FirstGroup signs National Rail Contract for GWR

LONDON, UK: FirstGroup plc announced the agreement of a National Rail Contract (‘NRC’) with the Department for Transport (‘DfT’) for its Great Western Railway (‘GWR’) train operating company. The new NRC will commence on 26 June 2022, when GWR’s current contractual agreement ends.

  • The NRC for GWR has a core three-year term to 21 June 2025 with an option for the DfT to extend by up to three further years to June 2028
  • FirstGroup bears no revenue risk and very limited cost risk under an annual budget agreed with the DfT; there is also no significant contingent capital risk
  • Annual fee consists of a fixed management fee plus a performance-based fee.  

The NRC is a management contract under which the DfT retains all revenue risk and substantially all cost risk. GWR will earn a fixed management fee of £6.9m per annum to deliver the contract, and there is the opportunity to earn an additional performance-based fee of up to £17.8m per annum. The punctuality and other operational targets required to achieve the maximum level of performance fee are designed to incentivise the highest level of performance for customers. The Group’s contingent capital for the GWR NRC is £13m.

In 2019 GWR completed the introduction of brand new fleets of InterCity Express and electric Thames Valley trains, and launched faster services for customers, as part of the biggest upgrade on the route in a generation. During the pandemic GWR operated under the Government’s emergency measures to ensure critical services kept running, and has made prudent and efficient use of this support by providing timetables closely matched to changes in demand. Under the NRC, GWR will continue to evolve its customer offering to meet changing passenger needs, helping customers switch to digital ticketing and making digital channels and information more accessible and personalised. GWR will continue to be a trusted delivery partner, making use of its strong relationships with stakeholders to drive forward projects across the network, including bringing into service three new stations.

FirstGroup’s ambition is to be the partner of choice for low- and zero-emission transport. As part of the new contract GWR will continue to develop and implement initiatives to reduce its operational impact on the environment, in accordance with the UK Government’s decarbonisation and climate resilience agenda. GWR will also continue work to improve air quality, increase recycling and divert more waste from landfill, and will support the switch to electric traction.

Commenting, Wendy Morton, Minister for Rail said: “We’re delighted to continue our partnership with Great Western Railway, and excited by its plans to deliver more benefits for local communities. 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.”

Commenting, Graham Sutherland, FirstGroup Chief Executive Officer, said: “We welcome today’s agreement of a new National Rail Contract, which enables us to build on the GWR customer experience and encourage passengers to continue returning to the network. GWR’s experience of operating the route over many years puts us in a strong position to help deliver the UK’s economic, decarbonisation and levelling up agendas and we look forward to providing vital connections for our customers as the recovery continues to build.”

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