FirstGroup ends TransPennine franchise with £6mln final payment

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FirstGroup PLC (LON:FGHP ) has agreed to pay the Department of Transport a further £6mln to cancel its TrainsPennine railway franchise.

The extra payment is on top of £42.5mln already paid by the bus and train group to exit the licence.

FirstGroup added that this final agreement with the DfT is around £50m better than its last assumption.

As  £80mln had been set aside to cover its potential exposure there will be an impairment release in the results to end-March 2021, it added.

The agreement clears FirstGroup’s franchise liabilities, with the group having already exited South Western Railway at a cost of £33.2m and the West Coast Partnership (nil).

New contracts are being drawn up for all three partnerships that will see them run for the government by FirstGroup on a fixed management fee basis.

Matthew Gregory, chief executive, said: “We welcome this agreement with the DfT, and are continuing to discuss a long-term National Rail Contract for TPE which will focus on passengers and operational performance, with a more appropriate balance of risk and reward.”

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