Mezeron & Steam Packet Master Thread

[Tugger]

Indeed, but it has nothing to do with a relaxation of company laws - the ability of the operating company to mortgage its assets was not what persuaded the banks to lend £200m, because the mortgageable assets are worth a fraction of that. It is not a question of whether the owners want to keep the company going and keep the user agreemetn, but whether the lenders are prepared to let them remain as owners.

[Sean South]

I think that Government has a place in all this. It should call in the Steam Packet and Mezeron and tell them they have to negotiate for the Steam Packet to take over the Mezeron service to Douglas.

Seriously? So what precedent will that create for other transport businesses? Forced mergers aren't healthy. Especially when the winner will have been the less healthy business. It will give us a scenario where a seriously flawed business has the monopoly on sea transport. That company is already in a precarious financial state and the monopoly will be susceptible to increased Union control.

 

The reward for the Steam Packet would be that the User Agreement would be renegotiated with a full review of the type and number of ships, to increase the minimum service treatment, and to review the division between freight and passenger fares to overheads and for both freight and passenger fares to be regulated in future, with 5 yearly reviews of the revenue and carriage stream mixes. I would favour getting rid of the fast craft and for a 20 year franchise with exclusive use of link spans and fright facilities in Douglas would want a new Ben 2 within 3 years and a Ben replacement in 10

That section makes sense however as I stated above, I don't believe the SPCo in it's current financial situation is the company to provide the islands sole sea transport services going forward. We need a service provider who is financially sound.

[b4mbi]

Plus, what would be Mezeron's incentive for agreeing to transfer anything to IOMSPC?!

 

A big dolop of cash? That the IOMSPC can't afford?

 

Freedom to Flourish (except if you upset the status quo, then government won't like it and will force you to sell up a perfectly viable business)

[manshimajin]

The reward for the Steam Packet would be that the User Agreement would be renegotiated with a full review of the type and number of ships, to increase the minimum service treatment, and to review the division between freight and passenger fares to overheads and for both freight and passenger fares to be regulated in future, with 5 yearly reviews of the revenue and carriage stream mixes. I would favour getting rid of the fast craft and for a 20 year franchise with exclusive use of link spans and fright facilities in Douglas would want a new Ben 2 within 3 years and a Ben replacement in 10

 

I thought that Phil Gawne was hinting in the ITV interview that there was room to renegotiate the UA anyway. And the IOMSPC via its MD seem to have been saying that they would like to renegotiate. IMO in these circumstances it is better to see what the deals are/what people want - before offering 'rewards'.

[Andy Onchan]

Good afternoon

My first time on this forum and some interesting comments (past & present).

 

Is there a suggestion that IOMSPCo would not be able to meet it's financial obligations under any circumstances? Are there no reserves? If so why does IOM Government allow the UA to continue?

[Sean South]

Good afternoon

My first time on this forum and some interesting comments (past & present).

Hi Andy. We'll go easy on you 'cos it's your first post. We'll only get stuck into ya after your third!!

Is there a suggestion that IOMSPCo would not be able to meet it's financial obligations under any circumstances? Are there no reserves? If so why does IOM Government allow the UA to continue?

I don't believe "there's a suggestion that IOMSPCo would not be able to meet it's financial obligations under any circumstances" as such. I think the SPCo Management have given off the impression that they are unable to survive if they have competition for freight transport. Also it is fairly widely accepted that the holding company is in debt to the tune of circa £200 million. So, yeah. They're a bit strapped I'd say. Whether their future is as dire as their CEO implies is anyone's guess.

[b4mbi]

welcome Andy Onchan.

 

A trawl through all 85 pages on the subject should give you a good insight!

 

IOMSPC as a entity in itself will most likely be able to meet its ongoing financial obligations, depsite the loss of the freight contracts, and be still able to meet the minimum terms required of it by the UA. (May mean reduced services and increased prices for passengers)

 

The problem is with the parent company as it looks like they might not be able to meet their financial obligations to the financing bank, who provided the finance for the owners to purchase the IOMSPC in the first place.

 

If this is the case, then the financing bank could make demands on the IOMSPC (through the various guarantees and securities given by IOMSPC to the financing bank) which would mean that possibly the IOMSPC could not meet even the minimum terms of the UA.

 

As long as IOMSPC can fulfil the minimum terms of the UA, there shouldn't be a need for Goverment to revise the agreement.

 

However, if the Goverment perceives that the minimum level of services provided by the UA is not sufficient for its public, then that's another matter, and possibly a reason why they may want to revise the agreement.

 

When you say "are there no reserves?" , if you mean is there a pot of cash sitting in IOMSPC to deal with these issues, then no. It appears all spare cash has been dividended away to the parent company over the course of the last few years.

 

Of course, I'm not the Finance Director of IOMSPC and the exact figures are not in the public domain, but from published information regarding the situation, this is my opinion of the state of affairs.

[Andy730]

Anyone know why Mezzeron's Kalana is sitting in West Float dock in Birkenhead while the Kurkse does all the trips?

 

Mechanical trouble?

 

Cost cutting?

[manshimajin]

As long as IOMSPC can fulfil the minimum terms of the UA, there shouldn't be a need for Goverment to revise the agreement.

 

However, if the Goverment perceives that the minimum level of services provided by the UA is not sufficient for its public, then that's another matter, and possibly a reason why they may want to revise the agreement.

My impression from what Phil Gawne said in the ITV interview is that if the IOMSPC wanted changes to the UA he would be willing to listen but the quid pro quo would be reduced fares. I found it interesting that he was not ruling out company initiated negotiations on changes to the UA if they could offer something in return.

[b4mbi]

Agreed, but what can they negotiate?

 

The Gov't can't give them a monopoly on all freight/pax into Douglas. What sort of message would that give out? Plus Gov't would be wide open to a commercial damages claim from Mezeron.

 

Maybe reduced level of minimum acceptable services, but of course Gov't would want something in return such as reduced prices. Either way, revenues are down for IOMSPC, but just depends how much they can save by not running certain services against loss of income from reduced prices. In either case, I think it's unlikely to cover the estimated £6-7m revenue losses.

 

Once again, depends on figures!

[manshimajin]

They may have raised some ideas when they met PG. Possibly fewer sailings to consolidate traffic in the low season? Possibly some reduction in or complete dropping of Irish services? The ability to dispose of one ship? Non-national crews? Sole use of Douglas for freight traffic? PG clearly said that from the Government side any change in the UA would be subject to lower fares (mind you is that discount or standard fares?). The interesting thing IMO is that changes have not been ruled out. If the IOMSPC believe that the current UA is constraining them there would appear to be room to negotiate but they would need to be able to give the Government an attractive benefit to 'sell' the public in return for this.

[Sean South]

I wonder how much right the Government have to restrict Douglas harbour. Given that all routes originate or terminate in a UK or Irish Port, it would be illegal (under EU trade regs) for the Government to absolutely block any other shipping company from access, would it not? Legal opinion here please, Mr Wright!

[Non-Believer]

I wonder how much right the Government have to restrict Douglas harbour. Given that all routes originate or terminate in a UK or Irish Port, it would be illegal (under EU trade regs) for the Government to absolutely block any other shipping company from access, would it not? Legal opinion here please, Mr Wright!

I don't think they'd be allowed to now, either. I remember a couple or three years ago reading a report in a (UK) newspaper about the EU Competition Commission coming down like a ton of bricks on a ferry company somewhere around Europe that enjoyed monopoly routes and was given to hiking fares at the drop of a hat for particularly busy times and the fine had a LOT of digits in it...I certainly remember immediately drawing comparison to the Steam Packet/TT Week/Linkspan UA at the time...unfortunately, I have long forgotten the actual details but certainly at the time I remember the Steam Packet situation being the 1st thing I thought of...anybody else see/remember anything about this?

[DRIVER]

Anyone know why Mezzeron's Kalana is sitting in West Float dock in Birkenhead while the Kurkse does all the trips?

 

Mechanical trouble?

 

Cost cutting?

 

 

Was easier logisticaly to unload empty containers there due to the weather and fuel can be delivered to . SIMPLES

[Andy730]

Anyone know why Mezzeron's Kalana is sitting in West Float dock in Birkenhead while the Kurkse does all the trips?

 

Mechanical trouble?

 

Cost cutting?

 

 

Was easier logisticaly to unload empty containers there due to the weather and fuel can be delivered to . SIMPLES

 

OK, sounds reasonable. So this was just a 'one off' then, as the Kurkse is in Seaforth as usual. And it looks like the Kalana is now in the locks and about to leave Birkenhead.