So the truth is finally out. Northern Spirit, the rail franchise owned by MTL and serving the North was in trouble.

In spite of earlier denials and heavy suspicion we now know that it has been "significantly loss making."

All was revealed in the details of yesterday's £84.7 million bid by passenger transport operator Arriva Plc for MTL. Of that sum, £50 million represents the debt wipe-off.

The big mystery now is - who is going to take over Northern Spirit once this deal goes through?

It is a question made possible by last month's announcement from the Shadow Strategic Rail Authority.

The SSRA wants to "re-shape" franchises serving trans-Pennine routes and the North West at some time this year.

That includes Northern Spirit which until now has had a franchise until 2004 to run both rural and heavy conurbation services from Northumberland to South Yorkshire, from Scarborough and Whitby on the East Coast to Manchester, Blackpool and Liverpool.

It does not take a genius to work out that one prospect for "re-shaping" is to hive off as a separate franchise the more profitable Transpennine Express.

Arriva has agreed to continue to operate the two franchises on their present terms "for no more than 12 months."

The wording betrays the fact that Arriva is prepared only at this stage to dip a long, tentative toe into the water. That is not to say that if it finds the water warm it won't stay there but if it doesn't what prospect would there be for a new bidder to take over what some might argue is the "scrag end" of an admittedly loss-making operation?

Rule out Virgin Rail for a start. It already runs West Coast routes and is pitching for the East Coast. So having declared their interest in north to south, how about squaring the circle and going for east to west? "Sorry," says a Virgin spokesman. "Of course we will have to se what the SSRA comes up with but in its present form it doesn't fit in with our plans."

So if the trans-Pennine operation was hived off and up for grabs would Virgin make its pitch for that alone? "We wouldn't rule out looking at it." As for the rest of the franchise, interest was unlikely.

Actually there is still a lot to commend it, although any new operator, and that includes Arriva, would have to balance the books between the fund-draining longer rural routes and the routes through conurbations which are subsidised - heavily in some areas - by passenger transport authorities, namely in West Yorkshire, South Yorkshire, Greater Manchester and Tyne and Wear (Nexus).

Whatever (and whoever), it spells the end of a long, stormy story for MTL which as the UK's largest independent bus firm expanded into the passenger rail industry in 1997 when it won two franchises - Merseyrail Electrics Limited and Regional Railways North East, later renamed Northern Spirit Ltd.

The seven-year Northern Spirit franchise actually began that March, providing services through around 250 stations.

By last March, three years later, despite problems with Northern Spirit, MTL's turnover from continuing operations was £460.8 million with operating profit of £14.9 million and with shareholders' funds of £37.9 million.

So what are the qualifications of the organisation pitching to be MTL's new owners? Well, Arriva is one of the top five passenger services groups in Europe, employing around 25,000 people operating some 9,000 buses from more than 200 locations in the UK, Denmark, the Netherlands, Sweden and Spain.

Arriva also operates a national motor franchise network from 38 locations and is also engaged in daily vehicle rental from 57 outlets and in bus and coach distribution.

By December, 1998, Arriva was reporting pre-tax profits of £136.6 million on a turnover of £1.556 billion.

Last July it sold AAS, its vehicle contract hire and fleet management business for up to £235 million in cash, helping to gear it for expansion.

But whatever happens to the rail aspect of MTL, we humble passengers can be assured that services will remain untouched. The Government is committed to its guarantees of minimal levels of rail service however stormy the route from now on...

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.