Great Western Coffee Shop

Leading article in July Buses magazine suggesting that FirstGroup could be the first major player to be dismembered and sold off to different interests in different continents. It highlights the failure of Greyhound and TPE,  the poor set of results for 2017/8, and the departure of Tim O'Toole, but points out that Firstbus is beginning to turn things around in Leeds and Bristol. I suspect that a lot will hinge on the success or otherwise of the M2 and M3 metrobus routes. If it's the former, it may be a stay of execution, but the latter could lead to the break up of the FirstGroup empire.

Can the whole of a huge, international group like First really be dependent on two bus contracts in comparatively small city?  I think there must be an accumulation of issues across a range of their subsidiaries for a complete disintegration. Bristol may think it's the centre of the universe, but ...

The overseas stuff is really dragging the company down, so I think that will get sold off if anything.  That being said TPE and SWR aren't looking especially good either, mainly due to their commitments in future franchise years.  Might it be enough to stop First bidding for the new franchise for 'GWR', as commitments are likely to be quite restrictive compared with the current arrangements?

First don't need to bid for the Greater Western franchise. The government keep giving it to them!

Possibly another four before there's a franchise competition. So that's either four more years with First at the helm, or the DfT taking over if FirstGroup fails.

They're skimming along at the bottom financially at the moment. If their banks start making noises...

Hmmm ... First have to make an offer that's sufficiently in line with what the government wants to have the business of running the trains awarded to them.   If they fail to make an offer that's good enough for the government, the government can take over and run the trains themselves.  That looks very much like a bidding process to me although one in which the competition is limited to the incumbent and the government.

Of course First cannot afford to bid to loose money so there is a point beyond which they cannot go.

There are of course complicating factors.  With First already losing money on TPE, government may not wish to push First so far that they have to take TPE in house as well as GW.

Difficult to know who’s got who over a barrel when it comes to the next direct award for GWR - First over Dft or Dft over First. Both in a mess.

Why do franchises have to make money?

Surely First could run the franchise for the government for a fixed fee. This arrangement is already in use elsewhere.

It would be good if the government could create a 'government franchise of GWR and the infrastructure, and take Network Rail out of the equation. A fully integrated franchise would hopefully be a lot more efficient.

Right and how would that work where operators share infrastructure?
Would you give the line between Temple Meads and Parkway to GWR or XC?
Would you give the line between Cardiff Central and Newport to GWR or ATW or XC?
Etc etc.

The freight companies have consistently opposed such moves as they fear they would be pushed out altogether. 

In theory I agree that it is a bidding process between First group and HMG, but in practice I suspect that First group would be virtually certain to win, unless their bid was VERY unfavourable to the public purse.
In practice I suspect that HMG are reluctant to take over rail franchises unless unavoidable as was recently the case at East Coast. For the government to have to take over ANOTHER rail franchise would be seen as a failure of the franchising process, and therefore to be avoided if at all possible.

Also if the government decided to take it over they would have to be confident they could fix the problems quickly.  However, the time to fix the present problems was several years ago and solving them now will take time.  So like Thameslink and Southern they leave it with the franchise to take the blame rather than DfT taking it over an becoming responsible for the mess for the couple of years* it will take to fix it.

*A wild guess

A couple of years may be a wild guess, or may prove to be accurate - who can say? But there's a difference between a franchise suffering problems, which can be sorted out by artifice if necessary, and a major transport group running into deep doo-doo. If true, First would have to dump all loss-making operations toot-sweet, and start again. Otherwise, they could fall prey to venture capital funds, who would hold the fire sale for them, get as much out of the company as possible, then sell what is left, if any. They follow the money, and only the money.

Interesting times. If they are banking on MetroBust to turn things around, the game is up.

I have split the posts on the request by First for copies of the GW franchise input into a separate thread in "Across the West" - at http://www.firstgreatwestern.info/coffeeshop/index.php?topic=19977.0