FIRSTGROUP PLC - Statement on TransPennine Contract
STATEMENT ON TRANSPENNINE EXPRESS CONTRACT
FirstGroup plc (‘the Group’) today announces that it has been notified by the Department for Transport (‘DfT’) that it will not exercise its option to extend the current arrangements for the TransPennine Express (‘TPE’) National Rail Contract.
The DfT will appoint its Operator of Last Resort to take over delivery of passenger services on the TPE network from 28 May 2023 when the existing agreement expires. The DfT’s decision regarding the TPE National Rail Contract extension relates only to TPE and the Group’s other rail businesses are not affected.
For a sustained period during the first year of the current contract, TPE posted its best performance results for a decade. However, in 2022 TPE’s service levels declined due to circumstances not wholly within the operator’s control, mainly the challenging industrial relations environment including the withdrawal of longstanding industry-standard overtime arrangements while undertaking unprecedented driver training requirements due to infrastructure upgrades. Following the introduction of an agreed recovery plan in February 2023, cancellations have fallen by approximately 40% and will continue to do so as more drivers become available over the next few months.
The Group is disappointed by the decision not to extend the National Rail Contract for TPE, given the investment and improvements we have made to the service over the years, which resulted in growing annual passenger numbers from 14m in 2004 to more than 29m before the pandemic.
Commenting, Graham Sutherland, FirstGroup Chief Executive Officer said:
“We have operated TransPennine Express and its forerunners since 2004, and are very proud to have served the communities across northern England and into Scotland, carrying millions of passengers and introducing new trains, new routes and more seats for our customers. Our team have worked extremely hard to improve services, including by recruiting and training more drivers than ever before. We have also worked closely with the DfT and Transport for the North on an agreed recovery plan as well as an improved offer on overtime working for our drivers.
“FirstGroup is a leading UK rail operator with a strong and diversified portfolio. Today’s decision does not alter our belief in the important role of private rail operators in the delivery of vital, environmentally-friendly transport for customers and communities across the UK.”
Notes to Editors
In FY 2022, TPE contributed £415.8m of revenue to the Group’s total of £4,591.1m; £13.2m of adjusted operating profit and £8.9m of attributable net income, which is the Group’s share of the relevant net post-tax fee income available for intra-company distribution.
The management fees and performance fees for the period April 2022 to May 2023 will be settled following the finalisation of the completion accounts after handing the franchise to the Operator of Last Resort. It is not anticipated that the Group will incur material costs transferring the operation to the Operator of Last Resort.
About TransPennine Express
TransPennine Express is an intercity rail provider with a vision to Take the North Further. During the current contract period, TPE has continued to roll out its new Nova fleets of trains across the network, financed by £500m of private sector investment and offering greater capacity and flexibility, in addition to investment in stations and further actions taken to improve accessibility. TPE has also been a key partner in the significant rail infrastructure boost for the region due to be delivered by the Transpennine Route Upgrade and has delivered savings to the taxpayer of around £120m to date through its involvement in project workstreams on access and rolling stock. The TPE network includes:
North TransPennine – including Newcastle to Liverpool Lime Street, Redcar/Middlesbrough to Manchester Airport, Scarborough to York, Edinburgh to Newcastle and Hull to Liverpool Lime Street
South TransPennine – including Cleethorpes to Liverpool Lime Street via Doncaster, Sheffield to Liverpool Lime Street, and Manchester Airport to Sheffield
Anglo-Scottish – including Liverpool to Glasgow, and Manchester Airport to Edinburgh
FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public transport services. With £4.6 billion in revenue and more than 30,000 employees, our UK divisions transported nearly 1.5m passengers a day in the last financial year. First Bus is the second largest regional bus operator in the UK, serving two-thirds of the UK’s 15 largest conurbations with a fleet of c.4,900 buses. First Rail is the UK’s largest rail operator, with many years of experience running long-distance, commuter, regional and sleeper rail services. We operate a fleet of c.3,800 rail vehicles through four management fee-based train operating companies (Avanti West Coast, GWR, SWR, TPE) and two open access routes (Hull Trains and Lumo). We create solutions that reduce complexity, making travel smoother and life easier. Our businesses are at the heart of our communities and the essential services we provide are critical to delivering wider economic, social and environmental goals. We no longer purchase new diesel buses and are formally committed to operating a zero-emission First Bus fleet by 2035; and First Rail will help support the UK Government’s goal to remove all diesel-only trains from service by 2040. In February 2023 FirstGroup was named as one of the world's cleanest 200 public companies for the fourth consecutive year by sustainable business media group Corporate Knights in partnership with US not-for-profit organisation, As You Sow.
Visit our website at www.firstgroupplc.com and follow us @firstgroupplc on Twitter.
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR 6 Annex 1R: 3.1.
Contacts at FirstGroup: Contacts at Brunswick Group:
Marianna Bowes, Head of Investor Relations Andrew Porter / Simone Selzer
Stuart Butchers, Head of Corporate Communications Tel: +44 (0) 20 7404 5959
Tel: +44 (0) 20 7725 3354
Contacts at Liberum Capital Limited: Contacts at RBC Europe Limited:
Nicholas How / John Fishley / William Hall James Agnew / Jonathan Hardy / Jack Wood
Tel: +44 (0) 20 3100 2000 Tel: +44 (0) 20 7653 4000