Tramlink, the operator of Nottingham Express Transit (NET), has announced that it has completed a financial restructuring which will secure its future for the next ten years.
After two years of negotiations, it has agreed new loan terms from lenders, which it says was necessary to avoid further and ongoing breaches of banking covenants. Tramlink runs the twenty-mile NET tram system as a concession under a Private Finance initiative (PFI), and believes that this move has put it in a stable position to move forward after significant changes in the market.
Passenger numbers have still not fully recovered from the pandemic, with figures currently at around four-fifths of pre-lockdown levels. Rising electricity costs and sustained high inflation have also contributed to financial difficulties.
Nottingham City Council and the Department for Transport have welcomed Tramlink's move, which will ensure that NET continues to offer an environmentally-friendly, convenient and affordable way to travel through Nottingham and the surrounding areas.
Tramlink says that the conclusion of negotiations will enable it to focus on improvements, including new technology, recruiting more revenue protection officers and updating ticketing systems. Tramlink will also begin to consider possible expansions to the network.
Nottingham's tram system first opened in 2004, and Tramlink has been its private investment partner since 2011, when Nottingham City Council entered into a Private Finance Initiative (PFI) to build NET Phase Two and operate the extended tram system. Phase 2 was due to open in 2013 but did not open until 2015.
Under the PFI, Nottingham City Council makes annual payments to NET for its operation and maintenance. Tramlink is a consortium, and sub-contracts the trams' operations to Nottingham Trams Limited, formed by its consortium members Keolis (80%) and Wellglade (20%), and sub-contracts maintenance to its consortium member Alstom.
More information about Tramlink is available here.
Tim Hesketh, CEO of Tramlink said: “Nottingham's trams are an integral part of the city's life, helping to connect thousands of people each day who rely on the network to travel to work, to their place of study, or for days out with family and friends.
“This new financial restructuring has been an ongoing project we've been working on for two years following the challenges we faced during the pandemic. There will be no changes to our customers in terms of how they use the trams as a result, and they can still expect the same great service from us. However, it gives us a secure financial position which will ensure we can keep on providing the people of Nottingham with reliable, convenient and sustainable travel for many years to come, whilst also allowing us to make key improvements across the whole network.
“We'd like to thank the City Council and Department of Transport for all their support as we look ahead to a brighter future for the city.”
Councillor Angela Kandola, Nottingham City Council's Portfolio Holder for Transport said: “This deal to secure the future of our tram system post pandemic is great news for Nottingham, reflecting the culmination of nearly two years of collaborative effort among Tramlink, shareholders, lenders, ourselves, and the DfT.
“Given the current financial challenge being faced by the city council, it is even more important that we have worked with partners to secure a thriving future for our system – a cornerstone achievement in our mission to offer top-tier public transport, alleviate congestion, achieve cleaner air and less emissions and foster local economic growth. This achievement not only ensures financial stability for our tram network but also empowers Tramlink to focus on making the network even more successful and useful going forwards.”
