15th Dec 2023 15:25
(Alliance News) - Trainline PLC made sizeable strides on Friday, following the news that the UK government will not be creating a ticket booking app under the Great British Railways umbrella.
Trainline on Thursday noted the UK Department for Transport will no longer pursue creating a ticket retailing website and app.
The proposal for a Great British Railways app was first mooted in May 2021 as part of a white paper. GBR is a planned state-owned body that would oversee UK rail transport.
The Department for Transport said Thursday: "As set out in the white paper, we are committed to improving passenger experience on the railways.
"The private sector plays an important role in driving innovation and attracting more customers to the railway. As stated in the Bradshaw Address, we are focused on opening up railway data and systems, lowering barriers to entry for independent rail ticket retailers to improve passenger experience. We are confirming that we are not pursuing plans to deliver a centralised Great British Railways online rail ticket retailer."
It added: "Train operators will continue to retail to passengers online alongside existing third-party retailers while we develop measures to spur further competition in the online rail ticket retail market to make things better for passengers."
It was intended for the new body aims to sell tickets via a website and app, potentially putting it in competition with Trainline.
Trainline shares rose 12% to 318.80 pence each in London on Friday afternoon.
Trainline shares slumped 23% on May 20, 2021, the day overhaul plans were announced. However, shares are now up 1.5% since then, aided by Friday's rally.
"For us, any perceived threat of a government run website/app was always extremely low. Not that we believed it wouldn't happen (though that became less and less likely as the months and years and changes in governments went on). It was more the lack of financial viability of running one on a level playing field. This became worse when the government decided to make it even less attractive for third-party retailers to sell tickets by reducing the commission that those retailers make," analysts at Peel Hunt commented.
Peel rates Trainline at 'buy', as does Stifel, which believes the threat from GBR has "dampened significantly" since 2021.
"We remain buy rated with a 360p target price because we feel positive investment attributes (strong UK market position, digital channel shift, strong [environmental, social, and governance] credentials, European prospects) outweigh associated risks around the pace of European growth/profitability and GBR ticketing," Stifel analysts said.
By Eric Cunha, Alliance News news editor
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