FirstGroup has reached an agreement with the Government over the close of two rail franchises, the multi-national transport group has said.
The Department for Transport (DfT) has confirmed that no payment is needed in return for scrapping Avant West Coast’s contract as the brand was thought to be “performing well before the pandemic,” according to the organisation.
Avanti West Coast replaced Virgin Trains as the provider of inter-city services in the region last year. Although, a contribution of £33.2 million is required by FirstGroup to end South Western Railway’s (SWR) deal.
The discussions were part of Emergency Recovery Measures Agreements (ERMAs) which were introduced following the collapse in demand caused by the Covid-19 outbreak.
Under the regulations of the ERMAs, the DfT has taken on the financial liabilities of rail firms and is paying them up to 1.5 per cent of their pre-pandemic operating costs.
EMRAs also cover provisions to allow operators to walk away from franchise contracts if a deal can be reached on additional payments.
Having reached this stage, FirstGroup is now negotiating with the Government over the terms of directly-awards management contracts for Avanti West Coast and SWR.
These would see it continue to run services when ERMAs expire for SWR in March 2021 and Avanti West Coast in March 2022.
FirstGroup Chief Executive Matthew Gregory said: “We welcome this agreement, which marks a further evolution of the contractual framework for our SWR and Avanti train operating companies, both in the context of providing resilient services throughout the coronavirus pandemic and also a more sustainable long-term approach.”
Image: Avanti West Coast
