Souter sells airline stake to concentrate on running trains

Brian Souter, the co-founder and chief executive of the bus and rail group Stagecoach, is clearing the decks in readiness for being handed a new 10-year franchise to run South West Trains.

Mr Souter and his sister Ann Gloag sold their entire shareholding in the Scottish airline ScotAirways yesterday in order, it was said, for Mr Souter to focus fully on his role at Stagecoach. Mr Souter also stood down as chairman of ScotAirways with immediate effect.

The pair acquired a majority stake in the airline seven years ago. They have been bought out for an undisclosed amount by the two founders of ScotAirways, Merlyn and Roy Suckling.

The move came as the Department for Transport prepares to name the winner of the South West Trains franchise, the biggest commuter network in the country. Stagecoach is favourite to retain the franchise, which it won originally in 1996. It faces competition from three other bidders, the strongest of which is thought to be First Group, now the country's biggest train operator.

The investment bank Merrill Lynch said in a report last week that it expected Stagecoach to retain the franchise, calculating it would be worth £130m to the group over a 10-year period. South West Trains accounts for about £500m of Stagecoach's turnover of £1.4bn a year and last year contributed £59m in profits.

In June, Mr Souter said he would be "surprised and disappointed" if Stagecoach were to lose the franchise. Although First Group is a strong contender, it already has 23 per cent of the UK rail market and winning South West Trains would increase that share to more than 30 per cent. The other two bidders are Arriva and a partnership between National Express and MTR, the operator of Hong Kong's mass transit railway.

There had been speculation that the DfT would announce the winner of the contest today. That is wide of the mark. But the DfT will announce today the shortlists of bidders for two new Midlands franchises and a cross-country franchise.