Virgin sees significant improvement in West Coast Main Line revenues

VIRGIN Rail Group’s West Coast rail service is continuing to perform strongly following changes to its franchise agreement, the group’s minority shareholder has said.

Stagecoach, which owns 49% of the group’s shares, said that in the 12 weeks to July 25, 2015 the service had seen like for like revenue growth of 7.5%.

“The franchise continues to perform strongly and that is benefitting taxpayers through profit share payments by the business to the Department for Transport,” said Stagecoach in a trading update.

“As expected, profit in the 12 weeks was significantly higher than the equivalent prior year period because until June 2014, the franchise operated under a temporary management contract. The revised rail franchise schedule referred to above envisages the franchise running until September 2017, having previously been planned to run until at least March 31, 2017.”

Stagecoach said the performance had boosted its UK Rail division as a whole and the company was satisfied that given current trading trends, it would meet full year expectations.

The UK Rail division as a whole saw like-for-like revenue growth of 5.5% during the 12-week period, a situation boosted by the inclusion of the new Virgin Trains East Coast franchise, which commenced on March 1, 2015.
 
Having been unable to agree terms with the DfT for a direct award of a new South West Trains franchise to at least April 2019, Stagecoach said it expected applicants to be invited to tender for a new long-term franchise to commence in 2017.

The current franchise is due to end in February 2017, and the DfT has indicated that it expects to exercise its pre-contracted option to extend the franchise to June 2017. However, the rail group said it did not currently expect South West Trains to earn a significant profit during any extension period.