Virgin Rail lines up £27m dividend as sales hit £1bn

VIRGIN Rail Group saw sales break through the £1billion mark last year after a surge in passenger numbers and paid out a bumper £27million dividend to its parent companies.

The group refused to be drawn into the debate on state ownership of the rail system, which has gained prominence after the election as Labour leader this month of Jeremy Corbyn – who has said he favours renationalising the railways.

But the company has highlighted the fact that its improved profitability generated a higher than expected payment to the Government under its franchise agreement.

A spokesman said: ‘Our business grew considerably last year, with annual turnover now exceeding £1 billion. This success has been achieved by attracting more people to rail, with an 8 per cent growth in journey numbers, which in turn has allowed us to pay well over £100million to taxpayers.’

Virgin Rail paid a total of £105mil- lion to the Government, including a £12million share in profits.

Profits in the year to March 2015 quadrupled from £13 million to £53.7million.

The company, which is owned 51 per cent by Sir Richard Branson’s Virgin Group and 49 per cent by stock market listed travel group Stagecoach, paid the £27million dividend to the two parent companies.

Just £6million of this came from profits of the West Coast service – which represents the vast bulk of its operations – with the rest coming from cash built up in recent years.

Virgin Rail has now doubled its sales in the past nine years.

A new franchise deal last summer followed a dispute over the award three years ago, when Virgin briefly lost but was later re-awarded the franchise after disputing the selection procedure. It operated the fran- chise under a profit cap while a review of the process was held, but for much of the past financial year it ran the franchise under a new deal, which included the Government profit sharing agreement.

However, the group continued to be uneasy about problems with Network Rail, which maintains rail tracks and signalling systems.

Virgin received £37.5 million in compensation over track maintenance and disruption due to failures caused by Network Rail.

Corbyn and Shadow Chancellor John McDonnell have both said they would favour renationalising the railways. The policy is also supported by rival leadership candidate Andy Burnham, who is now Shadow Home Secretary. British Rail was privatised in 1994. Railtrack, the privatised firm that operated tracks and signals, was taken over by state company Network Rail in 2002. The franchises to operate trains are held by private firms.