East Coast franchise in doubt again

30 June 2016

Stagecoach published its annual report yesterday and announced it was significantly behind with expected revenues on Virgin Trains East Coast in which it holds a 90% stake. Fifteen months into the franchise the company admitted their pledge to pay the Department for Transport £3.1 billion over eight years looks increasingly shaky. The franchise failed in 2006 and 2009 and the possibility of it doing so again looks increasingly likely. Commenting on the report ASLEF general secretary Mick Whelan said ‘it’s been an open secret in the rail industry for months that Stagecoach has overbid for the East Coast franchise. These results are before higher leasing costs for the new IEP trains, increased competition on the route and post Brexit economic uncertainty in the years ahead all of which will add to financial pressure on the company making a default a real possibility.’ He added ‘the prospect of a flagship rail franchise failing for the third time in ten years is merely the latest indictment of the government’s discredited franchising policy. I ask again: what has to happen for them to realise that their policy is just not working?’

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