“Trainline PLC (LON:TRN) had been glimpsing light at the end of the tunnel as lockdown eased, but the government’s shake up of the railways has seriously pulled the breaks on prospects for recovery.
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Shares were down by around 27% in early trading as investors digested the serious implications the new changes could have on it business model
Trainline’s Q1 Earnings
A new state-owned body, Great British Railways will not only set timetables and prices but also sell tickets in England. The aim is to offer more punctual services and cheaper tickets but it puts Trainline’s dominance in the e-ticket space in question.
70% of all digital fares are currently sold by Trainline, and despite the pandemic disruption which saw it pushed into a £100 million operating loss, Trainline kept investing in new personalised and go-location technology to win market share amongst customers.
In its prospectus issued before its IPO in 2019, Trainline had warned changes to government policies or regulations, affecting the rail network could have a material adverse impact on the Group’s results of operations, financial condition and business prospects.
If National Rail Enquiries starts issuing ticket it is likely to gobble up a significant share of the market currently enjoyed by Trainline, due to the strength of its nationally recognised brand, which could seriously impact the company’s sales volumes and revenue.
Trainline’s current commission rates are guaranteed until April 2024 under an agreement with the Rail Delivery Group but after that how the company will slot into the new rail world is far from clear, without further detail about how the new system will operate."
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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