions in passenger numbers due to pandemic. These reserves are actively monitored and managed in order to protect day to day operations.
‘TfL’s current forecast for its end of year cash balance is expected to be more than £2bn. This means TfL is able to manage the initial impact of Covid-19. TfL will consider further budgetary flexibility to ensure it maintains its financial resilience but the Mayor and TfL will also be looking to the Government to provide appropriate financial support to ensure that the core transport network continues to operate safely and reliably to the benefit of the UK’s entire economy.’
TfL has reduced its deficit from £1.5bn to £200m, it said, which helped mitigate the withdrawal by Government of £700m per annum in operating grant, the impact of delays to Crossrail and wider falls in demand.