Stagecoach sues UK transport authority over second rail franchise

(Reuters) - Rail operator Stagecoach Group Plc is suing Britain’s transport authority after being disqualified from bidding for the West Coast rail franchise along with partners SNCF and Virgin.

Stagecoach has already challenged the Department for Transport for disqualifying it from bidding for the East Midlands franchise, which it had operated since 2007.

Britain’s Department for Transport had asked bidders for the rail franchise to take on the full long-term funding risk of parts of the Railways Pension Scheme and disqualified Stagecoach because it did not comply with that request.

The DfT had also disqualified Stagecoach’s bid for the East Midlands, West Coast and South Eastern franchises for the same reason.

Stagecoach’s latest claim has been brought by West Coast Trains Partnership Ltd, in which Stagecoach has a 50% share, with SNCF holding 30% and Virgin 20%.

The company has estimated its exposure from the loss of the franchises to be well in excess of 1 billion pounds.

“It is extremely frustrating that the reason our bid was disqualified has nothing to do with looking after passengers or running a good train service,” Virgin Group Senior Partner Patrick McCall said.

“Stagecoach is an experienced bidder who knowingly submitted non-compliant bids on all competitions”, a spokesman for DfT said, adding that it would robustly defend decisions that were taken following an evaluation process.

The DfT awarded the East Midlands franchise to Abellio, a decision which Stagecoach said earlier this month it was preparing to contest in a separate judicial review.

Stagecoach, which lost the contract to run trains from London to Edinburgh last year, was involved in joint bids with Alstom for the South Eastern commuter network and with Virgin Group and SNCF for the West Coast line running to Scotland.

Stagecoach, employs around 26,000 people and is one of the UK’s biggest bus and coach operators with more than 8,000 buses and coaches.

Reporting by Sangameswaran S in Bengaluru; additonal reporting by Alistar Smout in London and Samantha Machado in Bengaluru; editing by Gopakumar Warrier/Shailesh Kuber/Jane Merriman