UK awards $15bn Thameslink rail contract
London, May 24, 2014
Britain awarded a £8.9 billion ($15 billion) contract to run the expanded Thameslink rail network in London to an operator majority owned by Go-Ahead, ousting rival FirstGroup.
The new seven-year Thameslink contract is part of Britain's £6.5bn upgrade to improve services on major commuter routes across the capital.
Govia, which is 65 per cent owned by Go-Ahead, beat four shortlisted bidders in the first competition for a rail franchise since 2012, when the government was forced to pull a contract after flaws were found in the way it handled bids.
The Thameslink contract covers rail connections between London and towns in southern England including Brighton, Portsmouth and Cambridge, plus Gatwick and Luton airports.
It brings together two previous rail franchises, one of which had been operated by Govia and the other by FirstGroup.
Analysts said the contract win was a coup for Go-Ahead, giving it certainty over rail earnings.
The contract, from which Govia will receive about £8.9 billion in franchise payments, will boost Go-Ahead's profits by about £150-200 million over the contract's seven-year period, Go-Ahead finance director Keith Down said.
"This should generate cash for us and therefore we should be in a position to review our dividend policy in due course," Down said without giving further details.-Reuters