Australian rail franchises won by National Express

NATIONAL EXPRESS yesterday became Australia's largest private transport operator after winning three rail franchises.

The awards will see National Express investing pounds 300m in new trains and trams in the state of Victoria and assuming liabilities of pounds 32m. A further investment of pounds 45.7m is to be provided by the group's bankers, Bankers Trust.

The franchises are for Melbourne-based services and run for between 10 and 15 years. Revenue will come from ticket sales, retailing, and fees from allowing other operators to use the network. The state government will subsidise the operations until 2009. All are expected to be profitable by 2012.

A spokeswoman for National Express said the group planned to retain the various operations' identities. "We understand the trains and trams are well-loved. We're not going to emblazon them with National Express logos."

The operations are expected to generate sales of pounds 91m in the year to 30 June, after receiving financial support of pounds 85m. They employ more than 3,300 people.

Yesterday's deal marks National Express's first foray into the overseas rail business. It already has five franchises in the UK making it the largest rail operator. The group entered the Australian transport market only last month with the acquisition of the National Bus Company, the country's largest private bus company. It acquired another Australian bus company this month.

Australia began rail privatisation last year in consultation with the UK's Office of Passenger Rail Franchising.

Analysts were disappointed that National Express was investing management time in Australia. "Australia is a car culture. This isn't going to be financially material," said one.