LONDON Jan 11 National Express agreed
to sell a London rail contract to Italy's Trenitalia on
Wednesday, marking the departure of what used to be one of the
biggest names in British rail and the arrival of another foreign
state-owned operator to the network.
Britain privatised its rail services in the 1990s, and the
network is now run by several UK-listed transport companies, as
well as state-owned European rail groups including Germany's
Deutsche Bahn, Abellio from the Netherlands and Keolis,
majority-owned by France's SNCF.
Marking the entry of Italy's state-run company into Britain,
National Express said that Trenitalia would pay it 70 million
pounds ($85 million) to run the C2C services between London and
commuter towns in Essex until the contract ends in 2029.
The sale of the contract, which is subject to approval from
the British government and expected in the next month, will mean
National Express, once one of the country's biggest rail
operators, will no longer run trains in the UK.
The company continues to run buses and coaches in Britain,
as well as in Spain, Morocco and the United States, plus rail
services in Germany. It said it saw future opportunities abroad.
"For National Express, while not ruling out participating in
future UK rail bids, this (deal) allows us to pursue further
growth opportunities in the markets where we have seen strong
returns in the recent years," CEO Dean Finch said.
In 2009, the British government stripped National Express of
its key East Coast service, putting the loss-making
London-Edinburgh route in state hands for the next five years.
National Express lost the East Anglia train operating
franchise at the start of 2012 and lost out in a new bid to run
train services in the region in August last year.
Britain's railways have been heavily criticised in recent
years, with passengers saying Britons pay more than Europeans,
while the network has been hit by a series of strikes,
particularly on the Southern line which connects Brighton,
Gatwick and London.
While the C2C line has avoided such problems, analysts said
the company had become less interested in UK rail due to the
terms associated with winning rail franchise competitions.
Expensive bid processes combined with a less attractive
risk-reward profile was making UK rail contracts less attractive
to firms like National Express, Shore Capital analyst Martin
"If you are a listed company that is beholden to your
shareholders perhaps it is harder to justify the potential lower
returns that UK rail is offering whereas, when you are a private
entity, whether you are ultimately foreign government-owned or
not, you don't face the same pressure," Brown said.
Listed companies will still be interested in UK rail but are
more likely to seek to partner with non-listed entities to
spread the risk, Brown added.
Some of the foreign state-owned rail companies also have
experience of maintaining tracks and rail infrastructure, making
them more suited as future operators of UK rail contracts under
an overhaul planned by Transport Minister Chris Grayling,
announced in December.
($1 = 0.8237 pounds)
(Reporting by Sarah Young; Editing by Adrian Croft)