Great Western Coffee Shop

Bus, rail and coach group pushes incumbent Virgin Rail into second place with improved offer for 14-year contract

FirstGroup has lodged the highest bid for the west coast rail franchise, making it the frontrunner to take over the prestigious London-to-Glasgow route.

The bus, rail and coach group is believed to have pushed incumbent Virgin Rail into second place on price with an offer that is 15 to 20% higher than the nearest contender.

FirstGroup and Virgin had been vying for the contract after the other two shortlisted bidders, Dutch-owned Abellio and a bid backed by SCNF, the French rail group, slipped out of contention.

According to one rail industry rumour, the biggest bidder has offered the Department for Transport a premium ^ or excess profits ^ of between ^6.5bn and ^7bn over the 14-year span of the contract. While that far exceeds the premium paid by Virgin, industry observers believe ^5bn would be a par bid for one of the most sought-after franchises on the British rail network.

The premium is likely to be scrutinised by procurement officials at the DfT, amid criticism of the vetting process after the ill-fated ^1.4bn bid for the London-to-Edinburgh east coast contract by National Express in 2007.

National Express won the contest but the deal collapsed in 2009 when it admitted it could not afford the rapidly escalating premium payments.

It later emerged that National Express had not been the highest bidder and the DfT had struck out a rival offer of ^1.6bn, believed to be from Arriva. The department said at the time: "We award franchises not only on cost but also on deliverability." Rail franchise competitions are judged on a number of criteria and it is not known whether, in the case of west coast, the largest premium bid is enough to guarantee winning the contract.

FirstGroup, which has a strong reputation for cost management and owns three franchises including First Great Western, is believed to have looked closely at the running costs on the west coast service.

Last month the RMT trade union, the largest rail union, warned that bidders were considering severe cuts to onboard catering to achieve higher premium payments.

While Virgin pays about ^160m per year to the DfT, a bid of up to ^7bn would require annual payments of about ^500m. FirstGroup is rumoured to have considered staff cost cuts of about 20% on west coast, which could include cutting catering numbers from approximately 800 people to 300, or the service outsourced.

A hefty premium profile is also likely to draw the scrutiny of investors, who are paying close attention FirstGroup's attempts to whittle down its ^1.8bn debt burden. A plan to raise ^100m from bus company disposals has hit a snag after Stagecoach withdrew from the purchase of FirstGroup's Devon bus business after the Office of Fair Trading raised concerns over the agreement. Although a small deal, it was viewed as a negative development by analysts because of the prospect of the OFT and Competition Commission intervening in every disposal.

According to City sources, there are also concerns among investors that FirstGroup will have to launch a rights issue to reduce the debt, a development that may be viewed dimly if it is perceived to divert shareholder cash into lending banks rather than into the business.

However, the share price does not indicate serious concerns over FirstGroup's debt with the stock trading at about six times earnings, whereas if there was genuine alarm the shares would be trading at two to three times earnings.

FirstGroup said: "We do not comment on speculation or market rumours of any kind. All decisions relating to the tendering of rail franchises are the responsibility of the Department for Transport."

Virgin Rail said: "We do not comment on our franchise bids."

If Virgin loses out to FirstGroup, it will be the first time that Sir Richard Branson, co-owner of the business, has been out of the UK rail business in 15 years.

Virgin Rail launched in 1997 and a year later was drawing record complaints from passengers. It is now a popular service and carried 30 million people last year.

A final decision on the contract is expected in August.

... SCNF, the French rail group ...

Have you tried Travelling Chef or a FGW Pullman Btline? Hardly low standard.

Your point is irrelevant. If First axe all those catering staff, I can hardly see them adding a Travelling Chef or Pullman dining!!

So it look as if First want to apply their low standards of First Class service (a cup of tea and a biscuit probably) to the WCML! >:(

I hope Virgin win.

So it look as if First want to apply their low standards of First Class service (a cup of tea and a biscuit probably) to the WCML! >:(

I hope Virgin win.

Comparing a company that serves the Midlands, North West, North Wales and Scotland to Chiltern is just silly. Chiltern are is primarily a commuter TOC

I don't see why when you have bought a First Class ticket you should pay even more for food. I certainly would not travel 1st in FGW unless there were some cheap advances.

Since EC introduced it, revenue is up (because of the promotions) with the result that the carriages are not longer empty, freeing up seats in standard.

Fixed that for you!

Fixed that for you!

I have spent a lot of time over the last ten years dealing with the economics of on-board catering and I am not aware of any catering offer which makes money.  I love the idea of great train catering and have spent happy hours dining whist watching the view but members of this forum must recognise that this takes revenue away from the rest of the railway.

That last sentence is interesting but doesn't bear out my experience.

Take the next two weeks for example.  On two occasions I am catching trains specifically because they are Pullman Restaurants.  In both cases me and a friend are travelling First Class because we want to ensure we get a seat in the restaurant.  If it wasn't for the catering we would probably travel out of peak times and probably use standard class for one of the journeys and not travel at all on the second occasion.  It is the restaurant which has drawn us to the train.  So in addition to the higher fares FGW also get the price of four meals out of me.  They will also get custom from us on Travelling Chefs on the respective return journeys.

There has been mention elsewhere on this forum about additional Travelling Chefs and Pullmans.  Why would these be considered if there was no commercial sense in them - maybe they do not cover their costs on the basis of money taken in Coach F but perhaps when taken as part of the overall offering they do increase the numbers travelling?

If restaurants were profitable they wouldn't have been axed across the network. Look at W&S - it failed.

People can't afford (even in non recession times) to shell out for a 1st class ticket and then pay even more for the food.

FGW are probably keeping the token service to avoid the outcry that surrounded other restaurants when they collapsed. Any new ones are probably to make the chef actually do something in the other direction.

FGW are probably keeping the token service to avoid the outcry that surrounded other restaurants when they collapsed. Any new ones are probably to make the chef actually do something in the other direction.

The restaurant and travelling chef however are not exclusive to first class which is a benefit to all. If the restaurant was not profitable then of course they would not exist. If you look however, numerous travelling chef services happen to be the named services which are no doubt busy and benefit from extra catering provisions. Being optional however allows staff to only focus food on what is ordered instead of providing anything to satisfy complimentary offerings. Have you by any chance used the travelling chef on fgw? Previously I have travelled I have had a first class ticket and food from the chef for ^15 whilst travelling Bristol to Swansea which is amazing value with many people also taking up the opportunity to use the chef on board too. It works out cheaper than purchasing food from other outlets sometimes and more convenient making paid for offerings on board highly attractive to both TOC and passangers if ran correctly. People can and do afford the service, however I admit that there is a perception that it is expensive and portions are lacking which when people try the service though realise is not the case.

However consider the annual cost of the rolling stock lease, maintenance, track access and then add the staff and other costs and the numbers dont stack up.  I have never seen evidence that the service adds enough additional passengers (who would travel by another mode) to make money.  With modern yeild managment the majority of fares are discounted and although this increases the total revenue it means that provision of other on-board services will not make money.  Four meals (avg of ^20?) - additional income ^80?  IF FGW are achieving 50% gross margin after cost of goods sold then they are taking ^40 to pay for the staff , the seat (if dining is provided in a dedicated separate area), the rolling stock etc etc.

If restaurants were profitable they wouldn't have been axed across the network. Look at W&S - it failed.

well that contradicts your own arguement, the meals on W&S were free to first class!

If they had been allowed a Wolverhampton and Birmingham stop once moderation of competition ended the ORCATS revenue may have saved them.

The fares were also very low in First Class though. FGW charge a fair price for the Pullman restaurants, but it is very good quality food. I very much doubt the First Class catering offer was why W&S folded though, it was the slow, unattractive journey times and the lack of custom because of that the caused them to fold. If they had been allowed a Wolverhampton and Birmingham stop once moderation of competition ended the ORCATS revenue may have saved them.

They call that an ORCATS raid. Remember open access operators still don't pay full track charges. With an ORCATS raid they also take money from government i.directly through the franchise operator.

All OA TOCs should be axed and absorbed into the EC franchise. It's ridiculous to have several TOCs fighting for paths when it would be better for the passenger to have a regular clockface service run by EC. And perhaps with some Peterborough stops for connections.

OA provides something which should be embraced which is competition. The problem with existing TOCs is they get complacent with a feeling of a given right to charge what they want offering services they feel are appropriate. The Sunderland market has grown as a result of OA which East Coast were not really interested in with previous franchise holders. Competition forces standards to improve. Who is to say if OA operators went that services would maintained in areas that now have improved services. OA is far from perfect but it can provide opporunities that TOCs will not attempt to try. If anything when hst's become available whenever replacements arrive, the OA scene could be extremely interesting as faster stock taking up less paths could create many opportunities that franchise holders will or not or can not attempt. The current system favours nobody as innovation is stifled through unwillingness to allow new ideas or services. OA could even provide opportunities for re-opened or rail connected preserved lines to have services direct to places people wish to go such as Minehead to Paddington during the summer. Saying OA operators should be forced to close and hand over paths to TOCs will help nobody in the long run.

however once we have smart card ticketting ORCATS can go!

Alas, this is not the case. The present arrangements for smartcards on the railways involve recording passengers' journeys from one station to another. If you think about some of the places where there is head-to-head competition (such as Doncaster - Kings Cross), then that doesn't tell you which train a passenger used. Perhaps we need smartcard readers at each carriage door...!

And smartcards are themselves old technology now. m-ticketing on your phone is supposed to be the future.

I'm just checking I have read that correctly ... ORCATS (Operational Research Computerised Allocation of Tickets to Services) remains in place, right?   Are you referring to a general modernisation here which effects / will effect the GW area, or some specific Birmingham stuff?

Within the next franchise, how farebox revenue is distributed amongst multiple operators on certain sections of line and how the fares are set and allowed flexibility could make a huge difference to the bids - both in terms of bottom line and services suggested, bid and provided.

Virgin's Sir Richard Branson: Government must not back unrealistic West Coast rail bid

Sir Richard Branson has complained to the Government that it risks a re-run of previous rail franchise failures if it awards the West Coast Main Line contract to an unrealistically high bid from FirstGroup.

 In a letter to Transport Secretary Justine Greening, copied to Prime Minister David Cameron, the Virgin founder claims the only way FirstGroup can justify its bid is to ^drastically cut the quality of services^.

The entrepreneur, whose Virgin Rail subsidiary has run the London to Glasgow train service for the past 15 years, is so angry at reports he has been outbid by ^1bn that he has written to ministers even before the winner is announced.

Failure to retain the franchise will end Virgin^s role as a UK train operator.

Virgin Rail, which is 49pc-owned by transport group Stagecoach, has offered the Government about ^6bn to run the West Coast services for 14 years from December. However, bus and rail operator FirstGroup is thought to have bid around ^7bn ^ equivalent to a ^500m-a-year payment to the taxpayer.

Both bids represent a big step up on the annual ^160m Virgin Rail is currently paying to run a franchise that had ^859m revenues and ^43m operating profits in the year to April 30.

In his letter, Sir Richard draws comparisons with recent failures on the East Coast Main Line, where both GNER and National Express walked out on the contract after their bids proved far too optimistic.

He claims Virgin was the runner-up bidder both times, putting in ^realistic bids after an extremely expensive tendering process^, only to be beaten by rivals that came ^nowhere close to delivering their promised plan^.

Arguing that history cannot be allowed to repeat itself on the West Coast, he says: ^We submitted a strong and deliverable bid based on improving the customers^ experience through increased investment and innovation.^

He adds: ^Our team has transformed the West Coast line over the last 15 years from a heavily loss-making operation to one that will return the taxpayer billions in years to come."

Noting how passenger numbers have risen from 14m to 30m since Virgin Rail began running the services, Sir Richard reminds the Government that critics used to say that doubling traffic on the route was "mission impossible".

Mark McVicar, a transport analyst at Nomura, said Sir Richard was ^bound to make a fuss because he always does^, adding: ^If FirstGroup has priced the risk differently you don^t need a massive difference to make ^1bn over 14 years.^

A Department for Transport spokesman said: ^We are evaluating bids and, as it^s a live competition, we cannot comment.^ FirstGroup declined to comment. Virgin would make no comment on the letter.

From The Telegraph (http://www.telegraph.co.uk/finance/newsbysector/transport/9444656/Virgins-Sir-Richard-Branson-Government-must-not-back-unrealistic-West-Coast-rail-bid.html):

So the point that seems to have been unanswered through the whole catering debate:  Will FG say goodbye to their GW bid, if they are awarded West Cost?

Who knows? I'm sure First Group would like both, but note my sig...↓↓↓  ;)

Why wouldn't First Group be allowed both franchises?

As a side point, I've been told of rumours Arriva are not after the franchise [Greater Western]: I've also been reliably informed they will be bidding.

I'm for Virgin ... (as I believe they offer the best customer service, vital for such routes).

You have seen the complaints per 100000 journeys right? I'll give you a clue; Virgin are better than EC by 69 complaints, the next placed competitor is Trans Pennine Express almost 180 complaints less.

Figures quoted for 2011-2012, full railway year.

Threat to Richard Branson^s train empire
Virgin^s presence on Britain^s rail network could be derailed as FirstGroup offers ^1bn more for the West Coast franchise.

No one lobbies like Sir Richard Branson. So, when the Virgin king fires off letters of complaint to the Government even before it^s announced the winner of a bid, it^s easy to be dismissive.

This time, though, he may have a point. If the crackles across the station loudspeakers are right, Virgin is about to be kicked off Britain^s railways after losing the battle for the West Coast main line ^ the London to Glasgow service it has run with partner Stagecoach for the past 15 years.

Virgin Rail, 51pc-owned by Sir Richard and 49pc by Stagecoach, looks to have been comprehensively outbid by FirstGroup in the fight for the 14-year West Coast contract starting in December.

The Virgin founder is spitting tacks, as is clear from his letter to the Transport Secretary, Justine Greening, and copied to David Cameron. But not just because he thinks he^s lost. It^s the thought he^s been done over by an ^unrealistic^ bid.

In short, he is playing the East Coast main line card, claiming the Government risks a re-run of the bid fiascos on that franchise. First GNER in 2005 and then National Express two years later triumphed at the bid stage, only to career swiftly into the buffers when their heroic revenue forecasts failed to materialise. Both walked out on their contracts. The result was a clean-up job for the taxpayer from which the East Coast is yet to recover. In both cases, Virgin Rail was a defeated rival bidder. As Sir Richard said in his letter, the company had made ^realistic bids after an extremely expensive tendering process^ only to be beaten by rivals that came ^nowhere close to delivering their promised plan^.

This time round, Virgin has offered to pay the Government about ^6bn over 14 years to retain the West Coast line ^ FirstGroup is thought to have bid around ^7bn. But rail franchise bids are not as straightforward as they look. Not least one as big as this ^ the first awarded under the Coalition^s new rail franchising policy.

The stakes are high, and not just for Virgin. Fresh from a profits warning, and with the market steamed up about its overly-geared balance sheet, FirstGroup^s under-fire chairman, Martin Gilbert, is desperate for some good news. Meanwhile, the Government is cash-strapped. These are just the sort of circumstances for a racy bid ^ even without Sir Richard^s huffing and puffing.

To understand what^s going on, it helps to know that with rail franchise bids no money changes hands upfront. Bidders undertake to deliver a certain level of performance, such as service frequencies or station upgrades. Then, after forecasting revenues and costs, they offer to pay a yearly amount to run the service.

But how can the Government be sure this will ever arrive? It asks for two things. Bidders must lodge a ^performance bond^ that is forfeited if the operator defaults, and a ^shareholder loan^, which is supposed to increase with the riskiness of the bid. When National Express ducked out of the East Coast, it lost its ^32m bond and ^40m loan ^ though the penalty was seen as derisory given that it bid ^1.4bn for the franchise.

The Government is now taking a harder line. On the West Coast, the bond is expected to be around ^70m. The important question is how big a loan the Government demands. There is talk it could request around ^300m from FirstGroup. But, crucially, that^s not cash. Bidders have to give only a guarantee with a credit rating of A-, proving they can pay out.

Sir Richard claims the only way FirstGroup can justify its bid is to ^drastically cut the quality of services^. The unions fear as many as 800 job cuts, including guards, catering and station staff. But, as Nomura analyst Mark McVicar says: ^You are only playing with 20pc-30pc of the cost base, max, because of all the fixed costs.^

Broadly, much of the remaining disparity between bids turns on forecasts of passenger volumes and fares ^ numbers that the Channel Tunnel, its fast rail link HS1 and the East Coast have all shown to be notoriously hard to predict. Current volumes are 30m passengers a year ^ up from 14m seven years ago, boosted by the snazzy Pendolino tilting trains.

The current and new West Coast franchises are not directly comparable. But even Sir Richard^s promised payment is punchy. In the year to March 31, Virgin Rail had ^938m revenues and ^34.4m operating profits. It is currently paying ^160m a year to run the service. So, if FirstGroup pays ^7bn, that is an average of ^500m a year.

One senior figure at a rival transport group said: ^Virgin Rail^s bid is already aggressive. Yet FirstGroup is said to be bidding ^1bn more. We think that requires 8.5pc to 9pc growth every year for 14 years off the back of a double-dip recession. That just beggars belief.^

As if to reinforce the point, the two other shortlisted bidders ^ France^s SNCF and Holland^s Abellio ^ are thought to have offered ^5bn.

But the quantum only tells half the story. The viability of a rail franchise also depends on the profile of premium payments. Typically, bidders pay little in the early years of the contract when investment is at its highest, with the payments cranking up towards the end. It is this ratchet which kills ill-judged bids.

Here, FirstGroup has form. In May last year, it controversially handed back its First Great Western rail franchise three years early to avoid more than ^800m in payments to the taxpayer.

To be clear, FirstGroup did nothing wrong. When it signed the contract in April 2006, it negotiated something unique in the rail industry: a break-clause, where it could opt out of the 10-year contract after seven years without penalties. The upshot was that, of the ^1.13bn FirstGroup agreed to pay, ^826m never materialised as it fell in the final three years.

All that^s provided more fuel for the critics. They see how FirstGroup^s board is under pressure from shareholders, not least given the risk that it loses the auctions for the new Great Western and First Capital Connect franchises.

So, as HSBC analyst Joe Thomas notes, FirstGroup has an ^incentive to overpay^. He believes its ^weak finances mean it could look to win rail contracts to bolster its balance sheet^. Indeed, FirstGroup cannot afford to lose rail earnings without risking breaching its earnings covenants.

Such pressures may push FirstGroup to bid big for the West Coast and cut costs early on, generating decent earnings growth. There is, of course, a risk things go wrong down the track, not least with the new franchise model recompensing bidders only if the Government^s GDP forecasts ^ on which they are partly based ^ are out by a colossal 5pc. But, by then, Gilbert will have retired, while chief executive Tim O^Toole may be back in his native America. So, even if the shareholder loan gets called in, it won^t be their problem.

What of the Government? The Department for Transport has not always picked the highest bidder. But, with a novice such as Greening in charge ^ under immense pressure from the Treasury to maximise franchise proceeds to fund other rail projects ^ it will be hard to reject a ^7bn bid for a ^6bn one. Besides, given the DfT^s revolving door, if the franchise fails, Greening^s likely to be gone.

Neither FirstGroup nor the Government would comment, though McVicar says: ^I don^t think O^Toole^s the sort of guy to bid like that.^

But, as one rival executive said: ^If this bid plays out like I think it might, it will prove so outrageously cynical as to boggle the mind.^ It^s certainly boggling Sir Richard^s.

Apparently a Virgin West Coast guard has just said over a 390 tannoy that First is "unfortunately" taking over.

firstwestcoast.com has been registered.

firstwestcoast.com has been registered.

Isn't there anything more important than catering in first class depending upon the outcome of this franchise award?  :-\

2610558 15 February 2012 (09, 39, 43)
HORIZON TRAINS

Class 09
Computer software, computer programs and software applications for providing travel, transport and timetable information and real-time information regarding train running times, prices and network delays; computer software, computer programs and software applications for travel booking, reservation and ticket issuing services.

Class 39
Transport services; transportation services; passenger transportation services; rail transport services; travel booking, reservation and ticket issuing services, including by means of the Internet and/or by mobile telephone; travel, tourist and travel timetable information services; tourist travel, travel agency and tour operator services; arranging of tours, trips and excursions; operation of stations (railway) for transport purposes; provision of car parking facilities; car park services; delivery and storage of goods; advisory and consultancy services relating to all the aforementioned.

Class 43
Services for providing food and drink; cafe, restaurant, snack bar, bar and catering services; rental of meeting rooms and temporary accommodation; advisory and consultancy services relating to all the aforementioned.

Horizon Trains Limited

Agent: Burges Salmon LLP, One Glass Wharf, Bristol, BS2 0ZX.

. firstwestcoast.co.uk appears to be owned by someone in a residential property in Birmingham.

Virgin prepares for legal fight over West Coast line

Virgin Trains is preparing for a legal fight over its last remaining rail franchise, as ministers prepare to award the contract for the prestigious West Coast line to rival FirstGroup.

Sir Richard Branson's Virgin Trains will push for a judicial review if the Department for Transport awards the 14-year franchise to FirstGroup this week as expected, The Sunday Telegraph has learnt.

Virgin has been operating West Coast services between London and Scotland for 15 years through a joint venture with Stagecoach. However, insiders say Virgin Trains now faces an uncertain future, with one senior source warning: "It could be farewell to Virgin Trains."

FirstGroup is thought to have made what industry insiders describe as a "suicide" offer of ^6.5bn-7bn to run the West Coast line, outbidding Virgin, its closest competitor for the franchise, by about ^1bn.

Dutch train company, Abellio, and France's SNCF are believed to have bid close to, or below, the ^5bn mark.

Virgin has spent almost ^14m bidding for the West Coast contract and Sir Richard has warned the Government that it risks repeating rail franchising mistakes of the past if it goes with FirstGroup's offer.

In a leaked letter to the Transport Secretary, Justine Greening, Sir Richard claimed the only way FirstGroup could meet its commitments would be to "drastically cut the quality of services". Industry experts say there is a high likelihood FirstGroup will have to "hand back the keys" to the franchise before the contract ends in 2026, a fate suffered by both GNER and National Express which abandoned the East Coast Main Line when their bids proved unviable.

The judicial review would be the first legal challenge of its kind in the rail industry.

One senior industry source admitted it is a "long shot" but pointed out that Sir Richard has little other choice if he wants to remain in the rail business. "A judicial review is a difficult process but Sir Richard is passionate about rail," said the source. "He doesn't want to see a repeat of the National Express situation."

It is believed Virgin, which is headed by Tony Collins, has spent up to ^60m bidding for rail contracts in recent years but West Coast is its only remaining franchise. It made several unsuccessful tilts at the East Coast Main Line and lost the Cross Country franchise to Arriva in 2007.

Virgin Trains would not comment but it is believed its bid team has not met DfT officials for more than a fortnight.

FirstGroup already has a registered company called First West Coast. Richard Parry, a former director at London Underground, has been leading FirstGroup's bid for the inter-city West Coast services.

Sceptics have pointed to FirstGroup's recent decision to hand back the First Great Western franchise three years early after the economic downturn rendered its ^1.1bn contract uneconomic. By taking advantage of a break clause in the contract, FirstGroup avoided payments of almost ^830m to the Government.

Virgin Rail Group, which is 51pc owned by Sir Richard and 49pc by Stagecoach, currently pays about ^160m a year to run West Coast services. A ^7bn bid would see FirstGroup having to meet payments averaging ^500m a year. A spokeswoman for FirstGroup would not comment on the West Coast franchise but insisted: "We do have a track record of bidding responsibly."

Rail unions have warned FirstGroup it will face a major industrial battle amid fears cost-cutting could lead to the loss of up to 800 jobs. Bob Crow, general secretary of the RMT Union, has slammed the West Coast deal as an exercise in "casino franchising".

The DfT has come under pressure from the Chancellor to maximise proceeds from rail franchises. The DfT refused to comment, insisting the franchise was still a "live competition".

Credit to Arriva for not putting Arriva on

In Wales, it should be "WelshRail", with small branding.

True - perhaps they assumed the franchise would be slammed!

In Wales, it should be "WelshRail", with small branding.

Rebranding another of the idiocies of franchising.

Well it was on the Today programme this morning. Interviwed Tony Miles Editor Modern Railways.

Seems to be done deal!

"It is understood that if FirstGroup wins the franchise, officials fearful of another 'overbidding' fiasco may force it to give up its other franchises - First Great Western and First Capital Connect.

I rather prefered this livery !http://www.fictitiousliveries.co.uk/photo.php?S_A4_1_vt.jpg (http://www.fictitiousliveries.co.uk/photo.php?S_A4_1_vt.jpg)

Ye Gods! That's just wrong. Gresley would have a fit if he were alive to see that.

Virgin could lose its franchise to run trains on the West Coast Main Line this week, with reports that First Group has bid ^7 billion for the franchise and would cut staffing.

Tony Miles of Modern Railways Magazine, said newspaper reports and a letter from Virgin boss Richard Branson suggested a new operator could be running trains between London Euston, the West Midlands, north west England and Glasgow.

He said a new operator would not be allowed to cut services, meaning "staff is the only thing" it could change to cut its costs.

And he suggested the chancellor was pushing the transport secretary to accept the highest bid.

The rumour about having to hand back other franchises is rumoured to be a cluase in the new franchise that if the company tries to hand the keys back early then they will be stripped of the others.

I am not sure that would be very practical, DfT would not cope if a group as involved as First did that, also each franchise is its own contract so it might be possible to build it into new franchises I doubt it could be made retrospective

it's obviously in the bag for SNCF. The DfT are in negotiations about the fares for the Shrewsbury to Paris service. A few ministers aren't too happy about the WCML being renamed the LGV Britannique, but, hey, if the DfT manages to fill up the coffers, who cares?