SGC.L Regulatory News (SGC)

19th May 2011

Virgin Rail Group welcomes West Coast franchise extension discussions

Stagecoach Group plc ("Stagecoach") confirms that Virgin Rail Group ("VRG") is in discussions with the Department for Transport ("DfT") regarding an extension to the current West Coast rail franchise agreement

VRG is a joint venture between Stagecoach and Virgin Group and operates the West Coast franchise through its Virgin Trains brand and the franchise was due to expire in March 2012.

The discussions, which follow an approach from the DfT, involve the terms of a franchise extension until early December 2012. VRG is also in discussions with the DfT about its plans for new Pendolino carriages that have been programmed to be available to go into passenger service by December 2012.

As previously announced, VRG has pre-qualified to bid for the new Intercity West Coast rail franchise. The Government confirmed today that the new franchise will start on 9 December 2012 and run until 31 March 2026, with an option to be extended by up to 20 months.

Virgin Rail Group Chief Executive Officer Tony Collins said: "We are pleased to have been invited by the Government to discuss an extension to the current West Coast franchise. This would mean we would continue to run services for passengers for an additional eight months at an exciting and challenging time for the country with the Olympic Games next year.

"We look forward to continuing our discussions with the Department for Transport with a view to concluding a commercial agreement that will be in the interests of passengers and deliver value for money to taxpayers."

ENDS

Enquiries to:

Analysts

Martin Griffiths, Group Finance Director +44 (0) 1738 442111

Ross Paterson, Director of Finance & Company Secretary +44 (0) 1738 442111

Media

Steven Stewart, Director of Corporate Communications +44 (0) 1738 442111

or +44 (0) 7764 774680

Smithfield Consultants

John Kiely +44 (0) 20 7360 4900

NOTES TO EDITORS

·; Virgin Rail Group, which has operated the West Coast passenger train franchise since 1997, is owned 51% by Virgin Group and 49% by Stagecoach Group.

·; Stagecoach Group is a leading international public transport group, with extensive operations in the UK, United States and Canada. The company employs around 35,000 people, and operates bus, coach, rail, and tram services.

·; Stagecoach operates the South Western rail franchise, which includes the South West Trains and Island Line networks. South West Trains, the UK's biggest commuter rail network, runs nearly 1700 trains a day in the south-west of England out of London Waterloo. Island Line, on the Isle of Wight, has been designated a Community Rail Partnership.

·; In addition, Stagecoach runs the East Midlands rail franchise. East Midlands Trains operates high-speed long distance services from London St. Pancras to Sheffield, Derby and Nottingham, Liverpool - Norwich and regional services throughout Leicestershire, Nottinghamshire, Derbyshire and Lincolnshire.

·; Stagecoach is also Britain's biggest tram operator, running networks in both Sheffield and Manchester.