Mr. Ray Hernan:

I thank the Chairman and members for invitation which gives us the opportunity to update them on the serious financial difficulties that Bus Éireann is facing at this time.

Bus Éireann is committed to being the key provider of public transport services outside Dublin in close partnership with our stakeholders. We are the biggest provider of regional and rural transport in the country, connecting many rural and urban centres, and in doing so are supporting the Government's objective of fostering balanced regional economic development.

I only recently joined Bus Éireann and I have been surprised by the complexity and the scale of the logistical operation that is delivered to the public each day. Last year, my 2,600 colleagues directly employed and 7,000 indirectly engaged with us carried an average of 110,000 passengers per day on a fleet of over 600 buses across 60,000 locations. In addition 114,000 schoolchildren are brought to and from school each day on a fleet of 4,500 buses.

I am proud to say Bus Éireann has been providing this pivotal role for the 30 years since it was founded in 1987. Our anniversary is on 7 February, which is not far away. In 2016, we increased our passenger volumes by almost 6%, equating to an additional 2 million passenger journeys, which was the strongest growth of all public transport companies. However, this passenger growth did not deliver an improved financial performance, but actually higher losses. As a consequence of this, I wrote last week to our staff formally advising them that the company's finances are now in a critical state and that the company will be insolvent in a short period of time unless drastic and decisive action is taken. To do nothing would mean all of the company, not just Expressway, will go out of business and as a consequence all jobs will be lost. This is not scaremongering; this is the stark reality of what this organisation now faces.

As acting CEO, I want to assure the committee, our customers and staff that my immediate priority is to lead the company out of this financial crisis. Over the past ten days, I have outlined measures that are required to make our company more cost effective and efficient which, I believe, will deal successfully with the immediate risk of insolvency while also ensuring the long-term future competitiveness and sustainability of the company. I am confident that this can be achieved with the support of my staff, their representatives and key stakeholders to implement the measures announced last week.

A number of factors have contributed to our crisis and I would like to address those here. Losses in the order of €8 million to €9 million for 2016 will mean our total reserves are now depleted to approximately €7 million, which is less than one year's reserves at the current run rate of losses. Costs are increasing at a faster rate than revenue growth, driven by both payroll and non-payroll categories.

The competitive landscape is also changing. Customers expect more for a reasonable price, more routes are being put out to public tender and additional licences are being issued on existing routes.

As an organisation, we must accept that there will be more competition. Competition is good for the consumer and is good for us too. Competition ensures that businesses remain agile, customer focused and also cost focused.

In the context of the above, I have already commenced a root and branch review of all operational structures and every cost driver. Savings need to be achieved, to reduce our existing cost levels but also to compensate for cost inflation including projected increases in insurance claims, higher fuel costs and upward pressure on pay. My management team will be working hard during the next few weeks to finalise the most efficient structures and staffing numbers required to provide our services. Improved staff rostering and better utilisation of our fleet will provide the foundation for delivering a more efficient business that is capable of competing for all new tenders and contracts, and enable us to aggressively defend our position on existing commercial routes.

Expressway will continue to be an integral part of our business. The losses in Expressway, however, cannot be reviewed in isolation to the rest of the company. All of Bus Éireann’s businesses are tightly interlinked and as a consequence the solution to Expressway's financial difficulties can only be achieved as part of an overall company-wide solution. As a commercial entity, Expressway is restricted from receiving state aid. It has been made clear that Government cannot provide funding for these services; to do so would be in breach of EU laws on state aid.

An increase in free travel subventions has also been suggested as the way to fix Expressway. I strongly disagree. The challenges faced by Expressway can only permanently be fixed by addressing the cost inefficiencies and inefficient operational structures that exist within the company as a whole. Free travel did not cause our problems and an increase in revenues for such services will not fix all our problems. I note our former CEO had written to the Department of Social Protection before Christmas on this matter and I will follow this up in due course.

I wish to make it clear that my management team and I are not bluntly targeting our staff to fix the financial problems that exist within our organisation. As stated earlier, all structures and all cost drivers, including existing management structures, are being challenged and reviewed.

My undertaking to staff is that Bus Éireann will safeguard basic pay and seek to protect the maximum number of viable jobs. However, I also want to make it clear that significant opportunities for improved efficiency and cost competitiveness exist and are within our own control. We are focussed on delivering a long-term solution, not a short-term fix.

Bus Éireann is committed to providing a safe and sustainable public transport service to all communities outside Dublin in partnership with its stakeholders, and to this end we must now ensure the following. First, we need to engage urgently with our staff and unions to agree that measures must be taken in the best interests of a secure future. I have already presented a detailed offer which must be implemented. I am disappointed that unions declined our invitation to meet yesterday. I take this opportunity to ask the unions and all staff representatives to as a matter of urgency come to meet us and engage in meaningful dialogue.

Second, we must work within the level of funding that is made available for public transport and we must deliver more services which are enhanced and progressive, deploying more new fleet and higher customer standards. The committee should note that in the last 12 months over 200 services were either introduced or improved and further services will be rolled out this year, an example of which is an extension of the Athlone town service from Sunday next. We must continue to provide a value-for-money service, not only for our customers but also for the State and the taxpayer.

In terms of our future, Bus Éireann must play a central role in Irish public transport. Our network is a vital asset which we must protect and it is our intention to continue to provide connectivity currently served on our commercial and PSO routes. We must continually address the viability of all routes and where changes are required for commercial reasons on some Expressway routes we will only do so after full consultation with the NTA, which retains the responsibility for connectivity. I assure the public that we will do everything that can be done, in conjunction with the NTA, to ensure no passenger is discommoded by any decision made.

Bus Éireann must provide a value-for-money service for both the customer and the taxpayer. We must be able to compete on service and cost and we must achieve this through improved efficiencies. It is an opportune time to be involved in public transport. We are becoming an increasingly commuter-driven society, and congestion is a growing and frustrating daily experience for many. The need for a credible alternative to the private-car commuter provides an opportunity for Bus Éireann to enhance its position as the key party at the heart of public transport. With an efficient and competitive business model, I believe Bus Éireann can thrive and exceed on the expectations of our customers and staff in the future.