The accident was caused by a Thames Train passing a signal at red and colliding with a Great Western express travelling in the opposite direction. The drivers of both trains were killed.
Since the accident, it has emerged that the Thames Trains driver, Michael Hodder, 31, had only recently qualified and driven the route fewer than 15 times. About one in five of Thames Trains' 250 drivers have been newly recruited in the last year and many of those recruits are new to the rail industry.
Two inquiries are being conducted into the crash. The first, being carried out on behalf of Railtrack by a civil engineer Richard Bonham-Carter, is due to report by the end of the year. However, Lord Cullen's public inquiry into the accident is likely to take 18 months to complete.
A rail executive said: "It is hard to see them retaining the franchise. If the inquiry finds things wrong with their safety systems and driver training, then they will lose their licence."
The City believes the franchise is at risk. Since Paddington, shares in Go-Ahead have fallen 22 per cent, wiping almost pounds 100m from its stock market value. At last Friday's closing price of 665p, the group, which also owns the Thameslink franchise, is valued at pounds 330m.
It is thought unlikely that Thames Trains would be stripped off its licence before Lord Cullen produces his report unless dramatic evidence of safety shortcomings emerges as evidence is taken. But, even if Thames Trains does manage to hold onto its licence, rail industry executives question whether its franchise will be extended.
Sir Alastair Morton, the chairman of the Strategic Rail Authority, and his chief executive, Mike Grant, have begun negotiations with the train operating companies with the aim of agreeing franchise extensions within the next six months in return for service improvements.
Observers believe it inconceivable that either of Go-Ahead's franchises would be renewed while the Paddington inquiry was still going on.
Go-Ahead's two franchises expire in 2004 and it is thought to be pressing for extensions of at least five years in both cases. A month before the Paddington crash Go-Ahead warned that it would not make any further investment in either Thames Trains or Thameslink unless the franchises were lengthened.
Go-Ahead said it was prepared to invest pounds 50m in Thameslink and pounds 10m in Thames Trains but only in return for franchise extensions or raised subsidies.