The threatened strike at Bus Éireann earlier this week has once again brought into focus the parlous state of the group's finances. Despite a

£100 million subvention, the company lost £56 million across its three subsidiaries last year.

Ironically, it is Bus Éireann which is probably CIÉ's most vulnerable company. It has taken a steady battering on all its provincial routes, as leaner, more cost efficient operators have steadily eaten into its business.

Bus Éireann operates all CIÉ's bus services outside Dublin.

These include provincial, city, and inter-city services. Over the years there has been a steady increase in the number of private operators offering similar services.

Today, there are 1,400 private bus operators running 6,000 buses on provincial routes, according to PAMBO, the private bus owners association.

Across Europe private operators are making major inroads on public transport networks. In 1985, according to an EU study, 55 million passenger journeys were made on vehicles owned by private operators. By 1995, this had risen to 74

million journeys.

In Ireland, PAMBO's director general Richard O'Byrne says passenger numbers are currently increasing by about 5 per cent a year. He says private buses used to be utilised by people travelling to and from Dublin for work. Now people use them as a matter of course to go shopping in Dublin for the day.

It is against this backdrop that CIÉ must radically overhaul its own services. A key component will be the viability plan - one of which was drawn up for each subsidiary. Bus Eireann lost £9.3 million last year. The viability plan seeks savings of £6 million a year for the company.

CIÉ makes no secret of the fact that it is taking a hammering on provincial routes. It now has only about 50 per cent of the passenger traffic using what it calls the central corridor - Dublin/Galway.

It argues that private operators, who have lower cost bases, have driven down prices and they have to respond. The fare from Dublin to Galway is currently around £8 return. To combat increased competition it must lower its costs.

The private bus operators argue that CIÉ has abused its dominant position and that every time it introduces a fare, CIE introduces a lower one.

Mr O'Byrne contends that CIÉ is cross-subsidising some of its routes and this is unfair competition.

Private bus operators are recognised by CIÉ as being formidable competitors offering cleaner buses and an excellent service.

In spite of its problems - which exist across all its companies - CIÉ

management and its shareholder, the Government, believe the group can operate as a commercial entity. Making the transformation is proving tortuously slow and painful.

Despite general agreement on what needs to be done, there are clearly serious problems and distrust between management and unions. It could be argued that the company is paying the price for years of under-investment in infrastructure - it estimates it must now spend £150 million on rolling stock, buses and other items - and under-investment in staff.

However, time is not on CIÉ's side. Overseas, private operators, are waiting in the wings. Despite its problems, CIÉ's subsidiaries would be attractive investments for more efficient operators.