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RNS Number : 2628G

Transport For London

16 March 2020

Transport for London ("TfL")

16 March 2020

U pdate on financial impact of coronavirus

Transport for London (TfL) issues an update on how the Covid-19 virus has affected its passenger numbers and how it intends to utilise its reserves to manage the forecast initial financial impact. This assessment has been based on Government scenarios for the impact of the virus on households over a number of weeks.

An underlying softness in demand and passenger revenue , largely caused by economic uncertainty, had been experienced by TfL since October 2019, with both London Underground and bus revenues trending at around two per cent below the previous year. During February 2020 TfL's revenue was further affected by three significant storms and a period of prolonged bad weather. This fluctuation was within TfL's usual financial forecasting tolerances.

In the week commencing 2 March 2020 further reductions in ridership became apparent, coinciding with growing public awareness of the Covid-19 virus, starting with modest reductions in ridership of around two per cent compared to the same period in the previous year. Since then, a growing number of firms and individuals have changed their travel behaviour, with greater numbers of people working from home. This has led to an acceleration in the reduction in passenger numbers to around 19 per cent on London Underground and 10 per cent on buses compared to the same week the previous year, with days later in the week showing reductions larger than that average.

This is an evolving situation and the financial impact is difficult to predict. This will depend on the duration and severity of the spread of the Covid-19 virus. TfL's current forecast, based on government scenarios, suggest that this could be a reduction in passenger income of up to GBP500m.

TfL's financial policies require it to keep a minimum cash balance of approximately GBP1.2bn to provide liquidity to absorb sudden financial shocks. Above this, TfL aims to hold a further GBP600m for other strategic risks, for example sudden reductions in passenger numbers due to pandemic. These reserves are actively monitored and managed in order to protect day to day operations.

TfL's current cash balance of over GBP2bn is well above the required minimum and allows the initial impact of Covid-19 to be managed. TfL will consider further measures, including budgetary flexibility, to ensure it maintains its financial resilience.

TfL is following and communicating advice from Public Health England, including that there is no specific risk on public transport, and has stepped up the cleaning regime on its services and in its work environments beyond the already existing high standards.

TfL is also planning what it needs to do to recover once the pandemic has subsided.

For further information, please contact:

Transport for London

5 Endeavour Square

London E20 1JN

Email: GroupTreasury@tfl.gov.uk

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