Stagecoach dispute could mean big loss

Apr 29 2009 by Iain Laing, The Journal

SOUTH West Trains operator Stagecoach has warned of a “significant“ operating loss in two years if a dispute with the Government is not resolved.

Stagecoach, which runs buses across the North East, said it had referred its disagreement with the Department for Transport (DfT) to arbitration because of the “magnitude and nature“ of the issues under discussion.

It said if the matter was not settled satisfactorily its UK rail division was likely to incur an operating loss in the year to April 2011.

The row centres on two points of its franchise agreement to run South West Trains services between the south coast and London Waterloo.

A provision in which the Government agrees to pay a proportion of a franchisee’s losses if it fails to meet its revenue targets is the key point of contention.

South West Trains believes the contract entitles it to revenue support calculated from April 2010, but the DfT believes the start date should be February 2011.

There is also a dispute over whether or not car parking revenues should be included.

The firm is committed to paying the Government £1.2bn by 2016 for the right to operate the service.

A spokesman for South West Trains said it was not trying to alter the deal.

“This is very clearly about honouring our contract with the Department for Transport - ie this is about the contract that we have,” he said. “This is nothing to do with any renegotiation.”

He said the row was down to “differences in interpretation“ and said the percentage of losses that would be reimbursed by Government was confidential.”