Stagecoach ‘rejected £1.6bn rail pension risk’

Perth-based rail and bus giant Stagecoach said on Thursday it was disqualified from three UK rail franchise competitions because it was unwilling to take on “well in excess of £1bn” of pensions liability.

Stagecoach suggested it could have had to pay more than £1.6 billion in pensions liability.

In a stock exchange statement, Stagecoach said: “Stagecoach Group plc is today providing further information on the approach taken on pension risks in its three most recent bids for UK rail franchises. 

“Those bids were disqualified by the Department for Transport. 

“This information is being provided in light of the significant media comment on the disqualifications and, in particular, on the issue of pensions.

“We announced on 10 April 2019 that we had been informed by the Department for Transport that we had been disqualified from a total of three rail franchise bids.

“We were shortlisted in the following franchise competitions:

• East Midlands, where we were bidding independently

• South Eastern, where we were bidding with support from our intended partner, Alstom

• West Coast Partnership, where we were part of a joint bid with Virgin Group and SNCF

“A senior Department for Transport official verbally advised that we had been excluded from all three competitions for submitting non-compliant bids, principally in respect of pensions risk.  

“In our bids, we refused to accept the potential pension risks that the Department for Transport requires operators to bear in relation to the three new franchises.

“The full extent of these risks is unknown, but we estimate them to be well in excess of £1 billion for the three franchises …