Is the National Express deal done and dusted?
Stagecoach has today agreed a £100 million payment with the UK government which would allow the company to take over the remaining franchises held by National Express. The major issue had been the East Coast franchise which National Express gave up to the government after experiencing significant losses. While the £100 million payment for transfer of control of the remaining two franchises is more than analysts had expected it should bring to an end a period of uncertainty for the UK rail industry.
However, it has to be said that the National Express takeover by a consortium has yet to be rubberstamped and has not officially been accepted. While many people believe that the National Express directors have little option but to agree the offer, which is an improvement on the original price, we will have to wait until official confirmation is given. The company itself is currently looking at ways to reduce its £1 billion debt pile and if the offer is not successful there will no doubt be a fund-raising exercise in the short to medium term.
One of the main issues regarding the UK rail network is the fact that ticket prices are linked to inflation and the specific inflationary measurement used to determine ticket prices has actually moved into negative ground. As a consequence, in the short term many rail operators will see price reductions until inflation "recovers".
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