FirstGroup: We won't be forced into any 'desperate' rail bids

[whole diary]

[ellendune]

What caught my eye in the DfT^» (Department for Transport - about) announcement was a commitment to reduce long distance anytime fares on ECML^▸ (East Coast Main Line) by 10%!

[stuving]

The first puzzle - what this new bunch is called? Is it "Inter City Railways", as in the DfT^» (Department for Transport - about) statement? Or "inter city-railways" (as printed as their address in their brochure)?

I can't find any web presence, but surely they have got their towel on something.

Also, note this:

Inter City Railways is 90% owned by Stagecoach, but trains will be branded 'Virgin Trains East Coast', Stagecoach said.

So maybe it's "Stagecoach".

[Super Guard]

FG shares dropped initially, and now up 1%.. go figure!

[JayMac]

So, like TSGN, the early rumours were correct. 

Hmm... this year it has been anyone but First Group when it comes to rail franchises. Lost ScotRail, lost First Capital Connect, failed in bids for TSGN, Essex Thameside, and now unsuccessful in their bid for ICEC.

Still at least they've got Greater Western for the foreseeable future, eventually for near double the actual length of time of the original franchise award in 2006.

Shouldn't be too long now before we get an announcement of the specific financial details from the DfT^» (Department for Transport - about) and First Group on how they've colluded to keep Greater Western in First Group's hands until 2018/19 with a direct award.

No doubt there will be mention again of, 'Greatest investment since Brunel' but I suspect there will be very little money on the table from First Group. Greater Western will continue to be good value for FG's shareholders, but poor value for the taxpayer.

First Group's statement from CEO^▸ (Chief Executive Officer) Tim O'Toole regarding the Intercity East Coast Franchise Competition:

FirstGroup notes the announcement today by the Department for Transport (^DfT^) concerning the new InterCity East Coast franchise.

Commenting, Tim O^Toole, FirstGroup^s Chief Executive, said:

^Our bid for the East Coast franchise was ambitious yet realistic. Had it been selected, it would have created a world class railway for passengers and value for taxpayers with a balanced level of risk and returns for shareholders.

^As one of the UK^▸ (United Kingdom)'s most experienced operators, we remain committed to the rail market but we are dissatisfied not to have secured any of the franchises that have come up for tender in this first round.

^Whilst we will retain a disciplined approach to bidding, we will continue to examine and assess the feedback from this and previous rail bids to help shape our approach to future competitions.

^We are shortlisted to run the next TransPennine Express franchise, and are negotiating with the DfT to extend our current operation of that route to February 2016. We are also negotiating with the DfT for a direct award to operate First Great Western, our largest franchise, through to at least March 2019.

^There are 12 franchise competitions still to take place and we remain focused on reaching our desired position in rail by the end of the process, which is to achieve earnings on a par with the previous franchising cycle at an acceptable level of risk and return.^

http://www.firstgroupplc.com/news-and-media/latest-news/2014/27-11-14.aspx


It seems that First Group are hoping for jam tomorrow. However, now might be a good time to buy shares in First Group PLC. If they do bounce back with further franchise wins in the coming years it could be a canny investment.

[ChrisB]

That may explain the rise in share price after an initial drop....BNE piled into FirstGroup :-)

Virgin East Coast - likely to appear on the Virgin website, no?....somewhat surprised thatthis combo has now got both East & West Coast...

RMT^▸ (National Union of Rail, Maritime & Transport Workers) flailing....franchise worth ^3.3billion to taxpayer, while DOR only paid ^1billion since takeover. Assuming Stagecoach cough everything up, taxpayer gets 3 times what DOR have paid over.

[eightf48544]

The bids for the new GW^▸ (Great Western) franchise from 2019 are going to be very interesting.

Particularly as it is rumoured (Roger Ford for one) that the leasing costs of the IEP^▸ (Intercity Express Program / Project.)'s will  be considerably higher than for an HST^▸ (High Speed Train) thus will require a massive increase in passengers to cover.

And that's without a possible increase in Track Access charges to pay for electrification and resignalling.

Plus the winner is likely to lose the revenue from TV stations to Crossrail.

A bit of poisoned challis

[JayMac]

A bit of poisoned challis

Must have been something he drank.

 

[stuving]

What caught my eye in the DfT^» (Department for Transport - about) announcement was a commitment to reduce long distance anytime fares on ECML^▸ (East Coast Main Line) by 10%!

The wording of that promise is:

Inter City Railways has also given a commitment to reduce all long-distance standard anytime fares by 10%.

In the corresponding statement to parliament, that becomes:

Stagecoach/Virgin plans to reduce some of the most expensive standard class fares on the franchise by up to 10% from May next year.

Nibbled by weasels in transit? Or is that the real version?

[Richard Fairhurst]

London-Glasgow anytime return via WCML^▸ (West Coast Main Line), priced by Virgin Trains: ^352.

London-Glasgow anytime return via ECML^▸ (East Coast Main Line), priced by East Coast: ^304.

Mr Branson, why do you look at the speck that is in your brother's eye, but do not notice the log that is in your own eye?

[grahame]

London-Glasgow anytime return via WCML^▸ (West Coast Main Line), priced by Virgin Trains: ^352.

London-Glasgow anytime return via ECML^▸ (East Coast Main Line), priced by East Coast: ^304.

Mr Branson, why do you look at the speck that is in your brother's eye, but do not notice the log that is in your own eye?

An interesting point and thought on what's been bid.  Trains on the East Coast line are, though, older that those on the West Coast, and perhaps the ECML fare in this case is a competitive one.  At 38p and 44p per mile, indeed, these fares both appear to be better value than something line a London to Bristol anytime return.

[TonyK]

It seems that First Group are hoping for jam tomorrow. However, now might be a good time to buy shares in First Group PLC. If they do bounce back with further franchise wins in the coming years it could be a canny investment.

^1.09 at the moment, 52 week high is ^1.459. Might have a flutter.