Stagecoach rail franchise bids rejected, shares fall

(Reuters) - Stagecoach Group said on Wednesday its bids to renew existing East Midlands and West Coast rail franchises had been disqualified due to concerns over pensions, sending shares in the bus and train operator down as much as 10 percent.

The company, which has operated the East Midlands franchise since its launch in 2007, was bidding to renew a contract that expires this year.

It also was involved in joint bids with Alstom for London's much-criticised South Eastern commuter network and with Virgin Group and SNCF for the West Coast line running to Scotland.

It said all three bids had been rejected and that it would seek an urgent meeting with officials to discuss the issues.

Stagecoach bumped up its annual profit forecast earlier this month thanks to strong performance from its rail businesses, which account for over 46 percent of the company's total revenue. It lost the contract to run trains from London to Edinburgh last year.

Stagecoach said franchise bidders were asked to bear full long-term funding risk on some sections of the Railways Pension Scheme by the Department for Transport, whereas its proposals were taking lower risks related to scheme.

"We believe strongly that the private sector should not be expected to accept material risks it cannot control and manage," Chief Executive Officer Martin Griffiths said in a statement.

(Reporting by Pushkala Aripaka and Sangameswaran S in Bengaluru; Editing by Arun Koyyur and Patrick Graham)