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National Express loses rail route National Express loses rail route
(30 minutes later)
The government is to take the East Coast rail service run by National Express into public ownership. 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.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.Ministers have refused the company's requests for its contract with the government to be renegotiated.
The Department of Transport said that all East Coast services would continue and that tickets would be honoured. The Department for Transport said that all East Coast services would continue and that tickets would be honoured.
It added it intended to put the franchise out for tender from late next year.
'No bail-out''No bail-out'
National Express was contracted to pay the government £1.4bn to run the East Coast Mainline, which runs between Edinburgh and London, until 2015.National Express was contracted to pay the government £1.4bn to run the East Coast Mainline, which runs between Edinburgh and London, until 2015.
"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. FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
But it said it would walk away from the loss-making franchise after failing to alter the terms of its agreement.
Transport Secretary Lord Adonis said: "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.
"It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."
In a statement, the government added that it believed it had also had grounds to end National Express's other two other rail franchises - Easy Anglia and c2c.In a statement, the government added that it believed it had also had grounds to end National Express's other two other rail franchises - Easy Anglia and c2c.
But the company said it did not believe the government had this power. But the company said it did not believe that the government had this power. It added that it did not expect the any losses from the franchise would be recouped from National Express.
And it added that it did not expect the government would be able to recoup any losses from the franchise from National Express.
Earlier this week, rival transport company 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.
Debt pileDebt pile
Richard Bowker, the chief executive of National Express, has confirmed he is to leave the firm, to become chief executive of Union Railway in the United Arab Emirates.Richard Bowker, the chief executive of National Express, has confirmed he is to leave the firm, to become chief executive of Union Railway in the United Arab Emirates.
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.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.
The firm is trying to reduce a debt pile of about £1.2bn.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.