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    5. Rail operator wins efficiency award despite regular cancellations


    Rail operator wins efficiency award despite regular cancellations

    TransPennine Express was nationalized in May after months of failures and cancellations. Photo: Danny Lawson/PA

    Former TransPennine Express operator is about to get a taxpayer-funded efficiency bonus despite the operator being nationalized after months of disruptions and regular cancellations.

    FirstGroup, which operated the troubled rail line between April 2022 and May 2023, has confirmed it will receive the payout as it announced a profit spike in its train and bus division.

    The payout is expected to be multi-million dollar, although FirstGroup chief executive Graham Sutherland declined to say how big the performance fee would be.

    Louise Hay, Shadow Transportation Minister, said the reward was “incredible.”

    Mr. Sutherland defended the award despite poor performance on the TransPennine line, saying: “Obviously we are still expecting to get what we think we are due.”

    Ministers have seized control of TransPennine Express in May after bosses failed to change the fortunes of one of Britain's biggest rail operators. In March, TransPennine Express canceled about one in six services.

    Mark Harper, transport minister, said the decision to nationalize came after passengers and northern businesses suffered months of non-stop flight cancellations.

    In its annual results released Thursday, FirstGroup said that ” management and performance fees” will be paid next year.

    Shadow Transport Secretary Louise Hay says the award is “incredible” . Photo: Eddie Mulholland

    Mr Sutherland said: “Railway management fees are actually six to 12 months overdue. They are independently evaluated by the DfT [Department of Transportation].

    “Part of this performance fee is based on the execution of the operating plan and budget. Part of it is the level of service [and] customer satisfaction. Thus, there is a mixture of components in the work. Obviously, we expect that some estimates will be clearly affected by the problems of the past year.”

    Ms Hay told The Telegraph: “The Transpennine Express failed passengers so disastrously in the North that the Conservative government had to strip them. their contract.

    “It's unbelievable that they'll get royalties for canceling and delaying recordings that cause so much suffering to so many people. This is just the latest proof that our railroads are fundamentally broken and the Tories have no plans to fix them.”

    FirstGroup shares rose 14% as multimillion-dollar railroad fees helped the company outpace City . expectations for annual results.

    FirstGroup reported a pre-tax profit of £97m on revenue of £4.8bn. Last year, the company recovered a pre-tax loss of £18m.

    Strong-than-expected performance from new London/Edinburgh rail operator Lumo and the return of bus services to pre-pandemic levels were the main drivers of profitability.

    The use of buses has increased with a government subsidy of £2. limits on passenger fares, which means that companies like FirstGroup are eligible for large subsidies, demanding any amount from the taxpayer above the maximum price.

    Mr Sutherland said: “We see the benefits of actions that we have taken to transform the business.”

    Shareholders will receive a final dividend of 2.9p per share and £115m will be invested in a new buyback scheme.

    Union leaders, representing bus workers in Manchester criticized the results after recently refusing a 7.4 per cent wage increase.

    Unite General Secretary Sharon Graham said: “First Manchester pays its workers the lowest wages in the region but profit continues to grow. Not only are drivers grappling with the rising cost of living, but the low wages paid to First Manchester are causing a shortage of staff that its workers are suffering from. It's unfortunate.”

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