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Blow for FirstGroup as Dutch firm wins right to run Scotland’s trains

  • FirstGroup suffers another setback
  • Pressure mounts on chief executive

A Dutch state-owned firm has won the right to operate Scotland’s trains, delivering another blow to the prospects of FirstGroup, the current holder of the ScotRail franchise.

It is understood that transport minister Keith Brown will announce that Abellio has secured the 10-year contract from next April.

The £2.5 billion deal may not be universally welcomed. One critic last night questioned why Scots will be paying their fares to a company owned by the Dutch government and why after running a campaign for independence, the Scottish Government is awarding the contract for its rail network to a foreign operator. However, Abellio runs three rail franchises in England and bus services around London and Surrey. It has already won the right to operate the Caledonian Sleeper jointly with Serco.

The ScotRail story was broken last night by The Scotsman as rumours began spreading that a deal was to be unveiled today. Abellio will be named winner in a five-way contest that also involved Arriva, Hong Kong firm MTR and National Express whose bid was led by former ScotRail boss Mary Grant (Dickson).

Abellio was founded as NedRailways (a name for headline writers in Scotland to conjure with) in 2001 and renamed in 2009.  It is the international arm of the Dutch national rail operator Nederlandse Spoorwegen and operates in the Czech Republic and Germany.

Aberdeen-based FirstGroup, which employs 4,700 rail workers in Scotland, will be deeply disappointed to lose the ScotRail franchise after growing passenger numbers by 30 per cent and improving punctuality. In an interview with me in February, chief executive Tim O’Toole said: “I could make a case that it is the most successful franchise in the UK.”

He went on to say that the Europeans, who are opening up their markets to foreign operators, were likely to look to UK companies such as FirstGroup for guidance on best practice. He can now be expected to face shareholder questions about how the group will recover from the loss of such a large and prestious franchise.

The loss of ScotRail follows the debacle surrounding the west coast franchise which was snatched away from the company in controversial circumstances. It also comes after First made a series of profits warnings and has been forced to fend off criticism from 3.1 per cent shareholder Sandell Asset Management which has called for it to be broken up and its Greyhound bus division in the US sold.

Chairman Martin Gilbert, who came in for particular attack, stood down earlier this year ahead of a cash call on investors.

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