Go-Ahead hits at 'unfair competition'

LONDON commuter trains group Go-Ahead expressed its frustration with the Strategic Rail Authority today as it complained about unfair competition at its Thames Trains franchise and admitted it will have to learn to live with the agency's volte-face on its South Central network.

Reporting falling profits from its rail business in the year to 29 June - operating profits at £17.4m would have been down 17% but for a first-time contribution from South Central - Go-Ahead's retiring chairman Sir Frederick Holliday took a swipe at ever-changing policies at the centre of the rail industry.

In clear reference to last week's surprise decision to cut Go-Ahead's 20-year franchise on South Central, won just 12 months ago, to seven years, Holliday said: 'Government agencies determine the nature, structure and funding of rail projects and the consequent risks and rewards expected to be taken by businesses such as ours. Under these circumstances, we have learned to recognise that our plans can be quickly overtaken by changes in policy, priorities and availability of funds.'

South Central franchise holder Govia, a 65-35 joint venture between Go-Ahead and SNCF of France, is having to renegotiate its plans for the network south of the capital to achieve 'suitable returns'. The move has also forced Go-Ahead to accelerate goodwill write-offs on the acquisition of the franchise.

Holliday took issue with the regime of falling subsidies at Thames Trains at a time when, he said, rival Thames corridor operator First Great Western is getting a better deal.

'We would normally respond by seeking commercial innovations but improvements are difficult to deliver when the competing express operators' punctuality targets are set on a more relaxed basis than those applied to Thames Trains,' he said. 'The automatic route-setting system favours frequently delayed express trains by giving those trains priority, thus further delaying ours.'

Pre-tax profits at the group, whose interests also include London buses and airport services at Gatwick, came in 3% better at £44.5m, flattered by the immediate returns from acquisitions during the year. Earnings per share were down 7% at 59.7p. However, the dividend for the year is lifted by 13.3% to 17p.

Shares in Go-Ahead opened at 542 1/2p. Last year they nearly halved after the 11 September terror attacks, having traded as high as 950p.