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Post by superteacher on Jan 3, 2018 17:34:50 GMT
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Post by dmncf on Jan 3, 2018 18:00:22 GMT
This sale and leaseback arrangement could make sense for an asset that might have another use after its life with London Underground, e.g. an office block that might find a new tenant or a refuse lorry that might be leased by another company. For Piccadilly line 1973 stock trains, which the leasing company will not expect to have any value after their life with London Underground, it just seems a convoluted way of borrowing money.
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rincew1nd
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Post by rincew1nd on Jan 3, 2018 19:21:34 GMT
I've not seen anything concrete saying it will be the 73ts, only that the money will be used to fund their replacement. What's to say that it will not be the S Stock?
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Post by metrailway on Jan 3, 2018 19:26:51 GMT
It tends to be an expensive way to borrow, particularly considering TfL/GLA AFAIK are the only local bodies in the country with the power to raise bonds themselves allowing them to obtain money at very low interest rates.
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Post by dmncf on Jan 3, 2018 19:39:30 GMT
I've not seen anything concrete saying it will be the 73ts, only that the money will be used to fund their replacement. What's to say that it will not be the S Stock? Sorry - my mistake. Selling any National Rail stock that TfL owns (that isn't already leased?) would make more sense.
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Chris M
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Post by Chris M on Jan 3, 2018 21:34:30 GMT
If TfL don't run them into the ground, I can imagine the S stocks having a second life on a secondary suburban route that's third-rail electrified. Particularly if they can be shortened to 4 or 5 cars. Although this does assume that the present economics of new-build versus second hand EMUs isn't in play at the time (AIUI it's an artefact of the combination of the present franchising and leasing setup, and I suspect the only certainty there is that it's unlikely to stay unchanged for the next 30-40 years).
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Post by spsmiler on Jan 3, 2018 23:13:51 GMT
The resistance we are seeing for the D stock trains suggests that apart from the Isle of Wight nobody will want pre-used tube sized trains!
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Post by Chris M on Jan 4, 2018 1:33:39 GMT
The D-stock isn't a tube sized train, and the resistance isn't so much that it's a former LU stock but that it's unproven technology. Using S stock on a third rail network would not have these issues, and if the D train does prove itself then the technology to convert it to diesel and/or battery electric will likely not be new either. However I think it far more likely that there wont be any life left in the trains after LU are done with them.
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Post by goldenarrow on Jan 4, 2018 1:42:06 GMT
I find it quite ironic that London Assembly members are taking the "moral high ground of common sense".
If certain politicians stopped trying to run the transport industry as a political PR stunt trying to win over the electorate, a good number of these problems wouldn't arise simply because people in the transport industry whom (shock horror) actually know a thing or two about running public transportation are not being held to account by the political equivalent of luddites.
Disclaimer: This is not an endorsement to bemoan the entire political system. There are some fantastic people in government whom work their socks off trying to ensure that the railways and other forms of transport run to their best potential regardless of the Punch and Judy nature of politics, it's simply a shame that many are not in a position to be listened to.
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Post by uzairjubilee on Jan 4, 2018 10:13:41 GMT
Considering I teach sale and leaseback to Year 12 for A-level Business, this is quite useful for me!
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Post by 35b on Jan 4, 2018 10:16:03 GMT
The D-stock isn't a tube sized train, and the resistance isn't so much that it's a former LU stock but that it's unproven technology. Using S stock on a third rail network would not have these issues, and if the D train does prove itself then the technology to convert it to diesel and/or battery electric will likely not be new either. However I think it far more likely that there wont be any life left in the trains after LU are done with them. I think the resistance is also to do with it being untried technology on 40 year old trains.
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Post by aslefshrugged on Jan 4, 2018 11:44:58 GMT
The obvious difference between the Tube and London Overground (or any other National Rail operator) is that London Overground is a fixed term franchise which can pass from one train operator to another so leasing rolling stock is the only practical way of operating this form of franchising. The Tube however isn't a temporary franchise so I fail to see how selling rolling stock then leasing it back is economically beneficial to anyone other than whoever will be doing the leasing!
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Post by Chris M on Jan 4, 2018 11:52:52 GMT
It woulnd't surprise me if it is economically beneficial to LU in the short term, about the same in the medium term but significantly more expensive long term. Short term thinking is very significantly encouraged by politicians of all colours.
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Post by brigham on Jan 4, 2018 11:56:05 GMT
It's a garbled form of borrowing, no more, no less. Just be honest about it; take out a loan, secured on rolling stock as an asset. At least everyone would know how much the interest is. (Or is that the problem?)
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Post by snoggle on Jan 4, 2018 12:03:12 GMT
The obvious difference between the Tube and London Overground (or any other National Rail operator) is that London Overground is a fixed term franchise which can pass from one train operator to another so leasing rolling stock is the only practical way of operating this form of franchising. The Tube however isn't a temporary franchise so I fail to see how selling rolling stock then leasing it back is economically beneficial to anyone other than whoever will be doing the leasing! While not defending the decision what this does do is illustrate the parlous budgetary situation with borrowing maxed out by 2020 and a clear reluctance from the government to increase investment funding. The Commissioner and Val Shawcross sought to present this decision as "entirely normal business practice" when they appeared in front of the Assembly Budget Cttee yesterday. This was after they admitted that "demand was softening" for the tube (and other modes) which has forced a review of expected revenues. The difference since last year's business plan is £2.3bn just for LU and Tube revenue between 2017/18 and 2021/22. It's £800m lower for London Overground and £900m lower for London Buses. These are very significant numbers. The current plan forces all rail modes into operating surplus by 2020 while the bus network is suffering large cuts to reduce costs to try to cope with its revenue issues. The alternative to not doing the "sale and lease back" would, I assume, be a decision to further postpone the Picc Line upgrade. I suspect City Hall have rightly decided that that would be unacceptable and politically very dangerous. Desperate times require desperate measures.
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Post by norbitonflyer on Jan 4, 2018 12:08:14 GMT
I fail to see how selling rolling stock then leasing it back is economically beneficial to anyone other than whoever will be doing the leasing! It's like re-mortgaging your house to help with a cash-flow problem. But the difference is that the if the loan is secured against bespoke rolling stock the lender cannot realistically foreclose on you if you can't keep up the repayments, as the assets can't be re-possessed and sold on unless there's a market for them. So really it's an unsecured loan. (Or secured by whoever would bail the operator out if they couldn't keep up the payments - probably the taxpayer)
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Post by aslefshrugged on Jan 15, 2018 17:33:55 GMT
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