National Express gets back on board gravy train

National Express, the country's biggest train operator, has abandoned attempts to spearhead a rationalisation of the industry after signs that passenger numbers are at last recovering from the downturn which followed the Hatfield disaster three years ago.

But the group, which owns eight of the country's 25 rail franchises, said yesterday it still expected to see the number of train companies it operates fall as the Strategic Rail Authority creates fewer, bigger "super" franchises.

Phil White, National Express's chief executive, said its portfolio of franchises could fall to five but this would not be as a result of it merging any of them with rival operators such as First Group. "With so many exciting opportunities around, consolidation through mergers is not on the agenda," he added.

He was speaking as National Express reported a 23 per cent increase in first-half, pre-tax profits to £18m, helped by a strong recovery in its rail division. The group's train franchises include Midland Mainline, Gatwick Express, ScotRail and Silverlink, which was hit yesterday by the withdrawal of its entire fleet of class 321 trains on safety grounds.

Rail operating profits for the six months increased 78 per cent to £7.3m on the back of a 5 per cent increase in passenger numbers, the biggest increase in more than two years.

Traffic levels on the group's London and South-east commuter services, which include the London-Tilbury-Southend line C2C and West Anglia Great Northern, increased 6.5 per cent. Its regional franchises, including ScotRail and Central Trains, increased passenger numbers by 3.5 per cent after two years of falling traffic.

National Express is bidding for the new Greater Anglia franchise which is being created by the SRA but Mr White said its Silverlink, Wessex and Greater Northern franchises could all disappear as the franchise map is redrawn.

Losses on National Express's 40 per cent stake in the UK arm of Eurostar rose to £3.5m for the first six months compared with £3m for the whole of the previous year. But Mr White said he was hopeful the group would have withdrawn from the loss-making cross-Channel train service by the end of the year under plans to convert the UK, French and Belgian arms of Eurostar into one business.

Operating profits from the UK bus business dipped slightly to £22m but profits from its American school bus division rose 35 per cent to $37.6m.