June 29, 2017

Stagecoach confirms Virgin Trains East Coast loss

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Stagecoach confirms Virgin Trains East Coast loss Keith Fender

STAGECOACH, majority owner of British operator Virgin Trains East Coast (90%), has confirmed that it is in discussions over the InterCity East Coast Franchise’s terms with the Department for Transport (DFT), after it revealed that it made a loss for the financial year ending April 29.

Stagecoach says it has been hit with an £84.1m exceptional charge and a £44.8m non-cash exceptional impairment of intangible assets for its Virgin East Coast franchise, although it expects it to be profitable from 2019.

“We are engaged in discussions with the DfT regarding our respective contractual rights and obligations under the current Virgin Trains East Coast franchise and reflecting the reprioritisation of Network Rail’s (NR) infrastructure programme,” says Mr Martin Griffiths, Stagecoach’s chief executive. “However, separately we have made financial provisions to reflect the short-term outlook for that business over the next two years, including in view of the weak growth environment affecting the UK rail sector as a whole.

“We are disappointed to report losses at Virgin Trains East Coast. However, I am confident that we can return the business to profitability and build on the significant benefits we have delivered to date for our customers and taxpayers.”

Overall, Stagecoach’s pre-tax profits for 2016-17 dropped to £17.9m, compared with £104.4m the year before. Revenue climbed 1.8% to £3.9bn.

Stagecoach is shortlisted to bid for the West Coast Partnership franchise, in a new joint venture with Virgin and French National Railways (SNCF), and is also shortlisted on its own for the new East Midlands, which it currently operates, and South Eastern franchises. However, Stagecoach will lose its lucrative South West Trains franchise in August.

 

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