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Virgin Trains 'to lose West Coast Mainline bid' Virgin Trains loses West Coast Mainline franchise
(40 minutes later)
Virgin Rail looks set to lose its bid to continue running the West Coast Mainline later, with the UK's largest rail operator expected to take over. Virgin Rail has lost its bid to continue running the West Coast Mainline and will be replaced by the UK's largest rail operator, FirstGroup.
FirstGroup is said to be the front runner for the franchise because it has offered the highest bid. FirstGroup had been the front runner to win the franchise after offering the highest bid.
The government is promising extra seats and more investment in stations along Britain's busiest rail line. The company said it would "offer substantial improvements in the quality and frequency of services".
But unions and rail campaigners warn jobs will be cut, fares will rise and catering services will be cut back.But unions and rail campaigners warn jobs will be cut, fares will rise and catering services will be cut back.
BBC transport correspondent Richard Westcott says it is the first of several big franchises up for grabs in the next few years, and the government is under pressure to get a good deal. FirstGroup already operates a number of rail routes including Great Western and ScotRail.
FirstGroup, under the name First West Coast Limited, will take over the franchise from 9 December and is due to to operate the service until 2026.
The company says it will introduce 11 new 125mph six-car electric trains on the Birmingham-to-Glasgow route and provide more direct services between destinations.
FirstGroup's chief executive Tim O'Toole said it was a good deal for the company and the public.
"Our bid also delivers value for taxpayers by returning premiums to the government underpinned by sustainable growth in passenger numbers and revenues from the utilisation of significant available capacity," he said.
Higher payments
First West Coast says it will return £5.5bn at net present value to the government over the franchise term.
That is believed to have been much higher than the amount offered by Virgin Rail which is 49%-owend by another transport company Stagecoach.
In a statement, Stagecoach said the reason it had failed to secure the new franchise was because FirstGroup had contracted to pay "significantly higher premium payments" to the Department for Transport.
BBC transport correspondent Richard Westcott says the West Coast franchise is the first of several big rail franchises up for grabs over the next few years, and the government is under pressure to get a good deal.
But picking the biggest bid comes with risks, because it is much harder for the company to make a profit, our correspondent says.But picking the biggest bid comes with risks, because it is much harder for the company to make a profit, our correspondent says.
Sir Richard Branson's Virgin Rail has operated the franchise since 1997 after the privatisation of Britain's railways. Sir Richard Branson's Virgin Rail has operated the West Coast franchise since 1997 after the privatisation of Britain's railways.
The West Coast Mainline route serves London, the West Midlands, the North West, North Wales and the Central Belt of Scotland.The West Coast Mainline route serves London, the West Midlands, the North West, North Wales and the Central Belt of Scotland.
Virgin Rail, which is 49% owned by another transport company, Stagecoach, could mount a legal challenge if it loses the franchise.