Britain to renationalize East Coast rail line as Stagecoach overestimates profit

  • Britain to renationalize East Coast rail line as Stagecoach overestimates profit

Britain to renationalize East Coast rail line as Stagecoach overestimates profit

The public transport operator said the UK Department for Transport has chose to appoint "Operator of Last Resort" for the East Coast train service and is "no longer considering" entering into a new franchise contract due to heavy losses incurred by Stagecoach and Virgin.

East Coast staff will transfer to a new company, London and North Eastern Railway or LNER, which will initially be overseen by "last resort" advisers comprising engineering firm Arup Group and accountants Ernst & Young, recruited earlier as potential emergency operators for failed franchises.

Trains will be run by the Department for Transport through an operator of last resort.

Transport Secretary Chris Grayling told the House of Commons this afternoon that no decision had yet been taken on the future of the Great Northern franchise, but that Great Northern services coming out of London King's Cross might be merged into LNER.

Stagecoach owns 90 percent of the East Coast franchise alongside Virgin.

ECML has been negotiating a new direct award franchise with the department but now understands that the secretary of state for transport is "no longer considering entering into a new franchise" with East Coast Mainline, Stagecoach said in a statement.

Stagecoach reported losses on the line and in November previous year Mr Grayling announced that the franchise would be terminated in 2020 to enable it to become a public-private railway.

I will terminate Virgin Trains East Coast's contract on June 24 2018.

Former transport minister Lord Adonis labelled the government's decision a "bailout" for the companies that would cost the taxpayer billions of pounds.

Passenger and freight rail services in Britain were privatized in the 1990s when routes were grouped into franchises and operators bid to run services for a set number of years.

Stagecoach chief executive Martin Griffiths said he was "surprised and disappointed". During that time, we have attracted more passengers, greatly increased investment, achieved industry leading customer satisfaction and made significant payments to the taxpayer to reinvest in public services. The company also has already funded its full GBP165 million loan commitment to the East Coast franchise.