The move is part of the government's national reform plan, which was approved by the cabinet on April 27.

Asked whether this would result in privatisation of the state's remaining rail assets, Mrs Pastor noted that this will be revealed "when the government has made its decisions."

In Asturias, where Feve operates a 504km network, the regional government has condemned the breakup of the railway as "very poor," given its recent focus on boosting efficiency through reducing the workforce and making budgetary adjustments. Regional president Mr Francisco Alvarez-Cascos says that the only way to successfully restructure and reform Feve would be to enhance its competitiveness with other modes.

Feve currently loses around Euros 150m per year on a turnover of just Euros 35m, while debts now exceed Euros 500m.

Formed in 1965, Feve operates a 1277km network in five Spanish regions, and employs around 1800 people. It has a fleet of 56 locomotives, 117 emu cars, 78 dmu cars, and 1142 wagons.