FIRSTGROUP’s hopes of building up its rail business, which has shrunk significantly with the loss of key franchises including ScotRail, have been dented with rival Abellio’s victory in the battle for the East Anglia operation.
Aberdeen-based FirstGroup expressed its disappointment yesterday, after the UK Government announced that incumbent operator Abellio had won the new East Anglia franchise, but highlighted its continuing ambitions to expand its rail business.
Abellio, a subsidiary of Dutch national rail company Nederlandse Spoorwegen, took over the running of the ScotRail franchise from FirstGroup on April 1 last year. It defeated a shortlisted bid from the Aberdeen company when the Scottish rail franchise came up for renewal.
FirstGroup, in 2014, lost out in its bid to retain the Thameslink Great Northern franchise operations it had run as First Capital Connect.
It continues to operate the TransPennine Express and Great Western rail franchises. FirstGroup also runs the Hull Trains operation under “open access” arrangements on the East Coast Main Line between London and Hull.
FirstGroup was in February named as one of two shortlisted bidders for the huge South Western rail operation. This is currently run by Perth-based Stagecoach, which has also been shortlisted in the competition to operate the next South Western franchise.
A spokesman for FirstGroup highlighted the fact the company was preparing to bid for the upcoming West Coast franchise. This operation is currently run by Virgin Rail, a joint venture between Sir Richard Branson’s Virgin Group and Stagecoach.
Looking ahead, the spokesman added: “We will look at each upcoming bid on its merits and decide what we have to offer and whether to bid each time.”
About 7,500 of FirstGroup’s total workforce of around 110,000 are employed in the company’s UK rail operations.
Commenting after it emerged the company’s bid for the East Anglia franchise had been unsuccessful, FirstGroup said: “FirstGroup is disappointed not to have been awarded the East Anglia rail franchise after submitting a compelling, deliverable, and value-for-money bid.”
It added: “We continue to be disciplined in our approach to bidding for UK rail contracts
and will seek feedback from the Department for Transport to help shape our approach to future competitions.”
Stagecoach had previously held 40 per cent of a joint venture with Abellio. This joint venture was shortlisted for the East Anglia franchise.
However, the Perth-based company announced in December that it was not proceeding with an equity participation in the bid for the franchise.
Stagecoach said at the time: “We have been unable to reach an agreement with Abellio on elements of the proposed bid. As a result of that, and taking account of the other rail-bidding opportunities that we anticipate over the next two years, we have decided not to proceed with an equity participation in the bid for the new East Anglia franchise.
“We have confirmed to Abellio our commitment to provide support and advice to the franchise if Abellio's bid is successful.”
The new East Anglia franchise runs to 2025.
The Department for Transport noted the new franchise, operated by Abellio, would “deliver one of the biggest orders for British-built trains – almost £1 billion for 660 carriages from the Bombardier factory in Derby – as part of a contract that will secure 1,000 jobs into the next decade”.
Des McKeon, UK commercial director at Bombardier Transportation, said: “We’re delighted to be chosen, pending final contract signing, as the preferred supplier for new trains for the East Anglia franchise.”
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