Dutch Railway to Sell Abellio UK Subsidiary to Unit’s Management

 The Dutch state railway plans to sell off its British subsidiary after 20 years of ownership as it focuses on the needs of its home market.

Nederlandse Spoorwegen NV expects to transfer the operations of Abellio UK to the unit’s British leadership in the second half of this year via a management buyout, it said in an earnings update. 

The new company, Transport UK Group Ltd., will need to make its way in a UK rail industry gripped by the worst labor strife in decades as workers strike for higher pay amid soaring inflation. At the same time, Britain’s scrapping of a franchising system introduced with privatization in the 1990s, accompanied by a switch to simpler contracts, has reduced cost risks.

Abellio UK has about 15,000 employees and runs the East Midlands, West Midlands, Greater Anglia and Merseyrail passenger services, as well as more than 50 London bus routes. It posted an operating profit of 40 million euros ($39 million) in the first half, including an exceptional gain of 21 million euros.

“I am thrilled to have the opportunity to return key public transport services back into UK ownership at a time when some of our competitors look destined for overseas ownership,” Abellio UK Managing Director Dominic Booth, who will lead the business, said in a separate statement from the unit Tuesday.

NS said it changed its overseas strategy in 2018, but that a UK exit took time amid an “uncertain” market and outstanding guarantees of 500 million euros. The company has since received approval from its shareholder, the Dutch Treasury, and filed the unit under “activities held for sale” at the end of May.

The Transport Salaried Staffs’ Association said the proposed management buyout of Abellio UK represents a “missed opportunity” to bring its services back into public ownership, and that whether British or foreign-owned, the business will be a focus for “private profiteering.”