* Govia, JV between Go-Ahead and Keolis, wins Thameslinkcontract
* Award is blow for FirstGroup, which currently operatespart of line
* Shares in Go-Ahead rise 8 pct
* Go-Ahead finance chief says to review dividend policy (Adds finance director comments, background)
By Sarah Young
LONDON, May 23 (Reuters) - Britain awarded an 8.9 billionpound ($15 billion) contract to run the expanded Thameslink railnetwork in London to an operator majority owned by Go-Ahead, ousting rival FirstGroup.
The new seven-year Thameslink contract is part of Britain's6.5 billion pound upgrade to improve services on major commuterroutes across the capital.
Govia, which is 65 percent owned by Go-Ahead, beat fourshortlisted bidders in the first competition for a railfranchise since 2012, when the government was forced to pull acontract after flaws were found in the way it handled bids.
The Thameslink contract covers rail connections betweenLondon and towns in southern England including Brighton,Portsmouth and Cambridge, plus Gatwick and Luton airports.
It brings together two previous rail franchises, one ofwhich had been operated by Govia and the other by First Group.
Analysts said the contract win was a coup for Go-Ahead,giving it certainty over rail earnings. Shares in the companyopened 11 percent higher, hitting an all-time high in earlytrading on Friday, and were up 8 percent at 0945 GMT.
Shares in FirstGroup traded down 1.9 percent, paring earlierlosses of as much as 5 percent.
The contract, from which Govia will receive about 8.9billion pounds in franchise payments, will boost Go-Ahead'sprofits by about 150 million to 200 million pounds over thecontract's seven-year period, Go-Ahead finance director KeithDown said.
"This should generate cash for us and therefore we should bein a position to review our dividend policy in due course," Downsaid in an interview with Reuters, without giving furtherdetails.
It paid out 81 pence per share for the 12 months ended June29, 2013.
FRENCH PARTNER
Govia, 35 percent owned by France's Keolis which is 70percent owned by French national rail company SNCF, estimatedfranchise payments at 1.1 billion pounds in the first full yearof operation, and is targeting a profit margin of about 3percent over the life of the contract.
Together the Thameslink routes will carry more passengersthan any other franchise in Britain. Passengers will travel in1,140 new carriages being built by Germany's Siemens,due to be delivered between 2016 and 2018.
Govia beat bidders Abellio, FirstGroup, MTR and Stagecoach to win the contract which will run for seven years fromSeptember.
In the two years since the bungled rail award, thegovernment has avoided full competitive processes across thecountry's privatised rail industry and instead negotiated directcontract awards.
But the Thameslink process marks the start of a new round ofcompetitions, with the award of the East Coast line due thisNovember.
FirstGroup is under pressure after it deferred the restartof dividend payments and said it had to focus on rebuilding itsfinances on Wednesday.
It is among the bidders for the East Coast line, along witha joint bid from Keolis and Eurostar, and InterCity Railways, ajoint venture between Stagecoach and Virgin Holdings.
It said was disappointed not to be awarded Thameslink butwas on course to meet its stated medium-term targets.
($1 = 0.5931 British Pounds) (Editing by Erica Billingham and Pravin Char)
Firstgroup (FGP)
