SCOTRAIL has been accused of "punishing" its staff by cancelling bonuses as it heads in to a second year of losses.

The Dutch-owned train operator expects to end 2017 in the red despite ending a spell of of poor punctuality and reliability which angered passengers.

The company, formally called Abellio ScotRail, had promised bonuses to staff if it improved performance but said only profits would "unlock" these payments.

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Now it has briefed trades unions that it is unlikely to break even in 2017 and that the bonuses, called Gainshare, would not be made even though performance has improved.

In a letter to all members, Liz Warren-Corney, the Scotland organiser of the TSSA or Transport Salaried Staffs' Association, said: "Quite simply you are being punished for senior management incompetence."

She added: "As we've seen recently in 2015 in the first nine months of the franchise Abellio made nearly ten million pounds profit - over a million pounds a month.

"That was the year they didn't pay a Gainshare because 'it wasn't in place yet.

"However in 2016 and 2017, despite revenues going up to £610 million, Scotrail managed to make a loss of £2.6 million. Now they tell us they're going to be making a loss in 2017 too, and you lose out on the Gainshare."

Abellio ScotRail's service had dipped below the standards of reliability and punctuality required by its franchise deal with the Scottish Government. They have since recovered and are among the best in the UK.

Workers who helped deliver this - and who have been praised by executives for doing so - had expected their bonuses, flat rates of £100 for five targets, to be paid.

Most, The Herald understands, had not realised that the firm had to break even to honour the bonus payments.

Abellio ScotRail's informal profits warning comes after it received a £10m bail-out loan from it parent company, Holland's nationalised railway.

The firm revealed its annual losses for 2016 last month in its annual accounts but did not explain how they came about.

Sources, however, suggested income may have been hit by poor performance, partly blamed on knock-on disruption from major infrastructure work at Queen Street station in Glasgow.

Train operators across the UK also saw some passengers move back on to the roads in 2016 as the drop in the oil price brought down the cost of petrol at the pumps.

It is not clear why the company is likely to lose money this year either. Industry insiders, however, stress that rail firms often make lower profits at the beginning of a franchise and more at the end.

This is because investment agreed under a franchise tends to be front-loaded.

ScotRail under its current Abellio franchise deal agreed with the Scottish Government has been spending on improvements, such as sockets for laptops and phones on its trains.

That did not stop the company being accused of "profiteering" in late 2016 by RMT general secretary Mick Cash, based on healthy profits filed in 2015, when the new franchise began.

He said: "The million pounds a month that is being stripped out by Abellio and shipped across the North Sea to Holland would go a long way to addressing the staffing, safety and performance issues that are dragging ScotRail down."

However, Companies House filings show that Abellio ScotRail's Dutch parent company has not sought or received any dividend since the franchise began.

Official documents show the only money crossing the North Sea has been from the Netherlands to Scotland, not the other way round.

A spokesman for the company, when asked about profits and bonuses, said: "We recognise and value the brilliant work our people do right across the network. Thanks to them, we are building the best railway Scotland has ever had."