GNER is facing end of the line

The rail firm has been struggling to make even a third of the money it predicted from its East Coast Main Line and today bosses at parent company Sea Containers were meeting to thrash out its future.

On the table are four proposals which include job losses, cuts, rising fares and even a wide-scale sell-off of GNER.

Sea Containers' successful £1.3 billion offer for the ten-year franchise for GNER last May was at least £300 million higher than any rival bid and a number of factors have militated against the rail company's success ever since.

A spokesman for Sea Containers today said: "We will have to await the outcome of the discussions with our financial stakeholders.

"Meanwhile, it is far too early to predict what will happen in the medium term with the GNER franchise."

A spokesman for GNER said: "A previously reported review of costs at GNER is still ongoing and we expect an outcome in the next few weeks. But on the strategic issues I must refer you to our parent company."

But The Press understands Bermuda-based Sea Containers, which is $394 million in debt, has four scenarios on the drawing board:

A spokeswoman for the DfT today, said: "We do not renegotiate franchise agreements. Full stop."

A press statement by Sea Containers reveals that over the last nine months since the franchise has been in operation, GNER's passenger revenue was a third less than expected at £510 million.

This represents a 3.3 per cent increase compared to the projected 9.9 per cent - £33 million lower.

More than half this shortfall was due to the effect of the London train bombings, and focus on terrorism at Kings Cross in particular, plus a 26 per cent rise in electricity charges Today, City of York Council leader Steve Galloway said he would write and "offer the company whatever help was needed" to Sea Containers' Chief Executive Bob MacKenzie.

He said: "GNER is very important to the city in employment terms and in terms of the reputation of the city. It is a quality company."

Meanwhile, Bob Crow, general secretary of the RMT (Rail Maritime and Transport Union) which represents 1,500 GNER employees, said: "The number one priority is to ensure that our members' jobs do not fall victim to Sea Containers' financial crisis.

"We warned when the new GNER franchise was let that the enormous price-tag raised the threat of service cuts, massive fares rises and a squeeze on jobs and conditions."

Split over helping firm

BIG differences have been exposed between two of York's major leaders over possible calls to renegotiate GNER's franchise in a bid to save jobs.

Leader of City of York Council Stephen Galloway today urged the Government to "show the will to be flexible" and agree to any attempt to renegotiate the franchise.

But York MP Hugh Bayley agreed with the firm rejection of the Department for Transport of any prospect of new talks over the contract.

He said: "It would be totally unfair for GNER to change the terms, otherwise in future companies will continually put in high bids then water them down at a later opportunity.

"If it succeeded, then every London rail company, some of whom were more seriously hit by the London bombings would expect the same treatment.

"I would firmly resist resources being passed from GNER to help the parent company meet its debts."

He said he had backed GNER's pitch for the franchise and later had an assurance from Christopher Garnett, the outgoing chief executive, that the bid was not too high - that the rail company could deliver a profit within the terms of the franchise.

"They made a commitment in jobs and rail services and I expect them to stick to the promises they made to me and other MPs along the East Coast Main Line at a briefing I organised."