National Express slashed its dividend today and indicated its on-board train services could be cut to a minimum as it struggles to keep control of its rail businesses.

Just a year after the company promised to raise its dividend by 10% until 2011, National Express today took an axe to the payout, cutting its final divi for 2008 by more than 60% to 10p. The total for the year is down from 37.96p to 22.72p.

The dividend cut, which will save £30 million, is part of a £100 million package to save cash in a business which last year saw it debts balloon by 30% to nearly £1.2 billion.

Having already laid off hundreds of staff, chief executive Richard Bowker said he is looking at more cost-cutting, likely to include reducing catering services on trains to the minimum level promised in its operating licences.

National Express's intercity train company out of King's Cross is struggling under a franchise licence in which it has agreed to pay the Treasury £420 million over the next three years.

The group, which also runs coaches and buses and has operations in the US and Spain, increased 2008 profits by 13% to £119 million.