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Stagecoach Group welcomes new commercial terms for Virgin West Coast Rail franchise

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13/12/2006

Stagecoach Group (”Stagecoach”) today welcomed the announcement that Virgin Rail Group (”VRG”) and the Department for Transport (”DfT”) have agreed new commercial terms for the West Coast franchise.

The agreement puts the franchise, which has been operated by VRG since 1997, on new commercial terms that will run through to March 2012.

Stagecoach has a 49% shareholding in VRG, which has operated the franchise on a management contract since July 2002. It followed the collapse of Railtrack and changes to the infrastructure upgrade to the West Coast main line, which prevented VRG from operating 140mph trains.

Passengers will now benefit from a range of improvements, including:

  • 10 million extra seats a year from December 2008 on West Coast routes between London Euston and the West Midlands, the North West, Cumbria and Scotland
  • a 32% increase in daily train services from December 2008
  • a new timetable and enhanced frequencies
  • continued management focus on improving punctuality even further

Under the deal, VRG plans to significantly increase the number of passenger journeys from the current level of 20 million a year in 2006-07.

Separate proposals being discussed with the DfT would provide a further 10 million extra seats by adding two cars to each of VRG’s 53 nine-car Pendolino trains.

Brian Souter, Stagecoach Group Chief Executive, said: “This new sustainable commercial franchise is an excellent deal for passengers, taxpayers and our shareholders.

“It will give Virgin West Coast a strong platform for growth over the next five years, allowing us to improve even further Britain's fastest growing rail franchise.

“Following Stagecoach Group's successful bid for the 10-year South Western Rail franchise, this new agreement will give us the opportunity for a further significant revenue stream and we look forward to developing our rail portfolio further in the future.”

Passenger volumes on West Coast grew by 21% in 2005-06, the biggest growth in the UK rail industry, and similar growth figures are continuing on much of the franchise.

It follows a £1.1 billion investment in a fleet of state-of-the-art Pendolino tilting trains with enhanced levels of safety and performance as well as lower emissions.

Combined with improved levels of punctuality, this has resulted in some 90% of Virgin West Coast customers now being satisfied with their travel experience.

Virgin West Coast will receive £1.36 billion in public funding support until 31 March 2012. The support is mainly to contribute to Network Rail track access charges, which rise steeply to around £500 million each year from 2008-09 linked to the £8.6 billion costs of the West Coast main line modernisation project.

Ends

For further information, please contact:

Stagecoach Group

  • Martin Griffiths, Finance Director, 01738 442111
  • Steven Stewart, Head of Media and Public Affairs, 01738 442111 or 07764 774680

Smithfield Consultants

  • John Kiely, 020 7360 4900

Notes to Editors

Stagecoach Group

Stagecoach Group is a leading international transportation group, with extensive bus and rail operations in the UK and North America. The Group's businesses operate around 12,000 vehicles and rolling stock, and employ around 27,000 people.

Stagecoach operates South West Trains, the UK's biggest commuter rail franchise, which runs nearly 1700 trains a day in the south-west of England out of London Waterloo. The Group also runs Island Line, the country’s smallest rail franchise.

The Department for Transport announced in September 2006 that Stagecoach had been selected to operate the new 10-year South Western franchise, which combines South West Trains and Island Line and runs from February 2007.

Stagecoach Group is shortlisted for the East Midlands rail franchise, which runs from November 2007.

Stagecoach operates the Supertram network in Sheffield on a 27-year concession running until 2024.

Stagecoach Group has been shortlisted to submit a final bid to operate the current Manchester Metrolink tram network. Greater Manchester Passenger Transport Executive (GMPTE) has invited Stagecoach to submit a Best and Final Offer to run the existing system and carry out tram maintenance. Stagecoach has also been asked to submit its proposals for a combined operating, systems and infrastructure maintenance contract. The 10-year contracts would run from 1 April 2007.

Virgin Rail Group

Virgin Rail Group is owned 51 percent by Virgin Group and 49 percent by Stagecoach.

Virgin Trains is the brand name of Virgin Rail Group and operates two rail franchises - West Coast Trains and CrossCountry Trains. Both franchises commenced in 1997. Virgin Rail Group is bidding to win the New Cross Country franchise, which is due to start in November 2007.

Virgin Rail Group was awarded the West Coast franchise in January 1997 and operations started in March 1997.

West Coast Trains was put onto the Letter Agreement in July 2002 following the collapse of Railtrack and the delays to the major upgrade of the West Coast main line.

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