THE collapse of the InterCity East Coast rail franchise has come at “significant” cost to transport giant Stagecoach, chief executive Martin Griffiths told MPs.
New Department for Transport (DfT) owned operator LNER took charge of Edinburgh to London services last month after previous franchisee Virgin Trains East Coast – majority owned by Perth-based Stagecoach – crashed out.
The partnership had won the eight-year deal on a bid which promised a premium of more than £3 billion.
However, projected passenger increases failed to materialise and the Government rejected a revised deal with Virgin Trains East Coast after it warned it could not deliver.
LNER will run services on the route until 2020, when a new partnership is set to come into force.
Yesterday, Griffiths told an inquiry by Westminster’s Transport Committee that the £200m financial hit taken by Stagecoach is equivalent to one fifth of its current market capitalisation.
On the failure of the franchise, he said: “At the end of the day, the numbers didn’t come through.”
Griffiths defended the basis on which the bid was drawn up, saying it had been based on expert advice and the best projections available.
Low fuel costs and changing consumer habits were said to be among the reasons why the “ambitious” plan hit the buffers.
Committee chairwoman Lilian Greenwood said: “It almost sounds like you don’t accept any responsibility for what the outcome was.
“You were responsible for meeting the revenue and the passenger growth. That’s why it’s in the public sector.”
Griffiths who praised the “incredible” staff on the route, responded: “I didn’t want to give that impression. It was our bid, we put it together. You asked me why, what had happened. It was ambitious. It was all about fundamental transformation of the East Coast Main Line.
“I’m not trying to not have responsibility for it. I was trying to give you an explanation of some of the reasons why it didn’t come through.”
The decision to bring the line back into public hands only temporarily prompted strong protest from the RMT union, which has called for its permanent renationalisation. General secretary Mick Cash said the situation showed “the failures of Britain’s privatised railway system writ large”.
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