TfL gets vote of confidence from Moody’s as passenger numbers drive recovery

Transport for London (TfL)’s finances have received a vote of confidence from the rating agency Moody’s as passenger numbers have continued to recover from Covid-era lows.

Moody’s said it had upgraded TfL’s debt rating quality score from A3 to A2, effectively signalling a lower cost of servicing the operator’s bills.

The agency cited a “significant improvement” in TfL’s operating performance, which it expects to be sustained alongside growing operating surpluses over the medium term.

The improvement was “driven by the recovery in passenger revenue” post-pandemic. In fiscal 2024, passenger income hit £5bn, surpassing pre-pandemic levels of £4.5bn reported in 2019.

That recovery came as traffic on the London Underground reached 85 per cent of pre-pandemic levels and London hailed an exceptional first year performance from the Elizabeth Line.

At the same time, average fares increased by 5.9 per cent in March 2023.

Rachel McLean, TfL’s Chief Finance Officer, said: “This decision is testament to the hard work taking place across our organisation to rebuild our ridership, ensure we are operationally financially sustainable and deliver a safe and reliable transport network that serves London and the wider UK, night and day.”

TfL has struggled financially for years since Covid-19 lockdowns decimated passenger numbers. London’s transport operator has been bailed out by government to the tune of over £6bn since then, with experts warning numerous times of a “cliff edge” without a long-term funding settlement.

It received a further £250m in December, but this was only half of what had been requested, leaving TfL unable to pursue a string of vital infrastructure upgrades across its network.

“Whilst we are now able to cover our day-to-day costs, with any surplus going directly into infrastructure improvements, we cannot fund major capital projects entirely from our own resources, just like other transport authorities,” McLean said.

“That’s why we are keen to work with transport authorities across the country to secure multi-year funding settlements from the government, like those that are already in place for National Highways and Network Rail.”

The latest Moody’s upgrade is the latest sign TfL’s financial situation may slowly be improving. In June, it hit an operating surplus of £138m, driven in part by ridership on the Elizabeth Line reaching 700,000 journeys per weekday.