Trainline’s chief executive has vowed to compete with a new state-backed rival that has scared investors and wiped out more than a third of the group’s share price as he brushed aside concerns about the future of the company.
The FTSE 250-listed group has built a £ 1.3bn business by providing passengers with an easy way to book a ticket on any part of UK railways, which includes £ 55m different combinations of tickets and fares.
But its dominant position is threatened by the government’s plans to create a new ticketing platform as part of sweeping rail reforms, which will centralize control under a new public body called Great British Railways (GBR).
Trainline shares have fallen 40% in the two weeks since ministers unveiled plans for the new body, but chief executive Jody Ford said he would “overwhelmingly back” the group to compete with GBR.
“I really feel in a good position to be able to compete with whatever comes,” he told the Financial Times in his first interview since taking office in October.
A former eBay executive who also ran digital companies Moonpig and Photobox, Ford bought £ 100,000 of Trainline shares after his fall, in a move to ‘express confidence’ in the company.
The emergence of a rival had just “created a bit of ambiguity” for investors, he said, as he downplayed the fall in stocks, especially because ministers expect the stock market to fall. ‘it takes years to implement the changes in British railways.
“We don’t have the answers yet because we can’t commit, and look, the stock price will do what it does in the short term,” he said.
He expressed relief that ministers still say there is a place for private sector ticket sellers in the new system, but are seeking more information on their plans for commission structures.
The threat of disruption has long been hanging over Trainline, which charges a 5% commission on ticket sales but relies on the same open-access database as booking apps from other rail companies.
Simon Davies, analyst at Deutsche Bank, said the new rival was “a definite and potentially significant negative” for Trainline, given the “marketing strength” of the new app under the GBR brand.
But “history suggests that as a state-owned company, it is unlikely to have access to the same level of technological skills and funding as Trainline,” he added.
Trainline also provides the technology that powers the reservation applications of several rail companies, and Ford said it has already met with the Minister of Railways and scheduled meetings with the government “at all levels” to see if the The company could also work on the new state app.
“Is this something that Trainline could and would be interested in doing?” Yes, is the answer. I think . . . our references are quite clear, ”he said.
Trainline shares have had a bumpy ride since its successful IPO in 2019.
Priced at 350 pence, they first erupted but were volatile as people stayed away from the railways during the pandemic. Stocks closed at 271p on Friday, around their lowest levels since November.
Right now, the company is optimistic about signs of a summer resumption in ticket sales as people return to the railroads.
Ticket sales have increased week-over-week since the lockdown began, and the last week of May saw more ticket sales for short trips, defined as less than an hour, than the equivalent year in 2019.