Britain Awards East Coast Rail Contract to Stagecoach-Virgin JV

Britain Awards East Coast Rail Contract to Stagecoach-Virgin JV

LONDON (Reuters) – Britain said it would award a contract to run trains between London and Scotland to a Stagecoach and Virgin partnership, returning the East Coast line to private control after five years in state hands.

Britain’s Department for Transport (DfT) on Thursday selected the duo over the other two shortlisted bidders, British transport company FirstGroup and a Keolis-Eurostar joint venture controlled by the French state railways SNCF.

The government said it would receive about 3.3 billion pounds from Stagecoach-Virgin over the eight year contract, which starts in March, and that the operators would invest 140 million pounds in the line, adding more services and capacity.

The East Coast line which connects London and Edinburgh was nationalised in 2009 after its previous operator National Express handed it back, having racked up large losses on the route.

Stagecoach owns 90 percent of the winning joint venture and shares in Stagecoach, which together with Richard Branson’s Virgin also runs Britain’s key West Coast rail line between London and Scotland, traded up 8 percent to 399 pence at 0830 GMT, a record high.

The plan to hand back the contract to a commercial entity has attracted criticism from the opposition Labour party and been slammed by transport unions, who cite the healthy financial returns made by the government from running the East Coast line.

The line contributed payments of 217 million pounds to the DfT in the 12 months ended 31 March 2014.

Read more at Reuters