FirstGroup extends Great Western franchise

<p>FirstGroup has signed a deal to operate the First Great Western franchise until April 2019.</p>

FirstGroup will operate the Great Western rail network for another four years after signing a deal with the Department for Transport (DfT).

The leading transport operator in the UK and North America will continue to run the First Great Western rail service until April 1st 2019. There is also an option to extend this for a further year providing DfT grants approval. FirstGroup has been operating the Great Western route, which provides a key link between London, the south-west, Cornwall and Wales, since being awarded the contract in April 2006.

As part of the contract, FirstGroup will be conducting the largest fleet upgrade on the route in a generation. It has unveiled plans to introduce new and updated trains for every area of the network. This will result in an increase in service numbers while the frequency will also be improved.

Over the coming years, FirstGroup is increasing capacity on key markets such as Bristol, Exeter, Oxford and Gatwick Airport as well as a 16 per cent increase in peak time seats in and out of London Paddington station. London to Bristol services will increase 70 per cent with First aiming to add 9,000 extra seats every day in the franchise by December 2018.

Tim O'Toole, FirstGroup chief executive, said: "Under our experienced management, the franchise will see new or refurbished trains on every part of the network, resulting in more frequent and faster journeys and an increase in the number of seats."

The announcement provided a boost to FirstGroup's share price which was up 2.58 per cent as of 09:05 GMT on Monday (March 23rd).

Upgrade to UK train services

FirstGroup's contract extension of the Great Western rail network comes after the government unveiled plans for a transformation of rail services in the north of England. Last week, chancellor George Osborne laid out the Northern Transport Strategy which aims to build on the proposals of HS2.

The plans are centred around reducing journey times between the likes of Manchester and Leeds, Manchester and Liverpool and Leeds and Newcastle.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.