Transport for London Seeks $2.5 Billion Bailout, Times Says

(Bloomberg) --

The operator of the London Underground is in talks on a 2 billion-pound ($2.5 billion) state bailout as coronavirus restrictions curtail travel in the U.K. capital, the Sunday Times reported.

Transport for London, which also oversees bus services, will likely have to delay or scrap major expansion plans in return for the funding, the newspaper said, without giving a source for the information. London Mayor Sadiq Khan, who oversees TfL, has already abandoned a fares freeze. Ticket sales generate about 85% of TfL’s income.

The agency could run out of funds within two months as it is down to its last 1 billion pounds, the report said. Daily passengers numbers on the metro system have plunged 95% due to a nationwide lockdown designed to contain the spread of the coronavirus.

Talks on government support are under way and a successful conclusion “is now urgent,” TfL said in reply to Bloomberg News questions. The transport operator is facing a “substantial reduction in income over a period of months,” it said. It didn’t comment on the size of any potential bailout.

The agency has 3.3 billion pounds of bonds outstanding, according to data compiled by Bloomberg. A 400 million-pound 2025 note fell as low as 101 pence on the pound amid a March credit rout. It has since bounced back to about 106 pence.

TfL held an investor roadshow for an expected 300 million-pound green bond in February. The 20-year deal is yet to appear in the primary bond market.

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