Bus and rail operator FirstGroup PLC (LSE:FGP) has won a part fixed-fee contract with National Rail for three years.
FirstGroup said the contract “bears no revenue risk” and has “very limited cost risk” under the annual budget that was agreed with the Department for Transport.
The annual fee comprises a fixed management sum and a performance-based fee, it said.
Work under the contract includes a transformation of services in the Greater Bristol Area, proposals for line and station improvements on the Dartmoor Line with three new stations planned, work on the delivery of MetroWest, and a plan to replace legacy diesel trains.
The group operates passenger train networks in the UK for South Western Railway, Avanti West Coast, the TransPennine Express and Great Western Railway, the company says on its website.
FirstGroup is already refurbishing and adding new trains across the network as part of Great Western’s £7.5bn mainline modernisation programme, and boosting internet connectivity on the railways. The latest contract comes after Great Western introduced new fleets of InterCity Express and electric Thames Valley trains in 2019.
The new contract with National Rail will begin on 26 June, when Great Western’s existing contracts end. The three-year contract will end on 21 June 2025 with an option to be extended by up to three years to June 2028, the company added.
FirstGroup said it aimed to be the “partner of choice for low- and zero-emission transport”.
The group, which has just rejected a bid from the private-equity firm I Squared, posted revenue of £5.59bn for the year to 26 March 2022, down from £6.84bn the prior year.
Adjusted earnings per share were 10.2p for 2022, up from 3.3p in 2021, as its group adjusted profit rose 16.3%.
Rail minister Wendy Morton said: “During the pandemic, GWR was instrumental in keeping critical services moving and this new contract will see it continue to deliver our ambitious Plan for Rail and provide a fantastic service for passengers.”