National Express fight pledge after East Coast line sacking

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In a day of turmoil for National Express, its crisis deepened as chief executive Richard Bowker, who signed up the group to its overly ambitious East Coast contract, quit. Bowker, a former Government rail czar, is to take up a lucrative role to build a £20 billion rail network in the oil-rich United Arab Emirates.

Transport minister Lord Adonis today said he has sacked National Express from the East Coast Main Line after it refused to honour its commitments to pay back forecast excess profits of £1.4 billion over seven years.

National Express had told the minister it would have to renege on its commitments as the King's Cross business has lost £20 million over the last six months as business folk quit the first-class carriages and leisure passengers boycott National Express's rip-off "walk-on" fares.

But Adonis said he could also strip National Express of its East Anglia services and c2c line to south Essex. He added: "The Government believes it may have grounds to terminate these franchises."

Noting that King's Cross operator GNER defaulted and has now been effectively barred from the UK rail business, Adonis said: "A company which had defaulted in the way National Express now intends would not have pre-qualifed for any previous franchises let by the Department. It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."

National Express hit back, saying leading counsel has told it that the DfT cannot exercise a "cross-default" and strip it of its other franchises.

It said: "It has been recognised that the challenges facing East Coast are purely financial and brought about by the economic downturn. National Express believes that the Secretary of State would not be permitted to execute the right of cross-default.

"Cross-default can only be applied where the Secretary of State can reasonably expect the default under one franchise within an owning group has a material impact on the other franchises within that group."