Branson wins West Coast line and pledges pounds 750m tilting trains

Richard Branson's Virgin Group last night became the preferred bidder for the West Coast Mainline, the largest franchise left in the private sector.

The company has pledged to invest pounds 750m in a fleet of hi-tech tilting trains and promised it would overhaul the service from London Euston to Glasgow by introducing seat-back videos and business class and premium economy fares. The new rolling stock is due to enter service in 2002.

Mr Branson's Virgin Group already holds the Cross Country rail franchise and and owns 17 per cent of Eurostar. The pounds 220m West Coast business will make him Mr InterCity, the largest operator of high-speed trains in Britain.

A spokeswoman for Virgin said: "We are all delighted that the Virgin Rail Group has been selected as the preferred bidder and we anticipate completing the deal within 14 days."

Mr Branson's team beat off rival bids from Stagecoach, the bus and rail company, and James Sherwood's Sea Containers. Bidders were each required to submit two bids - one involving tilting trains and the other based on refurbishing the existing trains or replacing them with conventional rolling stock. With an election in the offing, seasoned observers said no bid would win unless an order for tilting trains was made.

InterCity West Coast, which operates 159 passenger trains daily on 700 miles of routes to and from London, has long been regarded as the prize haul in the government sell-off. Although arguably Britain's prestige line, the West Coast Mainline is heavily loss-making. It is receiving a subsidy this year of pounds 92m compared with revenues of pounds 219m a year.

Its rolling stock is among the oldest on the rail network, and poor performance by the railway last year has driven away customers. Passenger revenues were down more than pounds 30m on projections.

The railway's main traffic is on four routes. These are London to Birmingham, London to Manchester, London to Liverpool and London to Preston. Mr Branson plans to go head-to-head with the airlines. On the London to Manchester route, air travel is worth pounds 50m a year alone. When the West Coast line opened in the 1960s it captured nearly all the air market.

The Virgin team point to their experience of running Eurostar - which has captured more than half the airline passenger revenue since it started running in 1994.