FirstGroup Loses ScotRail Franchise

Transport giant FirstGroup has lost its renewal bid for the ScotRail franchise, it has been confirmed.

The company will continue to operate First ScotRail until the new contract starts on 1 April, according to Transport Scotland.

An announcement by Scottish government officials is expected to be made at 9.30am this morning.

The new franchisee for the £2.5bn contract is Abellio, an offshoot of the Dutch national railways.

Confirming the franchise loss, FirstGroup said: "As one of the most experienced rail operators we are actively participating in a range of rail franchise competitions with the objective of achieving earnings on a par with the last round of franchising.

"(We) remain in discussions with the Department for Transport in respect of a potential longer direct award for our largest franchise First Great Western, during the period when the substantial programme of infrastructure upgrades will take place on the network."

The ScotRail loss is another blow to the revenue potential of FirstGroup.

In May, FirstGroup discovered it had lost out on the new seven-year Thameslink, Southern and Great Northern (TSGN) franchise into London, which was won by Go-Ahead-owned Govia.

A week later it was revealed troubled outsourcing firm Serco won a 15-year contract to operate the Caledonian Sleeper.

The overnight service runs from London Euston, northwest England and more than 40 destinations in Scotland, including Edinburgh, Glasgow, Fort William and Aberdeen.

Last year, shares in the company plunged by 30% after it announced a £615m fund-raising rights issue in a bid to reduce its heavy debt burden.

The RMT rail union said the new contract was a "scandalous" development, insisting it was the ideal opportunity to bring the franchise back into public ownership.

And the TSSA rail union described the Abellio win as "a slap in the face for Scots rail passengers".

TSSA boss Manuel Cortes said: "Only a few weeks ago, the Scottish people were promised the power to run a publicly owned railway which would put them first, ahead of private rail firms.

"Now the Scottish government wants to hand that railway to a firm run by Dutch state railways.

"So Scots passengers will now effectively subsidise Dutch rail passengers so fares can be lower over there."

The news comes as FirstGroup released a trading update for the six months to the end of September, with bus revenue expected to rise 2.1% and rail revenue by 6.5% in the period.

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