Bus Éireann will be insolvent by the end of the current calendar year if losses continue at existing levels, the company’s acting chief executive has said.

Ray Hernan told the Oireachtas Committee on Transport that cash reserves at Bus Éireann had fallen to €7 million by the end of last year, a period in which losses of €8 million to €9 million were recorded.

Mr Hernan said the Bus Éireann board had a duty to sign off the accounts by the end of March, and that in order for them to be approved there would have to be a demonstrable plan in place showing the company’s financial fortunes could be turned around.

He said that while no overall survival plan had yet been finalised, he had told his board this work would be completed in March.

He said given the financial situation he had received approval in the meantime to implement elements that would be included in a final plan. “We cannot wait for the ultimate approval of the final plan before we begin seeking cost efficiencies in the organisation.”

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Mr Hernan said one of the key issues leading to increased costs for the company this year was a surge in insurance claims and a rise in the amounts paid out in relation to these claims. He said in 2014 insurance claims cost €1.5 million, but this figure had increased to close to €7 million last year.

Financial crisis

Unions argue that the measures proposed would lead to reductions in earnings of up to 30 per cent for staff. However, Mr Hernan disputed the claim, saying it was “not based on facts”.

He also denied a suggestion that the measures proposed represented any form of preconditions for talks, and said he was ready to meet unions at the company “day or night”.

Mr Hernan said changes needed to be implemented “otherwise this company will not exist this time next year”.

Pressed by AAA-PBP TD Mick Barry and Sinn Féin TD Imelda Munster, Mr Hernan said confidentiality agreements prevented him from giving details of severance packages negotiated with former Bus Éireann chief executive Martin Nolan or its former human resources manager Joe Kenny, who left the company recently.

Derogation

Mr Hernan also revealed that absenteeism at Bus Éireann ran at 6-7 per cent, which was double the national average.

He said he had only become acting chief executive recently, and that his salary had not been finalised. His predecessor had received €180,000 to €190,000.

Mr Hernan said he had met Minister for Transport Shane Ross since his appointment.