Stagecoach wins subsidy battle with DfT

The transport operator Stagecoach has won a crucial victory against the Department for Transport in a dispute concerning the timing of a subsidy payment for its South West Trains franchise.

An arbitrator ruled that revenue support, when earnings from passengers are lower than expected, for Stagecoach should have kicked in from April this year, instead of from February 2011, as the DfT had argued.

A spokesman for Stagecoach said: "We believed this was a matter of integrity over a contract signed in good faith."

Stagecoach said availability of revenue support from April 2010 should enable its UK retail division to "remain profitable" for the year to April 2011. But the arbitrator ruled against Stagecoach over its claim that revenues from South West Trains station car parks should be excluded from calculating franchise payments to the DfT. Stagecoach said this ruling would hit its pre-tax profits by £8m in its current year.