National Express has sold their Essex Thameside
franchise to Trenitalia, owned by Italian state railways.
National Express Group PLC
("National Express") has reached an in-principle agreement for
Trenitalia, the passenger rail transportation company part of FS Italiane
Group, to acquire the c2c franchise.
Completion of the acquisition is conditional upon final consent from
the Department for Transport and is expected to occur within the next three to
four weeks. The total
consideration is expected to be in the region of £70 million, resulting in a small
net profit for National Express.
Following initial partnership
discussions regarding future franchise bidding, Trenitalia UK made an offer
that National Express’ board believes represents the best, and a fair, deal for
its shareholders. National Express is immensely proud of its record at c2c,
where under its tenure services have been transformed to become consistently
the UK’s best performing rail operation. While not ruling out participating in
future UK rail contracts, National Express has seen significant growth in North
America and continental Europe in recent years. National Express believes there
are further opportunities for growth in these markets.
The high-quality services and
operations run by c2c make an excellent fit with Trenitalia’s customer-centric
approach. Trenitalia has decided to invest in UK rail on the basis of the
market’s fundamental strength and potential for growth, particularly in light
of the Secretary of State for Transport’s recently announced vision for reform.
The acquisition is the first
step in Trenitalia’s plans to expand in the UK rail passenger market, in line
with the internationalisation plans of the entire FS Italiane Group. In
December 2015, Trenitalia became the first new entrant to be awarded a “PQQ
Passport” by the Department for Transport and since then is pursuing a number
of franchise opportunities including beyond today’s deal.
Trenitalia will retain c2c’s existing management and staff and
build on its successful track record of delivering value for passengers. In
addition to delivering the existing plans for the franchise, Trenitalia has also
committed to invest for further
improvements for all c2c’s customers based on innovative technologies at the
heart of its strategy for the franchise globally.
Under National Express, the c2c
franchise has been transformed with National Express introducing more services,
new trains and recently pioneering new customer service standards. In February
2016, c2c became the first rail franchise in the UK to introduce automatic compensation for registered smartcard customers
for any delay over 2 minutes without the need to complete claim forms. c2c was
also the first rail service to offer flexi-season tickets.
Dean Finch, CEO of National
Express Group, said: “National Express has been immensely proud of c2c’s
transformation on our watch. From converting c2c into the UK’s consistently
best performing franchise, we have also recently pioneered customer service
standards with automatic delay compensation and flexi-season tickets, for
example. While this has, therefore, not been an easy decision, the board believes
the transfer of c2c to Trenitalia UK presents opportunities for all concerned.
“We have been impressed by the
commitment and interest shown by Trenitalia and are grateful for the support
shown by DfT in this process. Trenitalia has significant rail credentials and
is excited by the opportunity to invest in the new agenda set out by the
Secretary of State. For National Express, while not ruling out participating in
future UK rail bids, this allows us to pursue further growth opportunities in
the markets where we have seen strong returns in the recent years.”
Barbara Morgante, CEO of
Trenitalia, said: “We see significant chances to invest in UK Rail and this in
principle agreement with National Express allows us to foster these ambitions.
This is why we are extremely delighted to have this exciting opportunity to run
the UK’s consistently best performing railway and serve the people of East
London and South Essex. We will work closely with customers and local
stakeholders to apply our vision and deliver improvements that will be visible
and valuable; we are confident that British customers will benefit from our
skill and capabilities developed in the highly competitive Italian market.
“We are also closely monitoring
the Railways Franchising Programme as we intend to participate in tenders
issued by the DfT to strengthen our presence in UK.”
Trenitalia, the passenger rail
transportation company part of FS Italiane Group, has completed the acquisition
of Essex and London train operator c2c from National Express Group via its
British subsidiary Trenitalia UK.
The deal, formally approved by
the Department for Transport, will see c2c’s franchise continue to run until
November 2029. As previously announced the total consideration of the deal has been confirmed in the region of
£72.6 million.
FS Italiane, parent company of
the Group, in its function as guarantor with the Department of Transport, has
paid to the vendor an extra £35.0 million to settle an existing intercompany
loan granted to the franchisee and in which it now acts as a lender.
Trenitalia intends to build on
c2c’s existing strengths as one of the UK’s most punctual and popular train
operators. The franchise will benefit from Trenitalia’s innovative technology,
such as advanced ticketing, that will aim to provide to c2c customers with an
increase in their overall quality of service.
All of Trenitalia’s tech is proven in the highly competitive Italian
railway market, and has been one of the most important drivers of the continued
increase in customer satisfaction recorded in recent years.
c2c will continue to be led by
Managing Director Julian Drury and will also maintain the current
organisational structure.
In December 2015, Trenitalia
became the first new entrant to be awarded a “PQQ Passport” by the Department
for Transport in the United Kingdom: this acquisition marks the first step in
Trenitalia’s long-term plan to establish a major presence in the UK rail
market.
On January 24th 2017 Trenitalia
announced its participation, in a joint venture with FirstGroup, in bidding for
the East Midlands and West Coast Partnership (which will include the HS2 line)
rail franchise; due to be awarded in 2018.
Barbara Morgante, CEO of
Trenitalia, said: "I am pleased that we have been able to conclude this
acquisition so rapidly, and we can now immediately start to concentrate on the
day-to-day business of c2c. Under the
leadership of Julian Drury, we will continue to focus on delivering the
outstanding service that helped make c2c the best performing operator in the UK
and we will collaborate with the management to introduce further improvements.
“In addition to the c2c
acquisition, our recent participation in the East Midlands and West Coast
Partnership bids shows that we are strongly committed to the UK market, and
look forward to passengers increasingly benefiting from our experience, competence
and ability to innovate.
“I am confident that the good
relationship established with the DfT, demonstrated by our recent mutual
cooperation during the Change of Control phase, will be strengthened and
reinforced over the next years, and be leveraged in future common innovative
projects in line with British passengers’ demand”.
Hopefully the c2c brand will be retained as it’s well known as part of
the Essex Thameside railway service.
Check out the infographic I’ve made showing the foreign, state-owned
operators that run services on our National Railways.
As my regular readers will know, you can follow me on Twitter and Google Plus which is @CLondoner92
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