Go-Ahead's GTR reaches agreement with DfT, lowers margin expectations
Go-Ahead Group announced on Tuesday that an agreement has been reached with the Department for Transport (DfT) regarding contractual matters in relation to the Govia Thameslink Railway franchise.
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The FTSE 250 company owns 65% of the GTR franchise, which operates the Southern, Thameslink, Great Northern and Gatwick Express rail services, with French consortium Keolis holding the remaining 35%.
It said the agreement resolved matters relating to the “industry-wide failures” around the introduction of a new timetable in May, as well as bringing to a close discussions around other outstanding contractual variations.
As part of the agreement, a plan for the remainder of the franchise term to 2021 was agreed, which Go-Ahead said was aimed at building on recent performance improvement and improving customer journeys.
GTR would provide £15m of funding this year for unspecified passenger enhancements.
The agreement also reduced uncertainty around the future of the GTR franchise and its financial performance, the Go-Ahead board said.
A profit-sharing mechanism with the DfT would be introduced for the remainder of the franchise, and as a result, the margin over the franchise term was now expected to be between 0.75% and 1%, down from a previous 0.75% to 1.5%.
No profit was expected in the current financial year.
The group's full-year expectations for the current financial year remained unchanged, the board said, in line with the trading update published on 29 November.
“We recognise that the industry-wide failures in delivering the May timetable created huge difficulties for our customers, and we are sorry for the poor service they received,” said Go-Ahead chief executive David Brown.
“Since the introduction of the interim timetable in July, performance has greatly improved, and now includes over 200 new services for customers, with further additional services to be introduced this month.
“This agreement will deliver additional benefits to passengers to be agreed in consultation with our customers.”