By Carole Dennett
Over recent weeks, further troubling allegations have emerged concerning the current management and the future of Red Funnel. Despite the gravity of the concerns, and their impact on lifeline services for Islanders, the company is unwilling to provide any comment or clarification.
Are buyers circling?
Well-placed insiders have told the IW Observer that Arcus Infrastructure Partners (AIP) are negotiating to buy the troubled ferry company.
Representatives from Irish Ferries were also seen touring the company’s operations and vessels ten days ago. The company has previously denied that it is up for sale. When the IW Observer asked again this week about these potential changes in ownership, the company remained tight-lipped.
The potential involvement of AIP does not appear to be good news for the Island. The private investment company has no obvious experience in owning or running lifeline ferry services. However the company’s website boasts that it delivers “Market-leading returns” to investors, by applying “creativity to get the most out of each investment”. It is hard to see how that approach could serve the Island well.
In an article for Infrastructure Investor magazine in early 2022, AIP’s managing partner, Ian Harding, set out the company’s investment strategy. He revealed that infrastructure “generates robust cashflows and yield and, by nature, generally has a strong position in its market.”
He also openly acknowledged that “transport assets that operate in a local monopoly, providing essential services” are of interest in the aftermath of Covid.
The IW Observer’s request for a comment from AIP also went unanswered.
No answers on finances
Adding to the financial intrigue and the urgency for Red Funnel to act is the huge loan of £40.7 million. As the IW Observer reported in June, when we looked into the company’s finances, this was due for repayment last month (July). The company has refused to clarify the situation with the loan, but insiders claim it has now been extended temporarily to enable a potential sale.
The company’s 2023 accounts are due to be submitted to Companies House by the end of September. Before that the auditors must approve the accounts and confirm the business has sufficient funds available for the next 12 months, impossible unless and until the £40.7 million loan facility has been dealt with.
Although this is the most pressing debt, it is the tip of the iceberg as, in total, the company owes more than £294 million.
Staff turnover concerns
Another significant point of concern is the extraordinary turnover of senior staff at the company. Since March, a number of key figures have handed in their notice, including: Carlo Romano – head of marine support, Matthew Dann – marine compliance officer and Designated Person Ashore (DPA), Jon Stage – head of risk safety and compliance and DPA after Matthew Dann’s departure, Les Howes – sustainability officer, Stuart Le Tissier – head of corporate finance, together with Luke Clifford and Chris Hadley – both technical superintendents.
In an audit prior to these departures, the Maritime and Coastguard Agency (MCA) had already flagged up concerns about Red Funnel’s high turnover of staff.
The DPA role is a hugely important one, as that person assumes overall responsibility for the safety and security of vessels. Red Funnel failed to clarify who is now undertaking the crucial role or how long they have been with the company.
Operational disruptions and leadership failures
Operational issues have plagued the ferry company, with many disruptions attributed to essential staff being unavailable, clearly not helped by the high number of departures.
Numerous maintenance and technical issues have also contributed heavily to the company’s dismal record of reliability. Front-line staff are reportedly unhappy with the frequent absence of directors and being left to take the inevitable flak from the public when things go wrong.
In one telling example on August 17, maintenance work overruns apparently led to cancellations. Stuart Tan, head of shop operations, and Tareck Ahmed, head of shore operations were on leave at the time. Both report to operations director, Leanna Lakes, who remained at home in Scotland. When contacted to find out when the repairs would be finished, she was reportedly unaware that the work was even being carried out.
Lack of response from the company
Despite repeated attempts by the IW Observer to seek comments or clarifications over recent months, and again this week, the ferry company has consistently refused to address these important issues. Their reluctance to engage with questions and provide transparency only fuels further speculation and uncertainty.
Islanders and visitors, who rely so heavily on the cross-Solent ferry services, deserve clear and honest communication from the ferry companies. The current state of affairs, marked by high staff turnover, questions over finances, and increasingly frequent cancelled and unreliable services, casts a long shadow over the company’s claimed commitment to the Island and its customers.
More evidence for government intervention
West Wight MP, Richard Quigley, commented yesterday: “The findings by the IW Observer will come as little surprise to Islanders suffering at the hands of an increasingly poorly managed company. The fact that another private equity company is sniffing around offers little comfort to customers.
“It is unbelievable that Red Funnel find themselves in apparent financial distress considering the cost of fares. The silence from Red Funnel in the face of legitimate questions is becoming deafening.
“This provides further evidence for me to present to the Department for Transport (which I am doing weekly) to press for regulation and a long-term solution to the current unsustainable situation we are in.”