Shares in Stagecoach have plunged after the UK effectively renationalised ownership of a main train link connecting London and Edinburgh, questioned the company’s financial state, and promised no bailouts on the lossmaking route. The shares fell up to 14% in London.
Stagecoach, which also operates buses in the UK and US, has lost £200m (€226m) on the east-coast line since winning the contract in 2014, and was told last week that it had breached a key financial covenant.
The UK government said it will open up bidding to find a new operator for the 640km route, which Stagecoach runs with Richard Branson’s Virgin Trains.
In the meantime, the UK may ask Stagecoach to keep offering the service in a short-term, not-for-profit arrangement, or take over the franchise directly. Asked if such a permanent renationalisation of the line is likely, UK prime minister Theresa May’s spokesman James Slack said it will be guided by “what is in the best interest of the travelling public and of the taxpayer”.
The Stagecoach contract’s demise fuels a UK debate over privatisation that has intensified after the collapse of contractor Carillion and troubles at outsourcing companies including Capita.
In some failures, however, costs have been passed to the state. Transport secretary Chris Grayling had defended his handling of the east-coast route in parliament earlier this week.
A Stagecoach spokesman said it had never made any announcement about plans to potentially pitch for Dublin bus routes.
Bloomberg and Irish Examiner