FirstGroup PLC (LSE:FGP) has been stripped of the TransPennine Express rail franchise in the north of England and part of Scotland after persistent poor service and cancelled trains.
Mark Harper, Transport Secretary, said the decision had been made after “months of commuters and Northern businesses bearing the brunt of continuous cancellations.”
In March, up to a sixth of trains scheduled to run didn't, with staff shortages, sickness and a lack of overtime working blamed for the disruption.
The franchise will now be run by the government through the “operator of last resort” system that allows it to intervene and revoke franchises being run badly.
TransPennine, the FirstGroup division that runs the franchise, will not have its contract renewed on 28 May, Harper added.
FirstGroup, which has been involved in the franchise since 2004, said it was "disappointed" by the decision.
Graham Sutherland, chief executive, commented: "Our team have worked extremely hard to improve services, including by recruiting and training more drivers than ever before."
FirstGroup shares dropped 4% to 118.2p.