Windfall to mark 'new era' for rail

THE NEW enlarged Greater Anglia train company serving Liverpool Street and the whole of the east of England is expected to make so much money that the Treasury will demand £500m back from new operator National Express by 2011.

The Strategic Rail Authority today announced details of the seven-year franchise in which National Express, operator of West Anglia and the Stansted Express, takes over Great Eastern and the Anglia inter-city franchise in April. Both are currently run by FirstGroup.

The reconfigured franchise marks a new era, according to SRA chairman Richard Bowker. The franchise blueprint entails not only having a single train operator running out of one London terminus but also licences that are more prescriptive.

'It is far more like a service contract,' said a spokesman. 'There is a lower upside [preventing operators from making make big profits] but also a flatter downside if things go wrong.'

On an annual turnover of £375m, Greater Anglia is expected to make profits of about £90m. The SRA will claw back on average £71.5m a year for investment elsewhere on the network, effectively subsidising chronically loss-making regional railways and helping bail out the Virgin West Coast and Cross Country services.

That leaves a profit margin for National Express of about 5%, or earnings of about £18.5m a year on the franchise.

That will fall if it fails to hit key performance figures. Over the past year, West Anglia has been the worst-performing London commuter operator and train punctuality has deteriorated on both Anglia and Great Eastern.

A spokesman for National Express said while integrating the three current franchises should lead to efficiencies and cost savings, timetables will not change broadly until December 2005.

The new company is currently called London Eastern but a 'customer-facing brand' will be launched and painted on the trains from April. One of the candidates is understood to be Anglia Great Eastern.

Of his new template, Bowker said: 'This is all about stability for investors, clarity for operators and continuity for passengers.'

The news sent National Express shares up 8 1/2p to 637 1/2p, close to an 18-month high.

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