Stagecoach Group Plc Rises On East Coast Franchise Win

Stagecoach Group (LSE: SGC) says it welcomes this morning’s news that the new InterCity East Coast rail franchise is to be awarded to a joint venture between it and Virgin. Stagecoach holds 90% of the share capital in the joint venture — called Inter City Railways Limited — and Virgin holds the remaining 10%. 

Stagecoach’s share price is currently up 6% so far today.

The company says that journey times will be reduced — London to Leeds in two hours, and London to Edinburgh in four — and that there will be  a 50% increase in overall capacity by 2020.

Stagecoach also says that it will add additional and new direct services to London from key locations in Scotland and England and will increase the number of weekend services. In addition, 65 new “Super Express” trains will be added from 2018, and there will also be a  multimillion-pound “train refresh programme” for existing rolling stock.

The company says that it also plans to invest £25m to improve stations and car parks — more parking spaces, extra cycle facilities, better security and improved accessibility.

Commenting on the news, Stagecoach CEO Martin Griffiths said:

Passengers using the East Coast mainline will benefit from hundreds of millions of pounds of infrastructure investment and service improvements over the next decade. Together with Virgin, our innovative plans will give customers new services, faster and more frequent trains, and easier, more personalised journeys.

“We will be investing in the committed East Coast people who will be joining our team, as well as delivering major programmes to help young people, communities and small businesses along one of Britain’s most important routes. We will match world-class customer service by giving a big boost to taxpayers with increased payments to Government.”

At 392.5p Stagecoach’s share price is up 9.5% on this time last year, during which time the FTSE 100 has only increased by 1.3%. And Stagecoach has raced ahead of the index over the past five years, too, with a share price rise of 113%, compared with a 28.4% gain by the FTSE 100.

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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has recommended Stagecoach. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.