Serco wins £800m Caledonian Sleeper contract

 

Troubled outsourcer Serco has won a £800 million contract to run the Caledonian Sleeper service between London Euston and Scotland.

More than £100 million will be spent, part-funded by a £60 million grant from Scottish ministers, to create the en-suite rooms, pod-style flatbeds — a first for railways — and a brasserie-style Club Car.

Serco said it will source local products and produce from small businesses as part of the improvements to the service.

The revamp will also include a new booking website, a wider range of fares and other improvements to create an “outstanding hospitality service that is emblematic of the best of Scotland”.

The trains, which will serve Scottish towns and cities including Aberdeen, Edinburgh, Fort William, Glasgow and Inverness, will be made by Spain’s CAF and leased to Serco.

Serco said £180 million of the £800 million, 15-year contract will be in franchise payments.

The deal is a rare piece of good news for Serco, which has faced a series of issues including a mounting debt pile, three profit warnings and a Serious Fraud Office investigation over overcharging on government electronic-tagging contracts.

Chief executive Rupert Soames said: “Serco has a strong track record of providing high-quality and efficient rail services around the world, as well as experience in managing large-scale tourism-focused transport services.”

Soames added: “Serco has a very constructive relationship with many parts of Scottish government and already operates essential public transport and many other services.

“With 3000 Serco employees living and working in Scotland, we are tremendously excited to be delivering these new developments and meeting the vision of Transport Scotland.”

Its share price has fallen 44 per cent in the past year but today lifted 2.1 per cent to 362.6p.

Rival FirstGroup has lost the contract. FirstGroup’s ScotRail franchise will, from next April, run separately to the overnight train service. First Group said the sleeper service is around 2 per cent of its ScotRail annual revenue so its medium-term earnings targets are unchanged.

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