National Express is striped of East Coast

Today National Express announced that they stop providing financial support to there lost making East Coast arm triggering the Government to remove the franchise from their control and for the year, run as a publicly owned company. This follows on from my previous story here.

National Express also runs two other franchises in NX East Anglia & c2c. East Anglia runs all the services out of Liverpool Street and c2c is an successful operation from Fenchurch Street to South Essex. Both are heavy commuter routes into London in the peak

More worrying signs that the DfT were prepared to strip National Express of all its franchises as in the words of Secretary of State for Transport, Lord Adonis “The Government believes it may have grounds to terminate these franchises, and we are exploring all options in the light of the Group’s statement this morning.”

In the statement he also added “A company which had defaulted in the way National Express now intends would not have pre-qualifed for any previous franchises let by the Department. I note that the parent groups of previous franchise failures are no longer in the UK rail business. It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging. “

On their website tonight is a paragraph in the trading statement not updated for todays events but clearly showing that National Express has walked away from East Coast but not the rail industry, “In the event that the Secretary of State for Transport ('Secretary of State') reassumes control of the franchise, National Express would work with the DfT to ensure an orderly handover and ensure that passengers, services and employees are unaffected. The Group does not expect that such circumstances would result in cross default of the Group's other rail franchises.”

If the DfT decides to try and strip National Express of all its franchises, then there will be a fight. In the case of c2c, it may be better to leave the franchise as it is and allow it to develop an improve an already good service. As for East Anglia, NX have recently order 30 class 379 Electrostars and 17 class 321 EMU to increase train length and cope with passenger demand.

National Express East Coast

After months of rumors do one of the rail franchises handing the keys back to one or more franchise, one has finally collapsed and has done a deal with the government. National Express East Coast franchise have has previous issues when GNER had to hand the franchise back due to its parent companies inability to guarantee premium payments. Two years ago National Express (NX) won the rights and begin running the services between London and Scotland along the East Coast, but the company has had negative press over its plans to cut jobs and services such as buffet cars in its trains due to struggling with its cost.

The deal for National Express to run the service as a management contract now means that NX can try to raise £400m to help stabilize the situation for its 3,100 staff and 17m annual passengers.

The full deal is yet to be settled with the agreement only at the outline stage but both commuters and staff will be worried about what the future is going to bring. It seems National Express's other franchises will be left alone which will come to relief of various groups. One of National Express's best franchise is c2c which has transformed the old LTS rail line and now is a by word for reliable and timely services.

This isn't the first time a franchisee has lost a franchise as Connex was stripped of its railway contracts which lead to the SRA (strategic Rail Authority) doing a management contact. With Southeastern this lead to improvements to the service before its was re let.

I leave you with the words of the DfT on the situation:

“All train-operating companies have regular meetings with the DfT and as a company we never talk about in public what we discuss in private,”

“As we have made clear on numerous occasions we do not renegotiate franchises.”

The original article is here

Rail deal sparks £400m cash call