From 31 May 2022 Abellio Transport Group Ltd and its subsidiaries (Abellio UK) are presented as ‘activities held for sale’. On 31 August 2022, NS entered into a sale and purchase agreement with Transport UK Group Limited (TUK), an entity registered in the UK and owned by the current UK Abellio management team, to sell Abellio UK to the current UK management. The new company is led by Dominic Booth, the Abellio UK managing director, who has extensive experience of UK public transport and has worked at Abellio since 2007.
Under the transaction there is no change to the existing UK company structure below Abellio Transport Group Limited, including the joint venture with Serco at Merseyrail and the minority participations of Mitsui at Abellio East Anglia and West Midlands Trains. There is also no change to the contracts that Abellio UK operates under, or the management of its businesses. The transaction gives TUK the opportunity to further develop the UK rail and bus operations.
Completion of the deal is subject to approval from partners including Transport for London (TfL), the Department for Transport and Merseytravel, as well as the receipt of regulatory consent from the Office for Rail and Road.
The approval process has been completed in 2023, and the transaction is expected to be completed in February 2023.
Current market context
There have been several key developments in Abellio UK during 2022. In terms of the operating businesses the ScotRail contract came to the end of its seven-year life and was handed back to the Scottish Government from 1 April 2022, and Abellio UK completed the transition of the East Midlands (EMR) contract with the Department for Transport (DfT) to a National Rail Contract (NRC) from October 2022, joining Greater Anglia (GA) and West Midlands (WMT) which had both transitioned to NRCs from September 2021. The year has also signalled the end of an era of ownership by Nederlandse Spoorwegen following the announcement of a management buyout (MBO) and the formation of a new company, Transport UK Group Limited, to acquire the Abellio UK business.
This corporate activity is set against a continued challenging business environment, particularly a relatively unstable political environment and adverse economic conditions with inflation peaking at 11.1% in November 2022, and a cost-of-living crisis impacting consumer behaviour and fuelling extensive industrial action, including the first national rail strikes for several decades.
Despite this tough environment, the signing of the four-year East Midlands NRC. Abellio UK exited its ScotRail contract after seven years operating north of the border as services moved into public ownership. Abellio remains an important employer in Scotland through its Shared Services Centre in Glasgow. Abellio is proud of its legacy in Scotland, including a new electric train fleet, enhanced intercity services and new and improved stations, and the exit on 31 March 2022 was achieved smoothly and with an efficient handover.
The last of the Covid-19 restrictions were lifted early in 2022, however the rail and bus industries are still contending with the consequences of the pandemic. In particular, passenger numbers have generally remained below where they were before the pandemic in 2019 with typical recovery to about 75% of 2019 levels. The resulting shortfall in revenue puts pressure back on the industry to control its cost base and this is the economic backdrop to the extended industrial action, with Government ministers requiring cost savings and wage restraint on the railway while the transport trade unions oppose many of the proposed reforms and have campaigned for double-digit pay increases for their members.
The trade unions have coordinated industrial action, the longest since privatisation in the mid-1990s, across the UK at both infrastructure provider Network Rail (NR) and at train operating companies (TOCs), beginning with strike days in late June 2022 and continuing through the following months. Under a system of collective bargaining, trade unions have been negotiating with NR and the Rail Delivery Group representing DfT-contracted TOCs, although this excludes Merseyrail whose arrangements are devolved to the Metro Mayor of the Liverpool City Region.
The Abellio bus division is looking to compete for contracts in Merseyside and other city regions pursuing London-style bus regulation after deciding not to proceed with its bid to run bus services in Greater Manchester as Abellio could not agree to the size of the capital support requirements of Transport for Greater Manchester).
UK rail companies and bus services
Abellio UK operates four UK rail franchises and around 9% of London bus services with a combined revenue of €2.5 billion (excluding Merseyrail). It operates East Midlands Railway, ScotRail (prior to 31 March 2022), Greater Anglia as a 60:40 venture with Mitsui, West Midlands as an 85.05:14.95 venture with Mitsui and Merseyrail as a 50:50 joint venture with Serco, as well as a wholly owned bus business.
As noted previously, EMR signed a National Rail Contract (NRC) in 2022, meaning all three of Abellio’s DfT-contracted TOCs, including Greater Anglia and West Midlands, are signed to NRCs. This reflects a different model of public-private contracting compared to the previous franchise agreement. Under the NRC, the UK Government takes most of the revenue and cost risk and finances the capital expenditures of the TOCs. Similar to the GA and WMT NRC, EMR will be paid a fixed management fee of circa 0.5% of operating costs for running rail services, plus a performance fee of maximum circa 1.5% of operating costs based on the delivery of various customer, operational, financial, business management and capital projects focused performance metrics. The risk profile of the NRC is lower compared to the former franchise agreements, but because of lower margins the profitability of Abellio UK will reduce going forward.
The EMR NRC commenced on 16 October 2022 and is for an four-year period to October 2026, with the DfT having the option to extend by a further four years to October 2030. Work is being undertaken by the local team to finalise the balance sheet under the ERMA which ended on 15 October 2022. Operational performance to date has been impacted by Network Rail attributed delays and, like the other TOCs, by industrial action. However, the performance across all areas under the NRC is in line with the recent, strong, performance under the ERMA.
The GA and WMT NRCs are for up to five years to September 2026 with the DfT having the option to exercise a break clause after the third anniversary of the contract. The overall performance of the GA and WMT NRCs in 2022 has been pleasing, noting that like EMR, the performance has been impacted by industrial action.
It is the intention of the UK Government to replace the NRCs, in time, with Passenger Service Contracts and the nature of these is currently under discussion with the DfT. The timing and nature of these remain uncertain due to the changing political landscape within the UK.
In March 2021, the Scottish Government announced that on the expiry of the ScotRail franchise agreement (from 1 April 2022), operations would transfer to a publicly owned operator. This transition was successfully completed on 1 April 2022 and Abellio UK played a key role during the demobilisation of Abellio ScotRail and the mobilisation of the new operator, ScotRail Trains Limited. Whilst the Abellio ScotRail contract ended, Abellio is pleased that the Abellio Shared Services Centre has been retained by the Scottish government to continue to provide their services to the new publicly owned operator until January 2025. Following the transition, Abellio UK has been focusing on the unwinding of the 31 March 2022 balance sheet and this work is expected to be ongoing for several years due to the nature of certain of the balances, which include historic legal claims between Abellio ScotRail and third parties.
Abellio Bus continues to implement its electrification strategy and 2022 seen the roll out of 53 electric vehicles. This takes the percentage of vehicles which are either hybrid or fully electric to 69% of the fleet. The operational performance for bus has been challenging due to a combination of inflationary cost pressures and a competitive driver recruitment market. Management have implemented various initiatives to help tackle these external pressures.
Revenue (€ million)
Number of stations
Number of trains/buses
Number of employees
ScotRail (until 31 March)
Abellio UK head office
Exclusion intercompany and JV
Consolidated (incl. head office, excl. JVs)
Key figures for Abellio UK rail franchises and bus services
Passenger revenues (€ million)
Government contribution (€ million)
Other income (€ million)
Revenue (€ million)
Abellio London Bus
Consolidated (incl. head office, excl. JVs)
Abellio UK consolidated
(in € million)
Revenue (excluding Merseyrail)
EBIT before non-recurring items
Intercompany financial result*
Other financial results
Profit before tax
Net profit attributable to Abellio
Capital investments (excl. Merseyrail)
Equity attributable to NS
PCS guarantees provided by NS
Other guarantees provided by NS
Total capital at risk Abellio UK
PCS guarantees called on (NS portion)
Other guarantees called on (NS portion)
Total guarantees called on (NS portion)
- * *Intercompany financial results consists of interest on shareholder loans and guarantee fees.
Despite the political uncertainty in the UK, the work required to progress the government’s plans for rail reform continued, with a “Great British Railways Transition Team” (GBRTT) fully established. A member of Abellio’s Executive Team is seconded to GBRTT.
The government also launched a consultation on the legislative changes required to implement rail reform, which Abellio responded to in the summer. Initial plans to introduce that legislation in the Autumn were postponed, with Ministers saying there is no parliamentary time available. Legislation is likely to be introduced during the next session of parliament, which will start in Autumn 2023.
A general election must be held by January 2025 at the latest, and polling is now consistently predicting the Labour party will form the next government. What this would mean for the rail reform agenda set out by the current government, including plans for Great British Railway, is unclear. The Labour party has recently recommitted to a policy that would see the railway brought back into public ownership, although the detail of this policy is not yet clear.
The effects of extreme weather, including record summer temperatures of 40C, are being felt in Abellio businesses and operational contingency plans have been tested. These plans were refreshed and enacted to ensure services were operated safely in collaboration with Network Rail.
Flooding has also become more prominent over the last year, with flooded tracks on Greater Anglia and station access being restricted in East Midlands.
Birmingham hosted the Commonwealth Games and West Midlands was commended for its exceptional service provision during the games. The 10-day event saw people travel to the city from across the country and West Midlands Trains provided a good service and were able to scale up services at the request of the mayor.
With the passing of Queen Elizabeth II, ‘Operation London Bridge’ was launched across the UK rail network and all businesses delivered an exceptional level of service during the period of mourning and on the day of the monarch’s funeral. All businesses that provided services into central London mobilised all available units.
On strikes, Abellio and its businesses prepared months in advance and have a strong contingent workforce, providing a good level of operational resilience compared to other operators.
Trains per day
Abellio Greater Anglia
South Western Railway
Average for all TOCs
Great Western Railway
First Hull Trains
TfW Rail Services
West Midlands Trains
East Midlands Railway
London North Eastern Railway
Govia Thameslink Railway
Avanti West Coast
- * This table shows the performance of the UK’s franchised TOCs (MAA = Moving Annual Average) for Period 10 of the railway calendar for 2022 and 2021. Eleven of these franchises were contracted by the Department for Transport. ScotRail and Caledonian Sleeper are contracted by Transport Scotland and Transport for Wales Rail Ltd is franchised by Transport for Wales. Merseyrail, London Overground and TFL Rail have a franchise that is contracted by the local authority. LNER, Northern Trains and Southeastern are operated directly by the Department for Transport.
- ** PPM is the standard industry measure of train punctuality when a service arrives within 5 minutes of time advertised, or 10 minutes for long distance services.
The table below shows the cause of delays for Abellio’s TOCs in 2022 by category, with delays attributed to Network Rail still the main cause:
• NR on TOC: delays attributed to Network Rail (infrastructure) on train operating companies, including extreme weather conditions;
• TOC on Self: delays attributable to a TOC itself;
• TOC on TOC: delays attributable to another TOC.
NR on TOC
TOC on Self
TOC on TOC
Abellio UK as an employer
Abellio UK is a major employer with more than 11,700 colleagues across its operating companies including Merseyrail.
Abellio UK is becoming a more diverse and inclusive workforce, so that it can both represent the communities it serves and attract the best talent. The Abellio Diversity and Inclusion Forum brings together colleagues from all operating companies to share best practice and make progress on the Abellio Diversity and Inclusions Strategy, including building an inclusive culture.
Following the response to the coronavirus pandemic Abelio UK has continued to ensure that it provides excellent wellbeing resources to all colleagues. Abellio UK continue to invest in their physical, emotional, and financial wellbeing through a range of initiatives and benefits such as Mental Health First Aid.
Each year Abellio UK undertakes two engagement surveys to ensure it is open and responsive to colleague feedback. Results are shared with colleagues through our engagement forums and communication channels and actions for improvement are owned at all levels through strategy and objective setting.
Abellio UK continues to play a key role in engaging with the principal rail trade unions by chairing both the industry wide Rail Industry Coronavirus Forum and Rail Industry Recovery Group to coordinate the response to the pandemic and then the financial aftermath due to the significant loss of revenues.