Effects of West Coast fiasco will take years to put right

Marion Dakers
OH, to have been a fly on the carriage wall of the Virgin Trains service to Birmingham yesterday. So many political problems to make the Tory faithful green around the gills, mixed in with the swaying of the high-speed Pendolinos and the pungent aroma of the onboard buffet bar.

Also feeling a little travel sick are shareholders in FirstGroup, who watched their investments lurch 20 per cent lower last week as the firm’s West Coast contract crumbled, along with the prospect of securing other franchises any time soon.

Meetings between the Department for Transport and First will rumble on this week, but with all rail competitions on hold, the government has left a large chunk of the firm’s business in the lurch. First generated 37.5 per cent of its revenues and 25.8 per cent of its operating profits on the railways last year.

Analysts at UBS and JP Morgan have already suggested the firm could axe its dividend or even begin a rights issue while it waits for the rail business to right itself – particulary given First’s bus operations could do with further investment. Like many journeys involving trains, don’t expect First’s recovery to be without delays. @mvdakers