Transport for London (TfL) must strike a deal with the Government to plug the huge gap in its finances in the next 48 hours – or risk running out of money.
If the Government does not step in by Thursday, TfL will be forced to issue a Section 114 notice – the equivalent of a public body going bust.
The network expects to lose £4 billion this year because of coronavirus.
Strict lockdown rules have seen journey numbers tumble – meaning more than 90% of normal fare revenue has evaporated.
Speaking at an emergency finance committee meeting today, Deputy Mayor for Transport Heidi Alexander said the situation is “now critical”.
“We have to reach an agreement with Government on this in the next 48 hours,” she said.
“I think the impact of the Section 114 notice is quite honestly unthinkable, with very serious implications for Tube and bus services in London,” she added.
Ms Alexander said the “back and forth” with Government was “becoming a monumental distraction”.
The Deputy Mayor said she had “spoken personally” with Transport Secretary Grant Shapps at the weekend.
Sadiq Khan has asked to speak urgently with Chancellor Rishi Sunak, but has not yet had a response, she added.
“We now need Government at the very highest level to engage with us so that we can resolve this and move forward,” Ms Alexander warned.
TfL will need a £3.2 billion boost to balance its budget this year, according to board papers.
The vast majority of the network’s income – some 80% – is from ticket fares.
TfL also makes money from advertising on the Tube and buses, and from the Congestion Charge in central London.
But under a deal negotiated by Boris Johnson during his time as Mayor of London, it no longer receives a grant from central Government.
Despite starting this financial year with more than £2 billion in reserves, it is now almost out of cash.
Fare incomes have been hit hard by Covid-19 – Tube journeys have fallen 95% during lockdown, with around 200,000 a day compared to 4 million this time last year.
Buses have moved to middle door boarding to keep passengers away from drivers and protect them from infection – travellers are no longer charged as a result.
Speaking ahead of the emergency committee a spokesperson for TfL said the network has done “everything possible” to stop the virus spreading.
He said this was “the right thing to do” – but has had “a highly significant impact” on the organisation’s finances.
But London Assembly Conservative transport lead Keith Prince said TfL’s finances were “a mess” before coronavirus.
The network was on track for a £300 million deficit at the 2019/20 financial year before Covid-19 hit – down from almost £1 billion two years earlier.
Before coronavirus, it had hoped to be out of the red in three years.
“Sadiq Khan’s fare freeze and the delay to Crossrail have cost TfL and the taxpayer billions in lost fares and bailouts,” Mr Prince said. “It’s no surprise TfL has crumbled during this crisis.”