FirstGroup's joint venture awarded West Coast Rail Partnership
Adds details on partnership, CEO quote, DfT quote
Aug 14 (Reuters) - FirstGroup FGP.L said on Wednesday Britain's transport authority awarded the West Coast Rail Partnership, which operates trains from London to Glasgow, to the transport group's joint venture First Trenitalia West Coast Rail.
The contract comes months after rail operator Stagecoach SGC.L said it was suing the Department for Transport for disqualifying it from bidding for the rail franchise along with partners SNCF and Virgin.
"Following this award we will not therefore be seeking new franchising opportunities for the foreseeable future over and above our current negotiations with the DfT to extend GWR (Great Western Railway)," said FirstGroup Chief Executive Officer Matthew Gregory.
First Trenitalia, owned 70% by FirstGroup, will pay 1.6 billion pounds ($1.93 billion) real net present value in premiums to the government over the first phase - from Dec. 8, 2019 to March 2026.
"Today's award confirms that, from December 2022, passengers will benefit from 263 extra train services every week," the Department for Transport said.
In the first phase, First Trenitalia will operate existing InterCity West Coast services while providing design, development and mobilisation services as "shadow operator" to the High Speed 2 ('HS2') programme.
First Trenitalia will then operate HS2 and the reshaped InterCity West Coast rail services together as an integrated operation in the second phase, from March 2026 until March 2031.
Passenger revenues, which were 1.2 billion pounds in 2018-19, are expected to increase at a mid-single digit annual rate over the first phase, lower than the historic growth rate of the franchise over the last 10 years, the company said.
Britain's Department for Transport had asked bidders for the rail franchise to take on the full long-term funding risk of parts of the Railways Pension Scheme and disqualified Stagecoach because it did not comply with that request.
($1 = 0.8290 pounds)
(Reporting by Tanishaa Nadkar in Bengaluru; editing by Gopakumar Warrier)