Taxpayer-funded Crown corporation VIA Rail will run at an estimated operating deficit of $411 million this year, according to the company’s newest corporate plan. Despite layoffs and service cuts to try and slow steep losses, the railway is expected to continue to lose money for at least two more years, according to the report.
The railway lost $370.5 million in 2021 and $415.8 million in 2020.
Government Bailout
Cabinet gave VIA a $187.5 million COVID bailout to cover losses and ongoing deficits in 2021, spread over three fiscal years instead of one.“VIA Rail drew on $90.4 million in 2020–2021 and $67.5 million in 2021–2022. The remaining $29.6 million will be returned to the Government,” said the VIA report.
The railway also received $490.1 million in the 2021 federal budget, according to the report, which will be used in Montreal on “targeted investment projects.”
The 2022 federal budget awarded another $212 million to VIA Rail “so that it may maintain, and upgrade stations and maintenance centres in the Windsor to Quebec City corridor,” according to the report.
The railway provides its CEO a salary of up to $529,280 including 28 percent bonuses, and an additional $45,000 in extra benefits such as a car allowance and “sport club memberships,” according to Blacklock’s Reporter.
Low Ridership
VIA Rail adopted and enforced a COVID-19 vaccine requirement policy and vaccination passports for passengers and employees, as well as rapid testing, on Oct. 30, 2021. Any passenger over the age of 12 years and 4 months was required to be “fully vaccinated” and wear a mask to board a VIA train.The vaccination passport requirement was suspended sometime after the federal government removed COVID-19 border entry restrictions, testing, quarantine, and proof of vaccination to travel. A specific date was not provided by the report.
In a normal year, VIA runs 450 trains per week across 12,500 kilometres of rail tracks. In 2021, VIA only had 1.5 million passengers compared to 2019 ridership of 5 million passengers at the height of its success. The report stated VIA rail “has made significant efforts to contain the growth of its operating deficit and thus, its reliance on government funding.”
“The Crown corporation thinks operations could return to pre-pandemic levels in 2024 but there remains an important risk this assumption may not materialize,” wrote VIA management, according to Blacklock’s Reporter.
Layoffs
Faced with mounting losses, the railway took steps to lay off workers; from pre-COVID payroll numbers, it cut 14.5 percent of its workforce, going from 3,234 employees to 2,763.The report, tabled in Parliament, stated: “Financially, the company has stretched itself in the past few years to grow revenues, contain the operating deficit and the reliance on government funding and improve on the cost-recovery ratio. However due to the Covid-19 crisis VIA Rail’s financial performance was significantly affected.”
According to Blacklock’s Reporter, federal transport minister Omar Alghabra testified on May 30, 2022, at a Commons committee meeting that there was no question “of privatization of VIA.”
The Crown-owned railway has been in existence since 1978. There was also no mention of selling VIA.
“The federal government should embark on setting Via Rail, a truly underperforming asset, on either a sale or liquidation track. Using the cost of federal debt, the present value of Via Rail is about negative $16 billion. There must be a better use of taxpayers’ money,” said Madsen.