07.01.19
Stagecoach took £35m from rail franchise before abandoning East Coast Main Line
Transport giant Stagecoach took out £35m from the East Midlands Trains franchise before it abandoned the London-to-Edinburgh East Coast Main Line (ECML) less than a year later, it has been revealed.
The massive dividend represents a £20m increase on the previous year’s payment from East Midlands Trains to its owners Stagecoach, according to the company’s accounts.
The Mirror reported that the £35m dividend was made to Stagecoach shareholders before leaving the ECML franchise last year, despite accounts showing that profits slid by 24% to £19.5m in the year to the end of April.
Labour criticised the move, with shadow transport minister Andy McDonald saying: “These dividend payments to shareholders are a major kick in the teeth for passengers who have just been forced to suck up another unfair rise in rail fares.
“Profit has been privatised, whilst loss-making franchises are just handed back to the government, no questions asked.”
This comes as train fares rise by an average of 3.2%, which sparked major protests across the UK against ticket prices.
Back in May, Chris Grayling said Stagecoach, which operated the line in conjunction with Virgin Trains, was making “significant losses” and the franchise would therefore return to public control as it would not be able to continue.
A Stagecoach spokesperson commented: “The East Midlands Trains franchise has delivered industry leading levels of performance over the last ten years and customers have benefited from millions of pounds of investment to improve services. We have also continued to pay substantial premiums to government.
“As with any private company, and as per our contract with the Department for Transport, it's normal practice that dividends are paid out to shareholders where applicable.”