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National Express Group PLC ("the Group"), one of Europe's leading mass passenger transport companies, today announces that it has been awarded three of the four franchises for which it had been shortlisted, to operate passenger train and tram services in Melbourne and across the State of Victoria in Australia.

Confirmation of the Group's success in the privatisation of the State's train and tram operations was made in Australia by Mr Jeff Kennett, Premier of the State of Victoria at 11.15am today, local time.

Through proposing a combined bid, in addition to three individual bids, the Group was able to identify a particularly attractive package of investment and benefits for passengers. These, together with the potential for greater integration between the new franchises and the Group's existing operations in the State, provide good opportunities for future growth.

The development means that National Express Group has won three of the five passenger transport franchises awarded by the State of Victoria. It also makes the Group the largest private operator of passenger transport services in Australia following its recent acquisitions of National Bus Company, Australia's largest privately owned bus company with operations in Melbourne, Sydney and Brisbane, and Transport Management Group, the Perth-based bus operator.

The Franchises

The franchises awarded to the Group are as follows;

  • A 10-year franchise for V/Line Passenger which mainly operates rail and coach services linking central Melbourne with destinations throughout the State of Victoria. As the largest provider of public transport outside the metropolitan area of Melbourne, V/Line Passenger carries 7.3m passengers each year and employs over 800 staff.
  • A 15-year franchise for Bayside Trains which operates a network of nine rail lines serving the north, west and south-east suburbs of Melbourne and carries 63m passengers per annum. It employs over 1,500 staff.
  • A 12-year franchise for Swanston Trams which operates a fleet of 275 trams across a network of 18 routes in the inner north-western and south-eastern suburbs of Melbourne and the Central Business District. It carries 68m passengers a year and employs over 900 staff.

In total the franchises provide services to almost 140 million customers per annum. Completion is expected to take place at the end of August following a transition period.

In addition to operating passenger services for these businesses, National Express Group will assume responsibility for the track and signalling for Bayside Trains and Swanston Trams. In common with the UK's railway structure, track and station access for V/Line Passenger, which utilises infrastructure right across the railway network, has been separately negotiated. The Group will also have responsibility for the maintenance of all rolling stock associated with these operations. From completion, infrastructure and rolling stock maintenance management will be subcontracted to specialist providers for the duration of the franchises. The Group's preferred bidders for these activities will be announced in advance of completion.


Proforma financial information, extracted from unaudited financial records show that for the year ending 30 June 1999 V/Line Passenger is forecasting turnover of £24.5m (A$59.0m) and is expected to require financial support of approximately £32.0m (A$77m). Bayside Trains is forecasting turnover of £46.4m (A$111.5m) and is expected to require financial support of about £35.3m (A$85m) and Swanston Trams is forecasting turnover of £19.6m (A$47.2m) and is expected to require financial support of about £17.4m (A$42m). Following completion National Express Group will receive annual subsidies as shown in the appendices attached to this announcement.

Under the terms of the agreement between National Express Group and Victoria's Director of Public Transport, the Group will acquire the assets of each franchise for a nominal consideration. Each of the businesses will be acquired with net liabilities, before fair value adjustments, as follows:

 V/Line Passenger - £10.8m (A$25.9m)
 Bayside Trains - £12.6m (A$30.2m)
 Swanston Trams - £8.6m (A$20.7m)

These net liabilities will be recovered through the subsidies received over the life of the franchises.

Total funding of £45.7m (A$110m) will be provided on behalf of National Express Group in support of the franchises as follows:

   V/Line Passenger - A performance bond of £8.3m (A$20.0m) and capital
                      contribution of £6.2m (A$15.0m)

   Bayside Trains - A performance bond of £12.5m (A$30m) and capital
                    contribution of £8.3m (A$20m)

   Swanston Trams - A performance bond of £6.2m (A$15.0m) and capital
                    contribution of £4.2m (A$10.0m)


The Group's successful bids include a substantial package of investment and marketing commitments which the Group believes will improve the quality of each businesses' services and stimulate further passenger and revenue growth.

National Express Group has undertaken to order 150 new trains and trams worth over £300m (A$733m) which will be financed by way of operating leases.

The Group has also undertaken to refurbish existing rolling stock, make improvements to stations and modal interchanges, install new technology to provide better customer information, increase the frequency of services and progressively improve punctuality and reliability. New ticketing and fare offers to encourage more people to travel in off-peak periods will be introduced and marketed across all franchises and initiatives to encourage a greater emphasis on customer service will be implemented.

The business plan for V/Line Passenger includes:

  • The introduction of 29 new dual-car trains to be introduced progressively from 2003. These will greatly improve passenger comfort and accessibility
  • A £0.6m (A$1.5m) investment in refurbishment of the existing rolling stock to provide higher standards of comfort for passengers
  • A £2.3m (A$5.5m) investment in station improvements including better customer waiting facilities, safety and security and customer information
  • Measures to improve punctuality and reliability of the services over the duration of the franchise

The business plan for Bayside Trains includes:

  • The introduction of 62 new three-car trains which will greatly improve passenger comfort and accessibility, especially for the elderly and disabled. The new trains will be delivered progressively from late 2002 and will all be in service in 2004.
  • A £29.1m (A$70m) investment in refurbishing the fleet to provide the highest standards of passenger comfort and improved security through the installation of CCTV
  • A £3.7m (A$9.0m) investment in station improvements at 40 stations, including better lighting, the installation of CCTV and help-points
  • A £7.5m (A$18.0m) investment to improve accessibility and facilities for people with special needs
  • Measures to improve punctuality and reliability over the duration of the franchise

The business plan for Swanston Trams includes:

  • The introduction of 59 new state-of-the-art low floor, easy access trams which will be delivered progressively from late 2002. All will be in service from September 2004
  • A £3m (A$7.2m) investment in refurbishing the trams that will be retained for the long term.
  • A £2.5m (A$6.0m) investment in real-time passenger information systems at key locations across the network
  • A £2.5m (A$6.0m) package of traffic management measures to improve the flow of trams and other traffic at congestion hot spots
  • Improved coordination with bus services, both with National Bus Company and other operators
  • Measures to progressively improve punctuality over the term of the franchise


Following completion, National Express Group's new operations in Victoria will be managed by the Group's Transition Director, Peter Strachan, who has 20 years experience in the UK rail industry, latterly as Train Service Director for Midland Mainline. He will be supported by the businesses' existing management teams, each of which have developed considerable expertise in their fields of operation.

Commenting on the announcement, Phil White, Chief Executive of National Express Group, said:

"We are delighted to be awarded these franchises which strengthen our presence in Australia's passenger transportation market.

"National Express Group's experience elsewhere has shown that the key to success is passenger growth. We believe that the formula for growth is investment in high quality, accessible, value for money services to the highest safety standards.

"We look forward to developing these newly privatised businesses in partnership with Government, local authorities, passenger groups and staff. We are committed to building on the successes they have achieved to date and to developing a network of truly world-class transport services in Melbourne and Victoria.



                             Bayside Trains  Swanston Trams  V/Line Passenger

 Rail network (route kms)    237m            137m            1,152m
 Coach network (route kms)                                   9,142m

 Train/tram (kms)            9.2m            13.1m           5.9m
 Coach (kms)                                                 9.3m

 Passenger (kms)             1,100m          264m            Not available

 Passenger journeys          63m             68m             7.3m

 Number of stations served   118             N/A             80

 Current fleet               78 trains       275 trams       56 trains
                                                             63 coaches

 Number of employees         1589            935             800


National Express Group's contractual obligations are held within a Franchise Agreement for each operation. The Group's performance against these agreements is monitored by the State of Victoria's Director of Public Transport.

Franchisees are able to earn revenue from:

  • Ticket sales
  • Reimbursement for mandated tickets sold at concession prices
  • Financial incentive awards to operators who exceed pre-defined levels of operational performance and passenger growth
  • Revenue from ancillary commercial activities (eg retailing and advertising)
  • Revenue from access charges paid by other operators for the use of their assets, facilities or services
  • Base subsidy

The franchise agreements specify service levels with financial incentives and penalties linked to the achievement of reliability and punctuality targets.

Franchisees will be required to maintain existing ticket types, with annual increases capped in line with inflation. Current concessionary fares will be mandated, with franchisees receiving top up payments for passengers travelling on these tickets. Franchisees have the freedom to introduce new ticket and fare offers which are not subject to restrictions.


                             Bayside Trains  Swanston Trams  V/Line Passenger
                             A$              A$              A$

 1999                        84.8            42.0            77.4
 2000                        82.7            50.6            78.4
 2001                        99.7            46.8            68.0
 2002                        99.6            36.3            74.0
 2003                        54.9            33.1            63.1
 2004                        31.8            30.5            51.0
 2005                        30.6            30.7            59.2
 2006                        27.8            30.2            56.1
 2007                        21.9            28.1            52.8
 2008                        17.3            23.6            49.6
 2009                        6.4             22.2            49.3
 2010                        3.9             21.3
 2011                        (1.9)           19.8
 2012                        (6.2)
 2013                        (13.5)
 2014                        (18.5)


1. All figures are at 1998/99 prices

2. Excludes forecast concession-related and incentive payments

3. The 1998/99 figure is expected out-turn under public ownership

4. For V/Line Passenger, figures for the years 2000-2004 include capital investment including the delivery of new rolling stock from 2002

5. For Bayside Trains, figures for the years 2000-2002 include capital investment including the delivery of new rolling stock from 2002

6. For Swanston, figures for the years 2000-2004 include capital investment including the delivery of new rolling stock from 2002

Notes to Editors:

National Express Group PLC is a leading mass passenger transport services company. Since its flotation on the London Stock Exchange in 1992, the Group has expanded through the acquisition of businesses privatised by national and local Government and during this time has developed a strong reputation for successfully transferring these companies from the public to the private sector. The Group significantly expanded its operations outside the UK during 1998 through entry into the USA transportation market and in May 1999 moved into the Australian transportation market.

In its preliminary results for the year ended 31 December 1998, on 18 March 1999, it reported a 16.7% increase in turnover to £1,322.4m and an operating profit, before exceptional costs of £95.6m - up 14.4%. With approximately 17,000 employees, the Group delivers high quality, value for money coach, bus, airport and passenger rail services. Over 520 million journeys were made by passengers using its services during 1998.

1. Overseas Operations

(i) Australia

In May 1999 National Express acquired the National Bus Company Pty Limited, ("NBC") - the largest privately owned bus company in Australia. NBC operates urban bus services in Melbourne and Brisbane. Its main subsidiary, Bosnjak Holdings Pty Limited ("Bosnjak Holdings"), in which NBC holds a 57% interest, also owns Westbus, Sydney's leading private bus operator. NBC, together with Westbus, has a fleet of 794 vehicles, over 1,200 employees, including 970 drivers and in 1998 carried over 43 million passengers.

In June 1999 entry to the Australian transport market was consolidated with the acquisition of Transport Management Group Pty Limited, ("TMG") - a privately owned bus operator based in Perth, Western Australia. TMG operates bus services in the rapidly-growing southern suburbs of Perth under the trading name Southern Coast Transit. TMG was awarded its first contract in 1996 and during the last six months of 1998 successfully won further contracts, including the high-profile Central Area Transit (CAT) service in Perth's city centre. TMG has over 400 employees, including 345 drivers. With a fleet of 190 vehicles, it carries over 10 million passengers each year.

(ii) USA

National Express Group has established a strong presence in the student transportation sector through the acquisition of Crabtree-Harmon Corporation, one of the USA's largest school bus operators. In February 1999, the Group purchased Robinson Bus Service Inc, a Chicago based school bus operator with a fleet of 547 vehicles which operates contracts in the cities of Chicago, Detroit and Philadelphia.

Today, with 1,750 distinctive yellow buses and 2,100 employees, National Express Group is the 5th largest operator in the USA school bus sector and transports 170,000 pupil per day - over 30 million a year.

In 1998, the Group was selected as the preferred bidder for the 99 year lease for Stewart International Airport in New York State, which will be the first airport in the USA to be privatised under the "Pilot" privatisation programme.

2. UK Operations

(i) Trains

The Group owns the largest number of train operating companies in the UK, with five passenger rail franchises - Central Trains, Gatwick Express, Midland Mainline, ScotRail and Silverlink. It is also the leading member of the joint venture company appointed by the British Government to manage Eurostar UK, along with the French and Belgian railway companies - SNCF and SNCB - and British Airways. Since acquisition, the Group's train companies have recorded considerable passenger growth, placed orders for 113 new trains worth over £300m and introduced a wide range of new and innovative service, fares and marketing initiatives. The division is focused on continuously improving operational performance and, according to the statistics issued by OPRAF (the Office of Passenger Rail Franchising), ScotRail provides the most punctual and Midland Mainline the most reliable services in the UK.

(ii) Coaches

The coach division consists of three business segments - UK Express Coaches, Airport Coach Services and European Coaches.Express Coaches provides Britain's only scheduled express coach network to over 1200 destinations. Airlinks operates premier scheduled coach services between all of the UK's airports and dedicated services for the four London airports and key airline operators. Eurolines operates scheduled coach services from the UK to over 500 destinations in Continental Europe.

(iii) Buses

The Group operates urban bus networks in the West Midlands, Scotland and Belgium. Its core operation, Travel West Midlands (TWM), represents the UK's largest urban bus network outside London. Its fleet of 1,800 vehicles serves 350 million passengers each year, 18 hours a day, 7 days a week across 500 routes. TWM will also operate the new Midland Metro light railway rapid transit system which is due to begin operating in 1999. Travel Dundee in Scotland, with its fleet of 133 buses, delivers high frequency, high load services.

The division has systematically been replacing its fleet with new vehicles including low-floor, easy access buses, gas powered vehicles and high capacity, two-coach articulated buses. By the end of 1999, 30% of its fleet will consist of these state-of-the-art vehicles - the largest in the UK.

(iv) Airports

The Group owns East Midlands Airport, England's fourth largest regional airport and one of the UK's leading air cargo gateways, and the smaller Bournemouth Airport. It is also the preferred bidder for Stewart International Airport in New York State, the first airport to be privatised in the USA.

Note to Editors:

Pictures accompanying this release are on the PR Newswire (Two-Ten) area of the PA Bulletin Board. There is no charge for using the pictures or story.

SOURCE National Express

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