National Express under pressure

THE owner of regional train operator National Express East Anglia said yesterday that stalling revenues at another of its franchises had increased pressure on its rail business.

THE owner of regional train operator National Express East Anglia said yesterday that stalling revenues at another of its franchises had increased pressure on its rail business.

National Express Group's key East Coast Main Line route between London and Edinburgh saw underlying revenue growth of just 0.3% in the first three months of 2009, compared with 9% growth last year.

The National Express East Coast franchise was awarded in 2007, before recession struck, and requires the group to pay the Government �1.4 billion over the lifetime of the deal which runs until 2015.

In a trading update released ahead of its annual general meeting yesterday, National Express said the terms had been “agreed in a very different economic climate” and meant that it would not receive revenue support from the Department for Transport for the franchise until the end of 2011.


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It added that it was “engaged in regular discussions with the DfT, which include the impact of the recession on the East Coast franchise”.

The statement prompted call from the RMT rail union and some Labour MPs for the East Coast service to be renationalised.

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John McDonnell (Hayes and Harlington) said: “The only solution is to bring it back into public ownership.”

Bob Crow, general secretary of the Rail Maritime and Transport (RMT) union supported his call, adding: “If reports of the collapse of the East Coast franchise are true, it gives the government a golden opportunity to renationalise the service.”

National Express is also saddled with �1.2 billion of debts and faces tighter lending terms from July. This has prompted a round of job losses, as well as cuts in dividend payouts and capital spending. The group is reviewing options to strengthen its finances, reportedly including a possible cash call on shareholders.

The group's other rail franchises, National Express East Anglia and London-Southend operator c2c, also saw revenue growth slow during the first quarter, to 3.8% and 4.6% respectively.

However, the group noted that, unlike the East Coast operation, the East Anglia franchise already benefited from revenue support and, in April, had entered into a new contract with the DfT to expand capacity during the peak commuter travelling period, which is expected to be worth �180 million over the remaining franchise period.

Bus and coach travel was more resilient than rail, with first quarter revenue growth of 4.1%, National Express added. Coach growth eased back over the quarter, but the firm added that it saw an Easter boost to passenger numbers “with holidaying in the UK clearly becoming more popular”.

And despite the “challenging”conditions, overall revenues in the first three months of the year were up 7.9% on last year.

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