State-backed Network Rail blamed its loss in the year to March 31 on changes to the timing of grants it receives from the UK's Strategic Rail Authority. In the previous year it made an operating profit of 80 million pounds.

Reorganizing the business, which Network Rail took over when its predecessor Railtrack collapsed in 2001, also drained away more than 150 million pounds.

Since the break-up and sale of the railways in the 1990s, Britain's train services have been blighted by crashes, delays and overcrowding, but Chief Executive John Armitt said on Wednesday the network's performance was improving.

"We've got a whole series of plans in place in terms of further investment in railways. There are 26 billion pounds which we will spend over the next five years to improve infrastructure," he told reporters.

Although Network Rail said it kept total debt below forecasts, heavy borrowing pushed debt up substantially from the 9 billion-pound debt burden it carried in 2002.

The operator, which is investing in new track to handle faster trains, said delays had been reduced, with 81.2 percent of trains now arriving on time. That compares with a goal of 90 percent.

Last month Britain's biggest rail union threatened to bring trains to a halt with the first national railway strike in 10 years in a dispute over pay and pensions. Armitt said talks with the unions were going well and he hoped to avert industrial action.

"We had a good meeting last Friday, a constructive meeting in which we listened to them and they listened to us on the various points. I do hope we can find a solution to this," Armitt said.

Network Rail's executive directors will forego some of their bonus entitlement because of the firm's failure to meet targets in areas such as service and punctuality, but they will still get bonuses equivalent to 24 percent of their basic salary.

For Armitt, this means he will bag about 112,000 pounds on top of his 468,000-pound salary.

Other staff such as signalers will receive a flat rate bonus of up to 1,000 pounds.