LONDON (Alliance News) - Go-Ahead Group PLC on Tuesday said it reached an agreement with the UK Department for Transport regarding contractual matters in relation to the Govia Thameslink Railway franchise.
GTR is a joint venture between public transport firm Keolis, which holds 35% stake, and Go-Ahead, holding the reminder.
The FTSE 250-listed provider of passenger transport said the deal resolves matters relating to the industry-wide failures concerning the introduction of the May timetable.
"We recognise that the industry-wide failures in delivering the May timetable created huge difficulties for our customers, and we are sorry for the poor service they received," said Go-Ahead Chief Executive David Brown.
Go-Ahead said the aim of the agreement is to build on recent performance and improve customer journeys.
GTR has provided GBP15 million of funding this year for passenger enhancements. However, the Department of Transport said Tuesday it will oblige GTR to contribute a further GBP15 million towards tangible improvements for passengers.
"Since the introduction of the interim timetable in July, performance has greatly improved, and now includes over 200 new services for customers, with further additional services to be introduced this month," said Go-Ahead's Brown.
The agreement reduces uncertainty around the future of the GTR franchise and its financial performance, Go-Ahead said.
Looking ahead, the profit-sharing option with the Department for Transport is expected to be introduced for the franchise for the reminder of its term, which is due to expire in September 2021.
As a result, Go-Ahead anticipates the margin to be between 0.75% to 1.00% compared to 0.75% to 1.50% estimated previously. The company expects GTR to generate no profit in its current financial year, which end in June 2019.
For the years ahead, the Department for Transport said it has capped the amount of profit that the operator is able to make.
The regulator noted that a termination of the franchise would cause further and undue disruption for passengers and is not an appropriate course of action.
"Performance after the May timetable change was unacceptable," the Department of Transport said in the report.
"The Department will continue to monitor closely the performance of GTR, particularly during the upcoming December timetable change," it added.
Go-Ahead shares were trading 0.2% higher early on Monday at 1,645.00 pence each.
