28th May 2014 07:06
LONDON (Alliance News) - Serco Group PLC said Wednesday it has been selected by Transport Scotland to manage the Caledonia Sleeper service, which is set to be operated separately from FirstGroup PLC's ScotRail franchise as the transport operator loses its second franchise in a less than a week.
International service company Serco will manage the new 15-year franchise for the Caledonia Sleeper service from April 2015. The service is to be operated seperately from rival FirstGroup's ScotRail franchise.
Serco said total revenue over the 15-year franchise period is estimated at up to GBP800 million, of which GBP180 million will be in the form of franchise payments, it said. A gain share agreement is also included to incentivise performance improvements.
As of April next year the company will be responsible for operating all aspects of the sleeper service, including marketing, sales, passenger services, station facilities and fleet maintenance.
The firm has pledged a GBP100 million investment in new rolling stock in order to meet Transport Scotland's aim of transforming the service, it said, in order to improve the customer experience.
As part of the GBP100 million invetsment, the new fleet is expected to be introduced by the summer of 2018, said Serco, part funded by a GBP60 million capital grant from Scottish Ministers, The fleet will be built by rolling stock manufacturer CAF and will be leased to Serco by Beacon Rail, with fleet improvements including en-suite berths and a brasserie-style Club Car.
FirstGroup has operated the current service since 2004, carrying approximately 800 passengers per night. The service currently forms a small part of the ScotRail franchise, operating four cross-border trains per night linking London Euston Station with Edinburgh, Glasgow, Aberdeen, Inverness and Fort William and constituting 2% of First ScotRail's total annual revenues, it said.
In a seperate statement FirstGroup said that its medium-term targets remain unchanged, despite the latest franchise loss, noting that it is currently shortlisted for a number of other rail franchises.
The contract loss comes less than a week after the UK government awarded a giant new rail franchise covering a swathe of southeast England to the Govia joint venture majority owned by Go-Ahead Group PLC, meaning FirstGroup lost a key franchise and Stagecoach Group PLC failed in its bid to win the deal.
The deal means FirstGroup has lost the First Capital Connect franchise - which comprises the Thameslink and Great Northern sections of the new franchise - it has operated since 2006. "Today's news does not alter our stated medium term targets. Going forward the group is currently shortlisted for a number of other rail franchises and will participate in a range of competitions with the objective of achieving earnings on a par with the last round of franchising, with an acceptable level of risk," FirstGroup's Chief Executive Tim O'Toole said in a statement.
Serco shares were trading marginally higher at the open, up 0.51% at 356.8 pence per share. FirstGroup shares were marginally lower, down 0.44% at 137.888 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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