1st Sep 2020 10:17
(Alliance News) - Transport service provider FirstGroup PLC said Tuesday the UK Department for Transport has extended the emergency measures agreement for its Great Western Railway service.
Chief Executive Matthew Gregory said: "We welcome the news of the extension of the EMA for GWR. This demonstrates the essential nature of GWR's services to the communities it serves, and provides important clarity and continuity for our customers, employees and wider stakeholders."
The emergency measures were extended to "at least" June 26, 2021. FirstGroup was awarded a three-year deal to run the service at the end of March.
"At that time, we also announced that the franchise would run under EMA terms for at least the first six months in response to the coronavirus outbreak. That time period is now expiring and therefore the Department for Transport has exercised its option for the EMA to continue under the same terms and conditions as previously. Under the EMA, the Department for Transport waive our revenue, cost and contingent capital risk and GWR are paid a fixed management fee with the potential for a small performance-based fee," Aberdeen-based FirstGroup said.
The government has the option to further extend the emergency measures.
FirstGroup continued: "GWR also has the right to revert to operating with revenue risk but with protection provided though the Forecast Revenue Mechanism until at least 2023. The franchise agreement also makes provision to agree a revenue rebasing which would apply at the end of the EMA term."
The parent company support and performance bond commitments associated with GWR are each GBP10 million, and cash ring-fenced within the train operating company was GBP266 million as at March 31, out of a First Rail total of GBP612 million.
At the end of August, FirstGroup had about GBP850 million in free cash, before rail ring-fenced cash and committed undrawn revolving banking facilities.
Gregory added: "Across the network we are increasing service levels to provide more capacity as schools recommence and work and leisure facilities reopen, and we are taking all necessary steps to ensure our passengers continue to travel safely. This includes running services with more carriages to allow for distancing, enhanced cleaning and sanitisation of our trains and ensuring more customer-facing employees are readily available. We look forward to delivering further plans that will bring improvements for passengers over the next few months and into the future."
The franchise operates trains between London and the southwest of the UK, to points such as Oxford, Bristol and Cardiff.
FirstGroup noted the emergency measures for its three other franchises end on September 20, and it is currently in discussions with the UK government about extensions.
Shares in FirstGroup were down 2.8% in London on Tuesday morning at 42.42 pence each.
By Paul McGowan; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Firstgroup