FirstGroup secures new National Rail Contract for West Coast Partnership

FirstGroup plc and Trenitalia UK Ltd have secured a new nine-year National Rail Contract (NRC) with the UK's Department for Transport (DfT) for the West Coast Partnership (WCP). The contract, which is set to commence on October 15, 2023, following the end of WCP's current contractual agreement. The partnership between FirstGroup, which holds a 70% stake, and Trenitalia UK Ltd, with a 30% stake, will operate under the WCP umbrella, which comprises Avanti West Coast and the West Coast Partnership Development (WCPD), the shadow operator for the HS2 program.

The NRC is a management contract whereby the DfT retains all revenue risk and substantially all cost risk. Under this agreement, WCP will earn a fixed management fee of £5.1 million per annum with the opportunity to earn a variable fee of up to £15.8 million per annum based on certain criteria.

Since mid-December 2022, Avanti has seen a significant recovery in operational performance and customer satisfaction under its new timetable. The operator has managed to maintain cancellations at below 2% of scheduled services over the last six months. As part of its ongoing efforts to enhance customer experience, Avanti is in the process of implementing a £117m (£1 = $1.2385) refurbishment program for its 56-strong electric Pendolino fleet.

In line with FirstGroup's ambition to be a leading partner in low- and zero-emission transport, as part of the new contract, WCP will continue to develop and implement initiatives to reduce its environmental impact. To this end, Avanti has placed a £350m order for 23 brand new electric or bi-mode Hitachi (OTC:HTHIY) trains aimed at reducing carbon footprint and improving air quality. Additionally, it will continue to increase waste recycling.

The new NRC will allow the WCP team to use its expertise on further improvements, including refurbishing the existing fleet and introducing new, more environmentally friendly trains. This is expected to attract more passengers back to the network and support the UK's decarbonization agenda.

FirstGroup plc, a leading private sector provider of public transport services, generated £4.8 billion in revenue and transported more than 1.8 million passengers a day in 2022/23. The company operates a fleet of more than 3,500 locomotives and rail carriages through three management fee-based train operating companies (Avanti West Coast, GWR, SWR) and two open access routes (Hull Trains and Lumo). It has committed to operating a zero-emission First Bus fleet by 2035 and aims to support the UK Government’s goal to remove all diesel-only trains from service by 2040.

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