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National Express is set to be hit by a second massive body blow, the loss of its lucrative train franchise out of Liverpool Street to Essex and East Anglia.
Ahead of its formal sacking tomorrow from its flagship franchise out of King's Cross up the East Coast Main Line, it has emerged the company is set to lose the East Anglian franchise in 2011, three years earlier than previously signalled.
After National Express defaulted on its contractual Treasury payments at King's Cross, the Department for Transport threatened it would strip it of its two other franchises, the Liverpool Street services and the c2c line out of Fenchurch Street to south Essex.
However, while lawyers wrangle over whether such “cross-default” would be legal, National Express has been forced to admit that in any case it could lose the Liverpool Street franchise earlier than expected.
National Express has the contract to 2014 with a break clause in 2011. Ordinarily, a train operator is automatically reappointed.
However, in the documentation with its £360 million rescue rights, National Express has conceded the foul-up at King's Cross means its reappointment at Liverpool Street will not be automatic and will now be at the “sole discretion” of the Department for Transport.
“Given relations between National Express and the DfT, the chances are the East Anglia franchise will come up for tender,” said an industry source.
The loss of more train revenues will further hobble National Express, which is £1.1 billion in debt and paying penalty interest rates to its bankers.
