Belfast Telegraph

Claim culture threatens future of Bus Eireann, boss warns

Ireland's claim culture could help collapse Bus Eireann as it struggles to cope with a 7 million euro compensation bill during an existential financial crisis, it has warned.

Ray Hernan, acting chief executive at the State bus company, revealed its insurance costs have rocketed to almost five times their levels just three years ago, when they were 1.5 million euro.

The spike is down to Irish people being more inclined to take legal action for payouts and is a key cost that could lead to the company going bust on its 30th anniversary, he claimed.

Before a parliamentary committee, Mr Hernan said Bus Eireann will be insolvent by the end of this year unless an emergency survival plan is urgently implemented.

He warned its going under would result in the loss of all 2,600 jobs at the State-owned transport company.

"This is not scaremongering," he told the Oireachtas Joint Committee on Transport.

"It is the stark reality of what this organisation now faces."

Mr Hernan said Bus Eireann lost between 8 and 9 million euro last year, and had only 7 million euro left in reserves.

"If that run rate continues we will be insolvent before the end of this calendar year," he told TDs and senators on the committee.

The bus chief said one of the "key" costs - that are rising faster than increased revenues from more passengers - is insurance claims and increased payouts.

"We have become much more litigious," he said of the country.

"We are a public transport provider, we carry 40 million people a year and our claims are going up.

"We are trying to manage those as effectively as we can, but we are exposed."

Mr Hernan said property damage, which he suggested was a result of bigger buses and the need for more driver training, as well as passenger slips and falls, are behind the increasing compensation costs.

But he also indicated staffing costs other than basic pay, such as overtime shift allowances, rota allowances and lunch expenses, will come under the axe in a root and branch cost-cutting review expected in March.

Absenteeism, which is double the national average, will also have to be tackled, he told the hearing.

Mr Hernan said Bus Eireann's board of directors have until the end of March to sign off on last year's accounts but it would not be able to do so unless there a drastic and decisive rescue plan is in place before then.

"That is the fact and why I am saying there is such an urgent need to implement what I consider to be a survival plan," he said.

Unions representing Bus Eireann workers claim cost-cutting measures being proposed by the company will result in effective pay cuts of up to 30%.

They have refused to sit down face-to-face with the company and are meeting on Thursday to decide their strategy.


From Belfast Telegraph