11th Jan 2017 11:21
LONDON (Alliance News) - Public transport operator National Express Group PLC on Wednesday agreed to sell its only rail operation in the UK and said it will instead focus on bidding for rail franchises in Europe and North America.
National Express said it has agreed to sell the c2c rail franchise in the UK to Trenitalia, the passenger rail transportation company arm of Italian transport company FS Italiane Group.
The c2c franchise covers the rail line linking London to Southend and Tilbury in Essex, operating out of Fenchurch Street Station in the City of London.
Trenitalia will pay around GBP70.0 million to acquire the franchise, resulting in a "small" net profit for National Express, the London-listed public transport operator said. The deal remains subject to final approval from the UK Department for Transport, expected in the next three to four weeks.
National Express said it does not rule out bidding for other rail franchises in the UK, but it will be moving its focus to winning rail contracts in North America and continental Europe, where it has seen significant growth in recent years.
In August, the group lost out on the East Anglia rail franchise, which was instead handed to Dutch rail firm Abellio.
National Express also runs bus and coach services in the UK but has been increasing its overseas business in recent years, including expanding its coach operations in North America and Spain. It also recently won a deal to run public rail services in parts of Germany, the start-up of which boosted its interim results for 2016.
In those results, National Express indicated a degree of scepticism about the outlook for the UK, emphasising that its growing international operations should offset a slowdown in the UK transport sector.
"With around two-thirds of our earnings generated outside the UK, we feel we are well placed to weather any challenges the UK economy may face post Brexit," the company said.
"We have been impressed by the commitment and interest shown by Trenitalia and are grateful for the support shown by DfT in this process. Trenitalia has significant rail credentials and is excited by the opportunity to invest in the new agenda set out by the Secretary of State," said National Express Chief Executive Dean Finch.
"For National Express, while not ruling out participating in future UK rail bids, this allows us to pursue further growth opportunities in the markets where we have seen strong returns in the recent years," he added.
"We see significant chances to invest in UK rail, and this in principle agreement with National Express allows us to foster these ambitions. This is why we are extremely delighted to have this exciting opportunity to run the UK's consistently best performing railway and serve the people of East London and South Essex," added Barbara Morgante, the chief executive of Trenitalia.
National Express shares were down 0.3% at 347.40 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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