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Struggling TransPennine train operator under pressure over £75m payouts

TransPennine Express train on a platform with a passenger boarding - Phil Oldham/PinPep
TransPennine Express train on a platform with a passenger boarding - Phil Oldham/PinPep

A train operator that runs some of Britain’s worst-performing services is facing calls to halt a programme of returning £75m to shareholders.

FirstGroup, the listed company behind the Avanti West Coast and TransPennine Express operators, launched a share buyback programme shortly before Christmas to return the proceeds of the sale of Greyhound bus depots in the US to its investors.

But Labour shadow transport secretary Louise Haigh is now demanding that the money is used to improve rail services.

TransPennine Express chief Matthew Golton was forced to issue a fresh apology last week after admitting services were “not good enough”.

Industry sources now increasingly expect the operator to be nationalised later as bosses grapple with persistent cancellations and delays. The Government has set up a shell company to take control of the operator as and when it is needed.

The operator runs trains from Liverpool and Manchester in the west to Hull in the east and as far north as Edinburgh and Glasgow.

Avanti West Coast, meanwhile, which runs intercity services from London’s Euston station to Birmingham, Manchester and Glasgow, suffered a fresh setback last week after the rail regulator said a recovery plan to improve performance had stalled.

Meanwhile, on Saturday the operator cancelled "a large number" of services, blaming high staff shortages. The cancellations were a setback for travellers looking for  alternative methods of transport after the collapse of regional airline Flybe on Saturday.

Both Avanti and TransPennine are, however, still entitled to multi million-pound “performance fee” bonuses under complex contracts with the Government.

Ms Haigh told The Telegraph: “Their services have been totally unacceptable yet Ministers have continued to reward FirstGroup with taxpayers' money in so-called performance fees which many will see as a sick joke.

“Now we see money being used to issue a share buyback, when FirstGroup should be throwing everything at delivering the timetable they are contracted to provide.”

A spokesman for FirstGroup said: “The funds involved in the share buyback come directly from the sale of our legacy Greyhound property portfolio in the US and are not derived from our UK rail or bus operations.

“We are continuing to invest in our bus and rail businesses in the UK, and have also used proceeds from the sale of our North American operations to reduce debt and make substantial payments of £336m towards the UK pension schemes of our employees.”

A Department for Transport spokesperson said: “We constantly review operators' performance, and all options regarding contracts remain on the table to ensure we reach a long-term solution that works for passengers.”