Trainline shares crash 33% as Britain plans biggest shake-up of railway network

Summary

• Trainline shares dived 33 per cent after DfT revealed revamp plan for Britain railways
• DfT is introducing a flexi-fare system, designed to save hundreds of pounds
• Fearing a potential revenue loss, one-third of market value of Trainline was wiped out
• At around 1416 BST, the stock was trading at 334.60, down 21.82 per cent

Shares of Trainline Plc (LON:TRN), the West Sussex-headquartered ticket booking services provider, nosedived nearly 33 per cent, on Thursday, 20 May, after the government revealed the plan to revamp Britain railways. The stock extended the losses in quick successions and touched a six-month low within the opening two hours, reacting to the development.

The Department for Transport (DfT) has come up with a Williams-Shapps Plan for the UK railway network in order to address the serious challenges encountered by the railway administration even before the coronavirus pandemic hit the transportation.

The new plan for Britain railways has been designed in order to make the system future ready for upcoming challenges as the railway network has remained fragmented without a single governing body responsible for planning and integration for freight operations, infrastructure and passenger services.

The DfT is apparently introducing a flexi-fare system which is orchestrated to absorb the modifications in the work patterns due to the Covid-19 crisis. Going forward, from 21 June, the government is readying to launch national flexi season tickets for the passengers who are not travelling on all the days of the week. The new system has been drafted for the infrequent travellers, the people who are using the railway network for two or three days in a week.

The new plan could be momentous for the passengers travelling two and three days a week, effectively helping them to save hundreds of pounds against the daily and season tickets on the UK railway network.

Under the government’s new plan, the DfT has been launching an all-new Great British Railways ticket website and mobile application that is accustomed to facilitate effortless digital ticket booking, contactless payments while you travel and easy compensation. The new national railway flexible rail ticket system will be made available to all the passengers across England. The facility will be provided only after the removal of travel restrictions.

Fearing a potential revenue loss, the stock of Trainline collapsed heavily, wiping out nearly one-third of the market capitalisation in a single day. However, Trainline shares staged a partial recovery as the trading progressed in the pre-afternoon trading session.

According to the data available with the London Stock Exchange, the stock of Trainline shed as much as 32.57 per cent to a six-month bottom of GBX 288.60 from the previous closing price of GBX 428 apiece. At around 1416 BST, the stock was trading at 334.60, down 21.82 per cent.

Trainline shares (20 May)

(Source: EODHD/Others, Thomson Reuters)

Unusually high trading volumes were seen in the shares of Trainline as over 7.79 million shares exchanged hands up until 1404 BST, translating into a total traded turnover of more than £10.55 million.

More details

1. The tickets under the new flexible regime will be put on sale from 21 June for use by 28 June 2021 as the paperless tickets will allow the passengers to travel on any eight days between a 28-day period.
2. Passengers will be able to tap the smartcards at the stations without selecting the days of travel in advance. Alternatively, mobile phones can also be scanned at the stations.
3. The new plan is likely to benefit the customers, ultimately providing flexibility, choice and saving them hundreds of pounds.
4. The DfT is likely to provide the exact details of the savings per commute before the tickets go on sale from 21 June.
5. Additionally, the government is working to explore new design and ride standards to make sure that there are fewer repetitious pre-recorded announcements.