Rough ride for transport shares

STEPHEN BYERS' departure caused relief rather than jubilation in the City. 'He was the most notorious Transport Secretary since Ernie Marples in the early 1960s,' said Howard Wheeldon at Prudential-Bache Securities. 'He made a bad situation in the railways 10-times worse.There is an overwhelming sense of relief.'

Transport shares were flat. Train operator First Group closed up 2 3/4p at 298 3/4p on Tuesday night, Stagecoach held at 73 1/2p, Arriva was down 4 3/4p at 345 3/4p, National Express down 16p at 640p.

Byers leaves the railways in crisis, the 10-year transport plan in tatters, air traffic control in a cash crunch and the airports running out of capacity.

'Things are going to get worse before they get better,' said Chris Tarry, analyst at Commerzbank. 'His successor cannot change much in a short period of time.'

Nonetheless, there are hopes that the resignation improves the chances that transport will finally get the investment it needs. The Prime Minister no longer has a lightning rod to absorb criticism. Byers' blunders, especially his attempted confiscation of Railtrack, had destroyed his credibility with big City investors, whose funds are needed. Private Railtrack shareholders vowed to continue their legal action.

'The industry can move ahead with some confidence again,' said Wheeldon. 'Investing in transport looks much safer than it did a day ago.'