First Group has this morning agreed new contracts to continue running South Western Railway and the Transpennine Express.
The new deals, the first contracts to be awarded under new plans to reform the UK rail network, will start at the end of May and last for two years.
There will be the option to extend the agreements by a further two years, the FTSE 250 firm said.
The new National Rail Contracts (NRCs) will replace the existing franchise system, which was all but ended by the Covid-19 pandemic.
Under the new deals, which operate in as concession agreements like the one Transport for London uses for the Overground, the government will retain all revenue risk.
For South Western Railway, First Group will be paid a fixed fee of £3.3m, with a maximum performance award of £9.9m for running a punctual and clean service.
And for the Transpennine Express it will receive a fixed fee of £2.3m, with bonus options of up to £5.2m.
The new contract structure is part of the government’s attempt to fix the much-maligned rail network, which has been hammered by the pandemic.
As part of the reforms, ministers have set up a new controlling body, Great British Railways, to bring together the infrastructure and operation of the network.
For some, that brings back the spectre of British Rail, which was privatised in the 1990s. But speaking this morning, transport secretary Grant Shapps dismissed this.
“I want the ticketing to be straightforward and simple and we won’t be going back to the days of British Rail with terrible sandwiches and all the rest of it,” he said.
First Group’s chief executive Matthew Gregory said: “We welcome the announcement today by the Secretary of State of a plan for the future of the UK rail industry with the expertise, innovation and experience of private sector rail operators at the heart of the model.
“The National Rail Contracts agreed for SWR and TPE leave us well-placed for lower risk, cash generative rail operations on those two networks.”
First Group said that it was also in discussion over a 10 year contract for its West Coast Partnership service, starting from next year.