Stagecoach set to contest rail franchise ban in High Court
● Row over three contracts expected to be heard in 2020 ● Sales come in lower than target at regional bus arm
The dispute between Scottish transport giant Stagecoach and the UK government over its ban from bidding for three rail contracts is expected to be heard in court early next year, the company said yesterday.
Perth-based Stagecoach has brought the High Court action against the Department for Transport (DFT) after it was blocked from bidding for the West Coast, East Midlands and South Eastern franchises over its refusal to take on pension liability risks.
In a trading update Stagecoach confirmed: “We continue to pursue our claims against the Secretary of State for Transport regarding his decisions to disqualify us from three rail franchise competitions. The three cases are due to be heard in the High Court in early 2020.”
Despite already losing the East Midlands franchise to Abellio – a route Stagecoach had run for 12 years – the company said it has been working closely with the new operators to ensure a smooth handover.
The company added: “We and our joint venture partner, Virgin (Trains), will approach the forthcoming transition of the West Coast franchise in the same spirit of collaboration.”
It was announced in August that Firstgroup would take on the route.
A DFT spokesman
said: “Stagecoach is an experienced bidder who knowingly submitted non-compliant bids. In doing so, they disqualified themselves from the South Eastern, West Coast and East Midlands franchise competitions.
“Wedonotcommentonlegal proceedings. However, we have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.”
On its bus business, which operates in towns and cities across the country, there was better news, particularly at its London division.
The company said it received higher-than-expected payments for providing “favourable” service and was confident of winning more contracts in the capital.
Its regional operations saw a 1 per cent like-for-like boost in revenues but this was lower than expected due to tough comparisons last year with the summerheatwaveandtheend of rail replacement services in the Derby area.
Stagecoach said it wants to expand the division and is looking at partnerships with airports, festivals and events.
It also said it plans to stop its current share buyback programme when it reaches about £30 million.
In April it announced plans to buy up to £60m of its shares but yesterday said it was satisfied it has “largely achieved its objective of making appropriate use of our cash, whilst retaining a good financial position and maintaining an investment grade credit rating”.