Issue 26/2012

13th August 2012

In this issue:

Industry developments this week

The DfT is expected to announce tomorrow that Virgin Trains has lost the West Coast franchise it has held for fifteen years to FirstGroup.

  • Virgin Rail Group is preparing to push for judicial review if, as expected, it stripped of the lucrative franchise this week. Daily Mail
  • Investors are taking a fresh look at FirstGroup, the Financial Times reports, as a victory would help the company cope with balance-sheet strain.
  • The RMT union has warned that FirstGroup could only balance the costs of its huge bid, rumoured to be £1bn larger than Virgin, by cutting staff. Press Association
Analysts have speculated on the impact the new franchise could have on UK transport firms.
  • The Daily Telegraph says not just FirstGroup but also Virgin have tabled absurdly optimistic bids.
  • The Scotsman quotes industry analysts as saying that Stagecoach could produce higher profits from its train division even if it loses the West Coast franchise.
  • The Sunday Times, meanwhile, says that a split between Richard Branson and Brian Souter is likely.
  • Sources at the DfT told Railnews FirstGroup’s rumoured £7bn bid equates to the operator paying them £16 per passenger journey, before any money is used to fund operating costs.

New rail services

None this week.

Other stories

July’s Retail Price Index, due to be announced tomorrow (Tuesday), could see season ticket increases of 10 per cent. Daily Mail

  • The Financial Times says ministers will come under pressure to curb the rises for next year.

ATOC says the Olympic period delivered the most sustained increase in capacity in the railway’s 187-year history. Railnews

Complaints about train companies by passengers rose by more than 30% last year, according to Passenger Focus, which named East Coast as the worst train company to deal with by an extraordinary margin. The Guardian

Five legal challenges against High Speed 2 will be heard at the High Court over seven days beginning on 3 December 2012. Transport Briefing

Finance, business and sharecheck


National Express has seen its rail profits fall by 43 per cent following the loss of the East Anglia franchise.

  • But the transport group said a “reassuringly stable” performance in Spain had helped it maintain steady trading in the period, reports the Financial Times
  • Rosie Jacobs in the same paper describes National Express as being “on the right track”.

Shares in Eurotunnel fell almost 6 per cent after the operator of the Channel tunnel said half-year operating profits had sunk in spite of a strong surge in revenues. Financial Times

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