Royal Bank of Scotland's Angel Trains refuses to sign 180 mln stg train deal

Royal Bank of Scotland's Angel Trains refuses to sign 180 mln stg train deal

	Published : Tue, 06 Feb 2007 18:25 By : Agencies Print this Story

LONDON (AFX) - British train leasing firm Angel Trains, part of Royal Bank of Scotland Group PLC, has refused to sign a 180 mln stg deal for new rolling stock due to uncertainty caused by a threatened competition probe.

Angel said it was unable to sign Virgin Trains' proposed order for 106 new carriages until it knows the outcome of a proposed investigation into competition in the UK rolling stock leasing market.

The UK rail regulator said in November that it was likely to demand an inquiry by the Competition Commission over concerns that lack of competition in the market for new trains is leading to excessive profits for the UK's three main train leasing firms and higher costs for taxpayers and rail franchisees.

Angel said in a statement that the absence of firm indications about the returns it can expect from investing in new trains 'makes future decisions into investments difficult.'

'We welcome the swift outcome of the investigation to enable ongoing investment and the improvement in service this will deliver for customers,' Angel said.

Sir Richard Branson's Virgin Trains is planning to buy the new carriages to extend each of its 53 tilting Pendolino trains by two cars.

The company had hoped to start introducing the extra vehicles into service in early 2009 to help it handle an expected 70 pct increase in passengers by 2012 on its West Coast route from London to Manchester and Glasgow.

Virgin is unable to bypass leasing companies and buy the trains itself because its franchise is too short to enable it to recoup its investment, a spokesman for the firm said.

However, he said there remains a strong business case for the investment via leasing. 'This is not a dead proposal and we believe it will happen, but the timescale will be pushed back slightly,' he said.

The UK rail regulator said it could be two years before an investigation into the rolling stock market reaches a conclusion, casting doubt over prospects for investment in new trains at a time when the government is facing growing pressure to relieve overcrowding on the UK rail network.

A statement from the Department for Transport said: 'We are very disappointed Angel has now withdrawn from plans to provide extra carriages on the West Coast Main Line.

'In every decision we take, we aim to get the best deal for the taxpayer and for the passenger. This is true of our involvement in plans to lengthen the Pendolino fleet on the West Coast Main Line and the request we have made for a market investigation into the costs of some rolling stock leases.

'We plan to work with Virgin Trains to find alternative arrangements to ensure trains with adequate capacity can operate on West Coast services.'

philip.waller@thomson.com

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