Britain extends Avanti West Coast contract; draws criticism from unions

(Reuters) - Britain on Monday extended Avanti West Coast's contract to run rail operations on routes including Manchester, Birmingham and London, citing an "improvement" in services, a move that drew criticism from labour unions.

The contract extension to Avanti, which is majority owned by London-listed FirstGroup alongside minority partner Italy state-owned Trenitalia, comes after the company was given six months to improve through a short-term contract in October after it cut services in August.

Britain's Department for Transport said there had been "very significant" improvements in services, including lower overtime, more trains (to 264 from 180 per day on weekdays); and a steep drop in cancellations (to 4.2% in early March versus nearly 25% in August).

"However, there is still more work to be done to bring services up to the standards we expect, which is why over this next six months further improvements will need to be made by Avanti West Coast," Transport Secretary Mark Harper said.

DfT extended the contract until Oct. 15 and talks regarding the longer-term contract are ongoing, FirstGroup said. The initial short-term contract was previously due to expire on March 31.

FirstGroup CEO Graham Sutherland said the extension would allow the company to focus on delivering on its "robust plans" to enhance services.

Avanti in August angered passengers and politicians when it cut the number of trains it ran between London and Manchester by a third in August due to driver shortages.

Britain's largest rail union RMT condemned the extension and called for the company to be stripped of its franchise.

"It is, frankly, extraordinary - as well as very disappointing, and discouraging for everyone working on Britain's railway network - that the government is, yet again, rewarding failure," said Mick Whelan, general secretary of train drivers' union ASLEF.

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Anil D'Silva)