01/09/2004

Stagecoach Group plc is pleased to confirm that it is to proceed with a bid for the InterCity East Coast rail franchise in partnership with the Virgin Group of Companies.

Stagecoach and Virgin successfully pre-qualified to bid for the franchise with another partner in May 2004. However, the three parties were unable to conclude a framework for their joint venture.

Stagecoach and Virgin, who are partners on the current Virgin Rail Group franchises, have now decided to continue jointly with a bid for the East Coast franchise after the Strategic Rail Authority confirmed that the Stagecoach-Virgin joint venture continues to meet the pre-qualification tender requirements.

Commenting on the announcement, Brian Souter, Stagecoach Group Chief Executive, said:

“We are delighted that we are proceeding jointly with our bid for the InterCity East Coast rail franchise, which is one of the UK’s flagship routes. With our partners Virgin, we have extensive experience of operating inter-city services and we are both committed to putting passengers at the heart of our business.”

Sir Richard Branson, Chairman, Virgin Group, added:

“We believe our track-record of investing in new trains and focusing closely on delivering a first-class operating performance will enable us to work together to develop a strong bid for the InterCity East Coast franchise.”

ENDS

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Notes to Editors

Stagecoach Group PLC:

Stagecoach Group is a leading international transportation group, with operations in the UK, the USA, Canada and New Zealand. The Group’s businesses, which include bus, train, tram, express coach, and ferry operations, operate around 16,000 vehicles and rolling stock and employ around 30,000 people. In the UK, Stagecoach is one of the biggest bus operators and also runs the largest rail franchise, South West Trains. Formed in 1980, the company floated on the London Stock Exchange in 1993 and now has an annual turnover of around £1.3 billion.

The Virgin Group of Companies:

The Virgin Group of Companies was established by Richard Branson in 1970 and now encompasses more than 200 companies around the world, operating in sectors ranging from transportation to financial services, mobile telephony, entertainment and retail. Virgin Group employs more than 25,000 people and its total worldwide sales in 2003 exceeded £4.5 billion.

InterCity East Coast

InterCity East Coast is one of Britain’s busiest long distance rail routes, which links London with several cities in both England and Scotland, including Edinburgh. The current franchise runs until April 2005.