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National Express boss steps down Rail firm loses East Coast line
(10 minutes later)
The government is to take the East Coast rail service run by National Express into public ownership.
The troubled rail franchise, which is expected to have lost £20m in the first half of the year, is suffering from slumping passenger numbers.
Ministers have refused the company's requests for its contract with the government to be renegotiated.
Richard Bowker, the chief executive of transport group National Express, has confirmed he is to leave the firm.Richard Bowker, the chief executive of transport group National Express, has confirmed he is to leave the firm.
The news, revealed earlier by the BBC, came as the company said its East Coast rail service was set to lose £20m in the first six months of 2009. National Express was contracted to pay the government £1.4bn to run the East Coast Mainline, which runs between Edinburgh and London, until 2015.
Passenger numbers on the service have fallen during the recession, putting the franchise at risk. "The government is not prepared to renegotiate rail franchises because I'm simply not prepared to bail out companies that are unable to meet their commitments," Transport Secretary Lord Adonis told the BBC
Earlier this week, its rival FirstGroup said a takeover approach made for National Express had been rejected. Earlier this week, rival transport company FirstGroup said a takeover approach made for National Express had been rejected.
Mr Bowker is to leave in August to become chief executive of Union Railway in the United Arab Emirates. Debt pile
No bail-outs In a trading statement, National Express said that the "challenging economic environment" meant it was seeing fewer passengers on the East Coast Mainline, and "significant" levels of people downgrading from first class and full fares.
National Express is contracted to pay the government £1.4bn to run the East Coast Mainline, which runs between Edinburgh and London, until 2015. However, the firm said it "does not expect" that the government's intervention would "result in cross default of the group's other rail franchises" - which are East Anglia and c2c.
Ministers say if National Express cannot make the franchise work it will have to give up all three of its rail companies - they have told the company there will be no bail-outs. And it added that it did not believe the government would be able to recoup any losses from the franchises from National Express.
However the firm says it "does not expect that such circumstances would result in cross default of the group's other rail franchises". The firm is trying to reduce a debt pile of about £1.2bn.
Cuts have been made in dividend payouts to shareholders and other spending, while 750 jobs have also been lost.Cuts have been made in dividend payouts to shareholders and other spending, while 750 jobs have also been lost.
Last month, the company started charging passengers for reserving a seat on its East Coast and East Anglia franchises.Last month, the company started charging passengers for reserving a seat on its East Coast and East Anglia franchises.
It is trying to reduce a debt pile of about £1.2bn. Mr Bowker, whose departure was revealed earlier by the BBC, is become chief executive of Union Railway in the United Arab Emirates.