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Stagecoach sues UK transport authority over second rail franchise

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(Reuters) – Rail operator Stagecoach Group Plc is suing Britain’s transport authority after it and partners SNCF and Virgin were disqualified from bidding for the West Coast rail franchise raising pension concerns.

Stagecoach has already challenged the Department for Transport (DfT) for disqualifying it from bidding for the East Midlands franchise, which it had operated since 2007.

The Part 7 claim has been brought by West Coast Trains Partnership Ltd, in which Stagecoach has a 50% share, with SNCF holding 30% and Virgin 20%.

Stagecoach has estimated its exposure from the loss of the franchises to be well in excess of 1 billion pounds.

The DfT had asked rail franchise bidders to take on the full long-term funding risk of parts of the Railways Pension Scheme and disqualified Stagecoach’s previous bid for the East Midlands franchise, saying it did not comply with that request.

It also disqualified the company from bidding for the West Coast and South Eastern franchises for the same reason.

“It is extremely frustrating that the reason our bid was disqualified has nothing to do with looking after passengers or running a good train service,” Virgin Group Senior Partner Patrick McCall said.

The DfT awarded the East Midlands franchise to Abellio, a decision which Stagecoach said earlier this month it was preparing to contest in a separate judicial review.

Stagecoach, which lost the contract to run trains from London to Edinburgh last year, was involved in joint bids with Alstom for the South Eastern commuter network and with Virgin Group and SNCF for the West Coast line running to Scotland.

(Reporting by Sangameswaran S in Bengaluru; editing by Gopakumar Warrier)

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