National Express Holds Rail Franchise Discussions
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Richard Bowker, the chief executive of National Express, said that the operator was holding constructive discussions with the government about the future of their train franchises, even though the rail minister insisted there wasn’t any room for talks previously. Reports from the media has suggested that National Express is going to take advantage of their annual meeting to launch a rights issue, as well as announce the effective cut of their contract to run long-distance passenger trains on the East Coast main line.
National Express, which is also the operator of East Anglia and c2c, the commuter service between Essex and London, is being made to refinance £484 million of their £1.2 billion debt by September of next year. However, the group is obliged to pay the government £1.4 billion between now and 2015 under their East Coast contract in order to run the service. This amount is based on projections for passenger growth that now don’t seem to be achievable.
Bowker wouldn’t make any comment on the progress of changing the terms of the franchise. He said that they are holding constructive talks, which are confidential. He also wouldn’t say what they were talking about with the Department of Transport.
However, Lord Adonis, the rail minister, said that no operators had told the government they would be defaulting on their franchise obligations. He continued that the government would not reconsider the franchise terms. The government is not in the business of franchise renegotiations for terms that were freely agreed to, Adonis added.
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