A new high-speed railway linking Paris and Bordeaux, announced on Friday, will substantially lower travel time between the capital and the southwestern city but also increase the state-owned railway, SNCF's operational losses.

The new Train a Grande Vitesse (TGV) line and a further upgraded TGV line linking Paris with Rennes will offer bullet-train services to the public from Sunday and will result in a substantial travel time reduction but also increase SNCF's, the French state railway company, operational losses.

The Societe Nationale des Chemins de Fer (SNCF) stated in a press dossier it expected to obtain 2.6 million additional passengers each year on the 580 kilometer (360 mile) Bordeaux route that will link the cities in two hours and four minutes instead of the previous travel time of three hours and 15 minutes, with a daily offer of 35,000 seats.

In the case of the Paris-Rennes line, the upgrade will add 1.4 million passengers annually and reduce travel time by 40 minutes down to one hour and 25 minutes with a daily offer of 30,000 seats.

The SNCF's dilemma is that in order to lay the extra 302 kilometers of high-speed railway required to complete the new Paris-Bordeaux line it had to invest 7.8 billion euro ($8.9 billion), plus an additional 1.2 billion euros in supporting railway infrastructure.

A business concession was created, the Lisea consortium, to secure the required financing.

Based on the number of TGV convoys which the SNCF was forced, by various French governments, to commit itself to, the state-controlled railway company has been compelled to run up losses.