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FirstGroup to run Great Western trains for four more years FirstGroup to run Great Western trains for four more years
(about 4 hours later)
First Group has been handed the keys to the Great Western franchise – which operates services out of London Paddington – for at least four more years. FirstGroup has been handed the keys to the Great Western franchise – which operates services out of London Paddington – for at least a further four years.
The government said the new contract, which will run from September this year until April 2019, with a possible year’s extension, would require First to bring in more seats and services for passengers as modern fleets of trains are introduced on the line between London Paddington, the Cotswolds, South Wales and the south-west. The government said the new contract, which will run from September this year until April 2019, with a possible year’s extension, would require FirstGroup to bring in more seats and services for passengers as modern fleets of trains are introduced on the line between London Paddington, the Cotswolds, South Wales and the south-west.
But First will pay just £68m in premiums to continue to operate the franchise, under the new direct award. First had originally declined to continue operating the network after 2013 to avoid paying around £800m in premiums, but in the wake of the west coast franchising fiasco, the Department for Transport has made a series of extensions and direct awards on far more advantageous terms for First. But FirstGroup will pay just £68m in premiums to continue to operate the franchise, under the new direct award. FirstGroup had originally declined to continue operating the network after 2013 to avoid paying around £800m in premiums, but in the wake of the west coast franchising fiasco, the Department for Transport has made a series of extensions and direct awards on far more advantageous terms.
Unions called the latest award, which was billed by George Osborne as a “new franchise for the south-west” in his budget last week, an “outrageous” deal. Unions branded the latest award, which was billed by George Osborne as a “new franchise for the south-west” in last week’s budget, as “outrageous”.
First Group’s chief executive, Tim O’Toole, said: “As the proud operators of this important franchise, we will be using our unrivalled knowledge and experience of the network to help deliver significant upgrades over the next few years, in particular the introduction of new trains as the mainline is electrified.” FirstGroup’s chief executive, Tim O’Toole, said: “As the proud operators of this important franchise, we will be using our unrivalled knowledge and experience of the network to help deliver significant upgrades over the next few years, in particular the introduction of new trains as the mainline is electrified.”
First said its years of experience managing the route would be crucial to successfully delivering the major infrastructure upgrades on the network, including the electrification of the line into South Wales – a task that is already incurring delays and overspend. The introduction of InterCity Express trains will lead to cuts in journey times from London to Oxford, Bristol, South Wales, and Devon and Cornwall, and more space on some of the most overcrowded commuter services into Paddington. FirstGroup said its years of experience managing the route would be crucial to successfully delivering major infrastructure upgrades on the network, including the electrification of the line into South Wales – a task that is already incurring delays and overspend. The introduction of InterCity Express trains will lead to cuts in journey times from London to Oxford, Bristol, South Wales, and Devon and Cornwall, and more space on some of the most overcrowded commuter services into Paddington.
Patrick McLoughlin, the transport secretary, said: “This is a fantastic deal which will give [passengers] more seats, more services and brand-new fleets of modern trains.”Patrick McLoughlin, the transport secretary, said: “This is a fantastic deal which will give [passengers] more seats, more services and brand-new fleets of modern trains.”
But Mick Whelan, general secretary of drivers’ union Aslef, said the “contract by default” was “absolutely outrageous”. He said: “It guarantees the company an income with virtually no risk and no incentive to improve performance. I find it hard to see how creating yet another short-term direct award will deliver these important and much needed upgrades, including electrification and the IEP rolling stock rollout. But Mick Whelan, general secretary of the drivers’ union Aslef, said the “contract by default” was “absolutely outrageous”.
“First Group had [the DfT] over a barrel on this – and named its price.” He said: “It guarantees the company an income with virtually no risk and no incentive to improve performance. I find it hard to see how creating yet another short-term direct award will deliver these important and much needed upgrades, including electrification and the IEP rolling stock rollout.
“FirstGroup had [the DfT] over a barrel on this – and named its price.”
As part of the agreement, Hitachi’s Intercity Express trains will be brought into service from summer 2017. Network Rail’s electrification programme is due to take effect for train services by 2018.As part of the agreement, Hitachi’s Intercity Express trains will be brought into service from summer 2017. Network Rail’s electrification programme is due to take effect for train services by 2018.
Shares in First Group were among the biggest risers in the FTSE 250, gaining 2% to 97.2p. Shares in FirstGroup were among the biggest risers in the FTSE 250, gaining 2% to 97.2p.