First Group Won't Abandon UK?

Discussion in 'UK Railway Discussion' started by Japan0913, 19 May 2019.

  1. Japan0913

    Japan0913 On Moderation

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    Sunday 19 May 2019 City A.M.
    http://www.cityam.com/277844/us-investor-urges-first-group-split-and-pull-out
    Will this happen?
    If the existing member store continues to be required to withdraw from a major shareholder,
    Can the UK franchise system continue?
     
    Last edited: 19 May 2019
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  3. Master29

    Master29 Established Member

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    The report seems to show what a fiasco privatisation is with Stagecoach suing the DfT (The taxpayer) for it`s decision; although probably not in First Groups case given shareholders urging the group to drop their franchises in the UK.
     
  4. Japan0913

    Japan0913 On Moderation

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    Why can't a franchiser make a profit in the UK?
    ◆ Strategic strike continues, adversely affecting business.
    Advances in technology have made it possible to significantly reduce labor but have not been realized.
    ◆ Passengers' needs do not match the conditions of deficit-based routes. ... There are many passengers seeking luxury investment.
    ◆Despite severe delays in infrastructure development and vehicle renewal, franchisees can not say anything to the country to maintain a franchise.

    It is very similar to the old Japan Railways era Japan, about 35 years ago. After all, Japanese National Railways were split and privatized.
    This experience has brought the union to self-control of radical demands.
    The privatized company has been aggressively upgrading infrastructure and upgrading vehicles, and has been rapidly modernizing.
     
  5. StaffsWCML

    StaffsWCML Member

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    Hopefully that means they will pull out of the West Coast Partnership bid then! That surely means the bids will have to be resubmitted as only MTR will be left true to the disqualification of Virgin/Stagecoach.
     
  6. BeHereNow

    BeHereNow Member

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    Financial results due on the 31st May, which should be interesting.
     
  7. Bletchleyite

    Bletchleyite Veteran Member

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    The competition was not rerun for EMR. If there is one bidder, and that bidder is compliant, I see no reason why they must not receive the contract.
     
  8. Wilts Wanderer

    Wilts Wanderer Member

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    Does anyone know anything about this Coast Capital group? If they're only in the 'top ten' shareholders (as opposed to, say, top three) then they are unlikely to force such drastic changes through, unless of course the May 31st financial figures are considerably worse than expected.
     
    Last edited: 20 May 2019
  9. cactustwirly

    cactustwirly Established Member

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    They're some American hedge fund, they'll want to break up First group, because that's what they do, they've bought the shares at a low price, and then sell them on for a higher price
     
  10. ainsworth74

    ainsworth74 Moderator Staff Member Moderator

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    We do not need yet another re-run of "Owning group X is rubbish, group A is much better!", "No group A is rubbish and X is better!", "aha no! Both A and X are rubbish group H is the best!". We done that particular topic to death recently and we don't need the same people expressing the same views about the same groups in the same combinations on another thread. If anyone is truly desperate to explain why they think group X is better than A or vice versa please feel free to do so on a new thread.

    Otherwise please leave this thread for discussion on the topic of First potentially pulling out of the UK market and similar considerations.
     
  11. StaffsWCML

    StaffsWCML Member

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    It should have been.

    The DfT talk of fairness, it is not really 'fair' if there is only one 'Compliant' bid. I would have to question if this is the case why the other bidders pulled out or were uncompliant...…...maybe perhaps because the whole system is a complete and utter shambles.

    The whole lot should be under review until after the Williams review and pending court cases.

    The current lot of franchise will fail without a doubt.
     
  12. ForTheLoveOf

    ForTheLoveOf Established Member

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    If First publicly pull out (and I don't see how they can keep it secret given they're a PLC so insider trading laws apply) then what's to stop MTR/Guangsheng from raising their bid price, leaving the DfT with the choice of taking that or incurring the cost and delay of yet a further rebid?
     
  13. Bletchleyite

    Bletchleyite Veteran Member

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    The fact that they have placed their bid as they have placed it which will have contractually committed them to delivering at that price. They cannot then change it without that allowing the DfT the option of cancelling it.
     
  14. ForTheLoveOf

    ForTheLoveOf Established Member

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    I don't think anything is contractually committed until the franchise agreement is finally signed.
     
  15. Bletchleyite

    Bletchleyite Veteran Member

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    Not in the sense of the DfT being able to force them to actually do it, but certainly in the sense that it would make the bid non-compliant and thus the DfT would not have to proceed with it, and could either run the competition again or just vest it in DOR.

    I suspect there are also likely to be financial penalties for a bidder doing something like that.
     
  16. Master29

    Master29 Established Member

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    Yes, but you`re talking of Japan where I wouldn`t question anything you`re saying but this is the UK; a very different animal on so many levels.
     
  17. Japan0913

    Japan0913 On Moderation

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    There is no progress in comparing current franchisees.

    It is necessary to fully privatize the franchise by region.
    Regional company.
    Freight Specialist Company.

    Although Williams's review is an emergency, it will be difficult to immediately stop the franchise system.
    First, we will bid after presenting a plan to fully privatize the new FC.
    A new company develops infrastructure, upgrades cars, and opens up additional purchases.
    This will allow the new company to quickly address serious transport shortages and infrastructure equipment failures.
    The new company will ask a specialized company to clean and maintain the dirty car to keep it clean and safe, and to be thankful to the passengers.

    The last FC period is until the transition date of full privatization.
     
  18. Japan0913

    Japan0913 On Moderation

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    The old Japanese railway was much worse than Britain.
    In the 1980s, the government at that time was
    The national railway was completely privatized by the region.
    As in the United Kingdom, boldly abolished adverse routes.
    The staff at that time was moved to a different department from the main business of the railway.
    Unnecessary things were boldly deleted.
    As a result, the characteristics of the commuter rail were strengthened, new stations were built as needed, several short cars ran frequently, and boarding opportunities increased.
    Although it is still inconvenient in the countryside, urban commuter trains have become very convenient.


    JR East joined West Midland Railway, but I think it would be possible to introduce Japanese success stories little by little in the UK.

    In Japan, the dining room has almost completely disappeared.
    Mobile sales in the car have also decreased.
    After all convenience store and station shop became convenient.
    The equipment in the car has been changed to simple and low cost (such as LED lighting).

    In a franchisor with many routes running through the countryside
    It seems that railway management can not be continued without significant cost savings.
     
    Last edited: 20 May 2019
  19. Clip

    Clip On Moderation

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    That press release just reeks of someone who wants to get some easy cash out of them and then dump the shares they hold if im honest.
     
  20. 43096

    43096 Established Member

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    I think most WorstGroup shareholders are wanting cash out of them: they haven’t paid a dividend in years. In the light of that, appointing the CFO who had delivered no dividend as CEO looks an utterly bizarre decision.
     
  21. Metal_gee_man

    Metal_gee_man Member

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    So, soon the DfT will have no-one willing to run (the way the DfT want) any franchises, and all of the current franchisees will be suing the DfT for false passenger number predictions, and the companies who don't like what the DfT are doing will be suing the DfT for excluding them from bidding, it's becoming one giant joke, privatisation in the current guise just isn't the right way, this report will show that in the coming months!

    Whilst this isn't me being nostalgic I want to see the return of British Rail, bringing it back into public hands would be the best baseline to start from, from a rolling stock, track maintenence & station perspective! Let the lines that make profit in the South East pay for the little branch lines in Cornwall for example, and hopefully the ROSCOs when faced with a large single entity like the DfT at the leasing table start backing down, they stop ripping us off for 30 year old knackered rolling stock, and if they don't back down then fine, the DfT buy the trains themselves win win and as the system naturalises itself over say a 10 year period look at privatising it again with the right kinds of deal, not just any deal will do operator GTR for example... They shouldn't be frightened to be making profit from a state entity and unless the returns let's say a Stagecoach or Abellio are offering on the franchise add up keep it in house.
     
  22. Robertj21a

    Robertj21a Established Member

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    Ah yes, let the government fund it. I'm sure they haven't got any other priorities.........
     
  23. jagardner1984

    jagardner1984 Member

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    The fundamental problem is that the companies are in an impossible situation.

    They are legally obligated to deliver best results for their shareholders.

    There is a heavy body of evidence that DfT go for the lowest bidder, so there is phenomenal pressure on cost.

    There are now additional pressures to account for pension liabilities no one seems to know what they represent.

    On top of that DfT Want to micro manage almost everything.

    The margin for operator decision making and strategic development is slim and ever slimming.

    Essentially, it’s loosely worked up to now because Operators have made money and been the fall guys for political incompetence and indecision. Joe public has been stupid enough to believe that just replacing First Capital Connect with GTR (with the same staff, rolling stock and timetable) will provide improvements. Standard *** more seats every day, better smartcard technology type press releases. Now belts are tightening, DfT want operators to take on more risk, and passenger growth is uncertain, you can entirely see why there would be shareholder pressure to pull out.

    In that sense, ignoring the arguments about which owning group is better, the Operators submission to the Williams review, basically DfT are in charge, the operators are running a concession according to certain prescribed parameters decided by DfT, would at least be a most honest reflection of what the situation is currently, rather than continuing the pretence that shoving a new brand vinyl over the old Logo really changes anything more significant.
     
  24. hexagon789

    hexagon789 Established Member

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    Their base is in Aberdeen isn't it? Would they really pull out of their home country and one in which they operate numerous bus and railway companies?
     
  25. jagardner1984

    jagardner1984 Member

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    I doubt they will ever pull out of UK bus. That’s their bread and butter.

    I read the article as suggesting the business should avoid further interaction with the current rail franchising process. Given the open legal warfare on that topic lately, I don’t think that’s very surprising.
     
  26. hexagon789

    hexagon789 Established Member

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    So it was a suggestion that they will at least not bid for any further franchises then?
     
  27. jagardner1984

    jagardner1984 Member

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    I'm not sure FirstGroup would ever say that explicitly, but pressure from significant shareholders has changed the direction of companies in the past.

    Where Grayling's DfT are concerned, I'd say we are very much in make it up as you go along territory. Where that leaves their bid for West Coast, or how that fits into the Williams review - who can say !
     
  28. F Great Eastern

    F Great Eastern Established Member

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    The problem with bringing the railways back into government ownership is the government is the biggest
    The DFT are not part of the solution, they are part of the problem.

    If the Department for Transport were in any way competent then I might support bringing the railways back into public ownership, but quite frankly giving them even more control than they have now scares me as I have no confidence that the would do a better job and actually would do a worse job as there would be nothing to stop them now, not that there is that much at the moment.

    Unfortunately Government in this country like the current set-up because it allows them to do all the puppeting behind the scenes and cause all the shots knowing that the public will only see the name of the train operators and blame them for all the strings and micro-management that government do behind the scenes which nobody gets to hear about.

    One politician once said to me that they are secretly strong supporters of the RMT and ASLEF because whilst the likes of Mick Cash are taking shots at the train operators, it means the public will always blame the operators and if they blame the operators then they are not blaming the government directly so anything that keeps the heat off the government is good for the government.

    I agree that there are serious issues with ROSCOS and the privatised world isn't perfect, but some wide eyed nostalgia about British Rail of the past coming back won't happen. The reason is that the DFT have far more control of the railways now than they ever did under British Rail, but the public don't see that.

    See also: School reforms where Tories hive schools off to academy trusts, under-fund them and then publicly blame the trusts for poor performance saying that they can't do anything as it's a matter for the trusts not government.
     
  29. Clarence Yard

    Clarence Yard Member

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    Coast Capital have been described in some quarters as aggressive asset strippers. They get involved with under performing or struggling companies and make a quick profit out of financial restructuring moves.

    Their play here is to get enough votes to get a majority on the Board and then the fun will start. The problem with rail franchises for them is that they are not easy to play financial games with. They will state other reasons but that’s in essence the real reason for wanting to dump UK rail.

    If I was an institutional investor, I would be looking at the forthcoming annual results before making my next move. I would also be very wary in hooking up with any organisation who seems to want to gain control on the cheap, by flooding the board, and not making an outright bid for my shares.
     
  30. jagardner1984

    jagardner1984 Member

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    Interviewed on Radio 4 Today business news today. Around 0620 if you want to find it.
     
  31. whhistle

    whhistle On Moderation

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    Or maybe they'd win by default?
    After all, three companies submitted bids. One was non-compliant, the other two have presumably passed that stage of checking.

    First pulled out of the East Mids franchise to concentrate on the West Coast, I doubt they'd be pulling out of that too. Especially as I don't think they'd get any money back, so no point really.
     

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