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Railhub Archive
2015-07-07 STG-001
Stagecoach Group


South West Trains franchise

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Stagecoach Group

South West Trains franchise

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7 July 2015
source Stagecoach Group
type Press release

Stagecoach Group plc ("Stagecoach") confirms that it has been notified by the Department for Transport ("DfT") that it is ending the discussions with Stagecoach subsidiary, Stagecoach South Western Trains Limited ("South West Trains"), regarding the direct award of a new rail franchise.

The current franchise is due to end in February 2017 and, as previously reported, South West Trains had submitted proposals to the DfT as part of previously announced government plans for the direct award of a new franchise to at least April 2019.

The DfT has now indicated that it plans to invite applicants to tender for a new long-term franchise to commence sometime in 2017.

In the meantime, the DfT has indicated that it expects to exercise its pre-contracted option to extend the current South West Trains franchise beyond February 2017. The option allows the DfT to extend the franchise to no later than August 2017. Stagecoach does not currently expect South West Trains to earn a significant profit during any extension period.

Our direct award proposals sought to build on the extensive improvements delivered under our operation of the franchise since 1996, providing more benefits for customers, good value for taxpayers and an appropriate return for investors.

However, despite extensive negotiations, a significant difference has remained between both parties regarding the financial evaluation of the proposals. As a result, South West Trains has been unable to reach an agreement on a direct award.

Nevertheless, as the incumbent operator with nearly 20 years' experience in growing and improving one of the most complex and busiest rail franchises in the country, we believe we are in a strong position to submit a powerful and attractive bid for a new South West Trains franchise.
In the meantime, we will continue to deliver on our commitments to government and customers, including the £50m package of investment agreed with the DfT earlier this year as part of a Deed of Amendment to the existing franchise.

We remain positive about the opportunities in the UK rail market. Constructive discussions are continuing regarding a direct award at East Midlands Trains for a period of at least two years. In addition, we are currently shortlisted for both the Transpennine Express and East Anglia franchises.

Stagecoach will continue to evaluate opportunities to bid for UK rail franchises on a case-by-case basis. We seek new opportunities that offer the right balance of risk and reward, provide scope for us to improve services to customers, and which are compatible with maintaining an acceptable balance of the Group's portfolio between bus and rail businesses.

South West Trains operates around 1,600 trains a day on a network in the south and south-west of England, serving more than 200 stations. The South West Trains network includes routes through Hampshire, Surrey, Dorset, Wiltshire, Berkshire, Devon, Somerset, and Greater London, serving a mixture of commuters and longer-distance travellers.


For further information, please contact:
Stagecoach Group plc www.stagecoachgroup.com

Investors and analysts
Ross Paterson, Finance Director 01738 442111
Bruce Dingwall, Group Financial Controller 01738 442111

Steven Stewart, Director of Communications 01738 442111 or 07764 774680
John Kiely, Smithfield Consultants 020 7360 4900

Notes to Editors

Stagecoach Group
• Stagecoach Group is an international public transport group, with extensive operations in the UK, mainland Europe, the United States and Canada. The Group employs around 39,000 people, and operates around 13,000 buses, coaches, trains and trams.
• Stagecoach is one of the UK's biggest bus and coach operators with around 8,500 buses and coaches on a network stretching from south-west England to the Highlands and Islands of Scotland. Low-cost coach service, megabus.com, operates a network of inter-city services across the UK and mainland Europe.
•Stagecoach is a major UK rail operator, running the South West Trains, Island Line and East Midlands Trains networks. It has a 49% shareholding in Virgin Rail Group, which operates the West Coast rail franchise. It also has a 90% shareholding in Virgin Trains East Coast, which operates the East Coast rail franchise.
• Stagecoach operates the Supertram light rail network in Sheffield.
• In North America, Stagecoach operates around 2,400 buses and coaches in the United States and Canada. megabus.com links around 130 key locations in North America. Stagecoach is also involved in operating commuter, transit, contracted, charter, airport shuttle and sightseeing services.

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