LONDON (dpa-AFX) - The Rail services on the East Coast Main Line are being brought back under the U.K. government control.
The U.K. Transport Secretary Chris Grayling told Parliament that temporary state ownership would provide the smoothest transition to a new operator.
The loss-making service is being renamed London and North Eastern Railway or LNER.
Mr Grayling told Parliament that after two months of analysis he concluded that taking the service back into state control would be the best option.
Grayling said, 'I am therefore informing the House that I will terminate Virgin Trains East Coast's contract on 24 June 2018.'
'I plan to use a period of operator of last resort control to shape the new partnership,' said Mr Grayling.
He said the aim was to create a new public-private partnership from 2020, with 'one single team operating the railway'.
'They will then begin the task of working with Network Rail to bring together the teams operating the track and trains on the LNER network.'
Stagecoach Group plc.' (SGC.L) subsidiary company, East Coast Mainline Company Limited ('ECML', trading as Virgin Trains East Coast) is the current operator of the InterCity East Coast rail franchise under an agreement with the Department for Transport.
Stagecoach said that ECML has been negotiating a new direct award franchise with the DfT but we understand that the Secretary of State for Transport is no longer considering entering into a new franchise with ECML. The financial consequences of that are expected to be consistent with the Company's announcement of 5 February 2018.
Stagecoach Group Chief Executive, Martin Griffiths, said, 'We are surprised and disappointed that the Department for Transport has chosen not to proceed with our proposals. We believe our plans offered a positive, value-for-money way forward for passengers, taxpayers and local communities, ensuring the continuation of the exciting transformation already underway on East Coast and a smooth transition to the Government's new East Coast Partnership.'
Griffiths said,'However, we respect the Government's decision. We will work constructively with the DfT and the OLR in the weeks ahead to ensure a professional transfer to the new arrangements, supporting our employees and maintaining the same clear focus on our customers as we have over the past three years.'
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