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Rail operator's revenues grow in run-up to loss of franchise

By Thom Kennedy | Business | Published:

London Midland saw passenger numbers and revenues improve in the run-up to losing its franchise.

A London Midland train

The rail operator's control of the West Midlands rail service will end on December 10.

It will be handed to West Midlands Trains, which is a joint venture between Japanese and Dutch businesses, after 10 years being controlled by Go-Ahead-owned London Midland.

Now the transport group has confirmed that passenger numbers grew by 4.1 per cent in the year to July 1, with passenger revenue rising by 9.6 per cent to £339.6 million.

Its subsidy for the year was 67.3 per cent larger in 2017 than in the year before, at £87 million.

Chief executive David Brown said he was "disappointed" the company had missed out on the new franchise, and that it would affect next year's profits, but added that the company had done all it could to keep hold of the West Midlands routes.

That included free onboard entertainment systems and wi-fi.

The new operator has promised to invest £1 billion in the network, including new carriages and additional services to alleviate congestion on a variety of lines. The number of West Midlands trains travelling between Shropshire and Birmingham will double.

"London Midland and its people have been part of our group's rail business for 10 years," Mr Brown said.

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"In that time we have delivered significant improvements across the entire network which have seen London Midland transformed into an award-winning franchise with high levels of employee engagement and customer satisfaction.

"While we're disappointed not to retain the franchise, we're confident that we submitted a robust, high quality and price-disciplined bid."

Mr Brown said that the revenue lost as a result of the franchise ending would be mitigated in part by new bus contracts in Singapore and Dublin, and rail contracts in Germany.

Go-Ahead Group's annual profits were hit by tumbling earnings from across its rail division, in the wake of the ongoing row over its Govia subsidiary's running of the Southern rail franchise.

It posted a 5.7 per cent drop in pre-tax profits to £136.8 million for the year to July 1.

Shares fell more than four per cent after the results.

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