The operator of the troubled Southern Rail franchise, Go Ahead Group PLC (LON:GOG), is to shell out millions of pounds on “passenger improvements” after it reached an agreement with the Department for Transport.
The £13.4mln is effectively a fine for poor performance and will be reinvested in the network rather than go directly to the government.
Southern customers have endured almost two years of disruption due to repeated strikes, with trains regularly late, diverted or cancelled altogether.
Go-Ahead has told investors that it had factored in the additional costs and that its expectations for the year ended 1 July 2017 remain unchanged.
“This agreement resolves financial uncertainty relating to past industrial action and allows GTR to focus on improving services for Southern customers,” Go-Ahead said in a statement this morning.
While the bulk of the uncertainty has been removed, the FTSE 250-listed group said a number of other “ongoing contractual variations” remain under discussion with the DfT, which could cost it another £5mln.
RMT not happy
The RMT Union – which represents thousands of workers in the transport industry – has slammed the fine, calling it a “pathetic response” that “does not even stack up to a slap on the wrist”.
Go-Ahead investors seemed to think that the punishment wasn’t as harsh as it could’ve been, with shares edging slightly higher to £17.31.