Trainline narrows loss as passengers return

After two years of lockdowns, commission rows and rail reform, Trainline (TRN) is almost back on track. The travel platform has seen ticketing sales rebound over the past 12 months,  and UK consumer sales have now reached 89 per cent of pre-pandemic levels.

As a result, Trainline has narrowed its operating loss to £10mn, down from £100mn last year. It has also generated enough cash to pay off a chunk of its net debt, which stands at £90mn, compared with £241mn in February 2021.

Management is confident of future growth. Online bookings in the UK represent more than half of total rail sales, up from 39 per cent pre-Covid. Trainline says there is still “significant headroom” for e-tickets, and there is no doubt that the group’s app is slick and user-friendly.  Concerns about how much commission Trainline will be allowed to charge have also been allayed, after it struck a deal with the Rail Delivery Group, which represents the UK's train operators. 

In Europe, Trainline says domestic competition between rail carriers is picking up, which should enhance its role as a third-party aggregator. It is also hiring around 150 tech engineers and data scientists to help drive sales. 

There are still concerns, however. Before the pandemic hit, Trainline Partner Solutions – which mainly provides rail technology for travel management companies – was an important source of ticket sales, generating about a quarter of UK revenue from its business-travel focus. Demand for these services remains very weak. 

The government’s “Great British Railways” project is still casting a shadow as well. While details are scarce, the Department for Transport intends to create a new central ticket retailer, which would pose a direct threat to Trainline’s business model.

Government projects are not known for their speed, however, and Trainline has plenty of scope to grow in the meantime. Upgrade to hold. 

Last IC View: Sell, 303p, 3 Nov 2021