By Isle of Wight Observer
Troubled ferry operator, Red Funnel, which is facing a showdown with its banks at the end of this month, looks set to be sold again – and the current owners seem to favour selling to yet another private equity owner.
A locally-led alternative, promising long-term stability, investment and fairer fares, has apparently been pushed aside in favour of short-term gains. But competition may be on the horizon, whether the cross-Solent operator wants to engage with the Island bid or not.
Vectis Ferries confirmed yesterday (Thursday) that, after 10 weeks of private talks, its bid was sidelined – used, it claims, only to inflate the price for a rival bidder. The company is now urging the bidder to step back in favour of a solution based on the Island’s economic needs, instead of global financiers’ profits.
For Islanders, the news has a familiar ring. Red Funnel has changed hands three times in 25 years, each time to short-term private equity investors who extracted profits with little concern for the company’s future needs, while Islanders suffered from ageing vessels, soaring fares and no say over their lifeline service.
By contrast, Vectis had pledged more than £100 million of long-term capital to fund next-generation ferries and new shoreside facilities. Its leadership team, led jointly by Island residents, former Red Funnel non-executive director, Patrick Seely, and Wight Shipyard founder, Peter Morton, supported by former Red Funnel CEO, Kevin George, former finance director, Graham Barnetson, and shipping industry finance expert, James Walton, have drawn up “transformative” plans for aluminium vehicle ferries capable of substantially reducing crossing times with “vastly improved frequency”. The plans include new skilled jobs on the Island and a radical improvement in reliability and frequency.
Backers are said to include a private shipping company, a respected Island family with deep maritime roots, and private investors. The company said, in a statement, it is fully supportive of the Islanders’ Charter, which sets out a principle-led framework based on reliability, transparency, fair pricing, service standards, and future investment. The statement singles out “the broken dynamic pricing model – which sees prices rise at the times of greatest demand to the detriment of all users.”
Instead, Red Funnel appears to be heading for yet another private equity takeover. Vectis warns that, while banks may pocket “a few millions more”, the Island risks losing out on transformative investment, better connectivity and control of its future.
The company is calling on government to remind Red Funnel’s lenders of their obligations as operators of a lifeline service, publicly supported during Covid. Vectis is seeking public support and signalled it may launch a competing service if it continues to be shut out of the sale process.
A spokesman said: “The chance to secure faster ferries, more frequent services and new Island jobs is on hold – a reminder of what could be lost if decisions about the Island’s transport are left to those with no links here. It is time for Islanders to have a say in their future.”
IW East MP Joe Robertson said: “We do not want Red Funnel bought by another private equity company which couldn’t care less about the Island and exists only to squeeze every last drop of profit out of cross-Solent travel.
“The private equity model is broken. It has only given us rip-off prices, dwindling timetables and knackered ferries. The Government should do the right thing and step in.”
Sir Paul Kenny, who has been assisting the Island’s MPs with ferry issues was forthright in his view on the decision. He said: “Over recent years Red Funnel has failed miserably, both in financial terms and in serving Island residents and visitors. The reluctance to own up to their failure and co-operate with an Island-based ownership model is yet another bad management decision. Hand over the keys and leave please!”
The IW Council leader and IW West MP Richard Quigley have also been approached for a comment.
Read the full statement from Vectis Ferries here:
