West Coast Franchise

[swt_passenger]

My recollection - and someone please correct me if I'm wrong - is that the original West Coast franchise was won solely by Virgin Rail Group. It was a few years later that Richard Branson raised the possibility of selling shares in part of the Group, and Stagecoach offered to buy a 49% stake. Therefore at the start of the franchise Stagecoach had no profile in it at all.

1998 according to the usual oracle...

 

[3141]

Remember First is also short listed for East Anglia and South Western.
They probably wouldn't want/be capable of running both of these and ICWC (with GWR and TPE).

Ten years ago First were running Great Western, Thameslink (as First Capital Connect), Scotrail, and TPE, and reckoned they were capable of running anything else they might win. E.g. they tried for South Western and East Coast (and others, I think), and would have won West Coast if the DfT hadn't messed things up. So unless they are now more cautious than they used to be I doubt they hold back from bidding for West Coast if by then they'd also managed to get hold of East Anglia and South Western.

 

[northwichcat]

What would a regional brand look like: London, Midland and Scotland (By Virgin)?

More likely Virgin red on the Intercity services with a generic branding on the regional services using Stagecoach colours to make it look like two different operators with Virgin only involved in the premium operation.
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Ten years ago First were running Great Western, Thameslink (as First Capital Connect), Scotrail, and TPE, and reckoned they were capable of running anything else they might win. E.g. they tried for South Western and East Coast (and others, I think), and would have won West Coast if the DfT hadn't messed things up. So unless they are now more cautious than they used to be I doubt they hold back from bidding for West Coast if by then they'd also managed to get hold of East Anglia and South Western.

They reportedly were the most ambitious with TPE bidding with Stagecoach and Kelios reportedly happy to accept the DfT's suggested loco-hauled 442s interim measure, while First proposed something better.

 

[LNW-GW Joint]

Ten years ago First were running Great Western, Thameslink (as First Capital Connect), Scotrail, and TPE, and reckoned they were capable of running anything else they might win. E.g. they tried for South Western and East Coast (and others, I think), and would have won West Coast if the DfT hadn't messed things up. So unless they are now more cautious than they used to be I doubt they hold back from bidding for West Coast if by then they'd also managed to get hold of East Anglia and South Western.

I'd say those multiple franchises were in a quieter era and were less of a management challenge.
They already have plenty to do with GWR and TPE and all the issues of new stock and route upgrades, especially on GWR.
East Anglia is expected to be a tough ask too, with a lot of change in prospect.
Managements have to assess the corporate risk - it's a lot of eggs in one basket.
First Group's finances are regularly under pressure.
DfT have to make a similar assessment of "deliverability".
They are known to want to spread franchise ownership wider to reduce the risk of failure.

I don't doubt that First would want West Coast ahead of EA and SW, but they put the other bids in!
Of course they might not win either, in which case it will be all out for WC.

 

[hwl]

I'd say those multiple franchises were in a quieter era and were less of a management challenge.
They already have plenty to do with GWR and TPE and all the issues of new stock and route upgrades, especially on GWR.
East Anglia is expected to be a tough ask too, with a lot of change in prospect.
Managements have to assess the corporate risk - it's a lot of eggs in one basket.
First Group's finances are regularly under pressure.
DfT have to make a similar assessment of "deliverability".
They are known to want to spread franchise ownership wider to reduce the risk of failure.

I don't doubt that First would want West Coast ahead of EA and SW, but they put the other bids in!
Of course they might not win either, in which case it will be all out for WC.

1. Most of the recently awarded or soon to be awarded franchises involve major change.

2. DfT have increased the risk on the TOC parent which doesn't sit well with 1.

Unless you are stagecoach 4 franchises is about the limit.

MTR reckon they can only do 4 well in Europe (they have some in UK and Sweden) give the challenging nature of the franchises (inc Crossrail).

First bringing in MTR for the SW bid suggests they are stretched and need a minor partner!

 

[WatcherZero]

First would struggle to fund the required bonds for multiple franchises on their own nowadays. Their bus operations have been shrinking, suffer low margins and the company is saddled with a huge amount of debt that it can barely service. Their rail operations were the most profitable part of the company.

 

[northwichcat]

First would struggle to fund the required bonds for multiple franchises on their own nowadays. Their bus operations have been shrinking, suffer low margins and the company is saddled with a huge amount of debt that it can barely service. Their rail operations were the most profitable part of the company.

How much does the First Group PLC make from their North American market of school buses and coaches?

 

[HH]

Because the franchise hadn't "failed".
It was the DfT which failed.

And they probably didn't want the entire extent of that failure to receive any more public scrutiny, which it certainly would have if they'd tried kicking VT out.

The really shocking thing is that the "ABB" brigade are still running franchise competitions, having received nowt but a small slap on the wrist.

 

[WatcherZero]

How much does the First Group PLC make from their North American market of school buses and coaches?

About the same they make from their UK bus and rail operations combined, approx £150m before tax, half that afterwards.

 

[LNW-GW Joint]

How much does the First Group PLC make from their North American market of school buses and coaches?

They made £207m profit in the USA last year, compared to £73m in UK Rail (£52m in UK Bus).
Profit margins are 5-7% in each area, with the bus businesses at the higher end (rail was 5.6%).
Rail revenues were down because of the end of Scotrail/FCC.
http://www.firstgroupplc.com/~/medi...tions/press-release/fy-results-14-06-2016.pdf

 

[WatcherZero]

And despite that profit their debt increased by £3m (a lot better than the previous year when it increased by £103m).

 

[HH]

First definitely are not in the same position as they were when they bid on everything last time round. And neither are franchises the same; there's no longer cap and collar, there is a bigger bond, DfT isn't handing out section 54s, etc. It's a much riskier market out there now, which is why you're seeing two-bidder franchise competitions.

 

[northwichcat]

They made £207m profit in the USA last year, compared to £73m in UK Rail (£52m in UK Bus).
Profit margins are 5-7% in each area, with the bus businesses at the higher end (rail was 5.6%).
Rail revenues were down because of the end of Scotrail/FCC.
http://www.firstgroupplc.com/~/medi...tions/press-release/fy-results-14-06-2016.pdf

Being aware that First Student and Greyhound both operate in Canada as well I just checked that pdf to see if there was additional revenue for Canada and it seems what you've said is the USA profit is actually the North America profit quoted in US dollars.

 

[HH]

Being aware that First Student and Greyhound both operate in Canada as well I just checked that pdf to see if there was additional revenue for Canada and it seems what you've said is the USA profit is actually the North America profit quoted in US dollars.

The US is about 95% to Canada's 5% (very approximate), so it's understandable why they don't bother to split it.

 

[317 forever]

I hope Virgin Rail Group retain it. They've been a competent operator and their brand name brings a degree of glamour to the railways (I know it doesn't for us lot on here but it does for Joe Public).

God help us if Govia, Arriva or Serco get it...

Virgin have been good on ICWC. Arriva already run 3 franchises between Manchester & Stockport - AT Wales, Northern and XC - so ICWC would be a 4th!

My recollection - and someone please correct me if I'm wrong - is that the original West Coast franchise was won solely by Virgin Rail Group. It was a few years later that Richard Branson raised the possibility of selling shares in part of the Group, and Stagecoach offered to buy a 49% stake. Therefore at the start of the franchise Stagecoach had no profile in it at all.

IIRC Virgin Trains started out as 41% owned by Virgin Group and the rest by backers. They sold out to Stagecoach in 1998 in a deal which included 10% sold to Virgin Group, giving them majority control. I remember a press conference with Richard Branson and Brian Souter featuring a model 125 with just 2 carriages. This could have been seen as onimous!

 

[LNW-GW Joint]

IIRC Virgin Trains started out as 41% owned by Virgin Group and the rest by backers. They sold out to Stagecoach in 1998 in a deal which included 10% sold to Virgin Group, giving them majority control. I remember a press conference with Richard Branson and Brian Souter featuring a model 125 with just 2 carriages. This could have been seen as onimous!

That's muddling the waters somewhat.
Virgin Rail Group (Virgin Trains, which operates VWC and formerly VXC) is 51% Virgin Group (ie Branson) and 49% Stagecoach.
The 49% started out as equity finance from the US (Berkshire Partners), but was bought up by Stagecoach early on.
Inter City Railways operates VTEC, and is a JV of 90% Stagecoach and 10% Virgin Group.
Nothing has yet been said about which flavour of Virgin/Stagecoach will bid for ICWC later this year.
They both have franchise "passports" so can bid together or separately.

 

[The Ham]

Thinking outside the box for a moment, if ICWC got non tilting trains for the services London to Birmingham, would that limit their speeds? If not (or at least not very much), how many units would that free up to them be able to use their 390's to replace the total under wire services run by 221's?

 

[AlterEgo]

Thinking outside the box for a moment, if ICWC got non tilting trains for the services London to Birmingham, would that limit their speeds? If not (or at least not very much), how many units would that free up to them be able to use their 390's to replace the total under wire services run by 221's?

It would limit their speeds. There are quite a few sections of line between Coventry and London which require tilting trains to reach EPS speeds. Weedon, Linslade, Watford, to name a few. It'd mess up the current timetable for sure.

 

[LNW-GW Joint]

Thinking outside the box for a moment, if ICWC got non tilting trains for the services London to Birmingham, would that limit their speeds? If not (or at least not very much), how many units would that free up to them be able to use their 390's to replace the total under wire services run by 221's?

Why would you damage the whole service on the most congested part of the route, just to convert 5 diesel trains (I think it is) to electric?
Chester/Holyhead/Wrexham, Blackpool and Shrewsbury still have to served by diesels running partially under the wires.
People in the know say the WCML south of Rugby will not work without tilt.
You would have to remove some paths, maybe putting LM on the slows for instance (so knocking out the fast Trent Valley service).
Non-tilt trains are limited to 110mph on the WCML, which would cost about 5-6m or 2 fast line 125mph paths to Rugby/Coventry.